{"id":24425,"date":"2019-09-10T19:20:35","date_gmt":"2019-09-10T13:50:35","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=24425"},"modified":"2019-09-12T10:53:36","modified_gmt":"2019-09-12T05:23:36","slug":"compliances-for-foreign-subsidiary-company-in-india","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/compliances-for-foreign-subsidiary-company-in-india\/","title":{"rendered":"Compliances for Foreign Subsidiary Company in India"},"content":{"rendered":"<p class=\"has-drop-cap\">In India, like any other companies which are managed by Indian people and entities, the foreign subsidiaries are also required to maintain strict and perfect compliances with all the Indian regulatory government bodies and authorities. <strong>Foreign subsidiaries<\/strong> located in India are essentially required to make maintain additional compliances as compared to those required from Indian-owned Companies. There is a broad category of compliances for the Foreign Subsidiary company in India i.e. Annual, periodic and monthly return.<\/p>\n\n\n\n<p><strong>Foreign subsidiaries are also required to comply with other Indian tax regulations like <\/strong><\/p>\n\n\n\n<ul><li>TDS regulations, <\/li><li>GST regulations, <\/li><li>ESI regulations\nand others. <\/li><\/ul>\n\n\n\n<p>Based on the\nindustry, state of incorporation, number of employees and sales turnover the\ncompliance requirement for a foreign subsidiary company varies.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is a Foreign Subsidiary Company?<\/strong><\/h2>\n\n\n\n<p>A Foreign subsidiary company is a company with the voting\nright (that is more than 50%) controlled by another company, usually referred\nto as the&nbsp;parent company&nbsp;or the&nbsp;holding company. <\/p>\n\n\n\n<p>Where a parent company owns a&nbsp;foreign subsidiary, the\nForeign Subsidiary Company must follow the laws of the country where it is\nincorporated and operates. The foreign subsidiary is required to follow the\napplicable laws in India if a&nbsp;foreign subsidiary&nbsp;is incorporated in\nIndia.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What are the major compliances\nrequired for a Foreign Subsidiary Compliances?<\/strong><\/h2>\n\n\n\n<p>The Foreign Subsidiary Company is required to perform the following\nthree categories of statutory compliances with Indian regulatory authorities &ndash;<\/p>\n\n\n\n<ul><li>Periodic compliances, <\/li><li>Annual compliances, and <\/li><li>Event-based compliances. <\/li><\/ul>\n\n\n\n<p>Additionally, the types and nature of these compliances\ndepend on the various factors-<\/p>\n\n\n\n<ul><li>Type of company and its incorporation, <\/li><li>Industry type and its <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Market&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;A market is a structured environment, either physical or virtual, where buyers and sellers convene to trade goods and services. This trading hub operates based on the principles of supply and(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/market\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>market<\/a> size, <\/li><li>The number of its employees, and <\/li><li>Annual sales turnover. <\/li><\/ul>\n\n\n\n<p>Now, In India, the compliance regime has been made very\nstrict particularly since the promulgation of the new Indian Companies Act of\n2013 and all amendments made thereto in the cases of delayed compliances or\nfailures in statutory compliances advocates for heavy fines, penalties, and\npunishments including imprisonment.<\/p>\n\n\n\n<div class=\"read\"><p><b>Recommended Post<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/wholly-owned-subsidiary-or-subsidiary-in-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Wholly Owned Subsidiary or Subsidiary in India?<\/a><\/mark>.<\/p><\/div>\n\n\n\n<ul><li>Financial Statements should contain comprehensive information about its Indian business operations demanded by the Schedule III to the Companies Act of 2013 and are to be filed within six months of the end of the financial year of the foreign company.<\/li><li><strong>Form FC-1<\/strong>:&nbsp;Form FC-1 is to be filed within 30 days of the establishment of the subsidiary anywhere in India, duly accompanied by any necessary certification\/authorization required from RBI or other regulatory authorities.<\/li><li><strong>Form FC-3<\/strong>:&nbsp;Form FC-3 is to be filed with the concerned ROC containing details of the business places and the financial records of the company.<\/li><li><strong>Audit of Accounts<\/strong>&ndash;If the foreign subsidiary is the India-based Subsidiary Company then the accounts related with business operations and transactions in India, should be arranged, checked, and verified by a PCA(Practicing Chartered Accountant) as per the provisions and rules given in the <strong>Section 381(1)(a)<\/strong> of the Companies Act of 2013.<\/li><\/ul>\n\n\n\n<div class=\"shadow1\"><strong>Note &ndash;<\/strong> Rule-4 of the Companies (Registration of Foreign Companies) Rules of 2014 is also required to comply with.<\/div>\n\n\n\n<ul><li><strong>Form FC-4<\/strong>:&nbsp;Annual Return in Form FC-4 to be filed with relevant ROC within Sixty days from the end of the financial year.<\/li><li>All company-related documents (translated or distributed) of the India-based subsidiary of the foreign company, must be in English, duly substantiated by a competent lawyer practicing in India.<\/li><li>Various Compliances under the concerned ROC, <strong>Income Tax Departments<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Income_Tax_Department\">[1]<\/a><\/sup> and GSTN, <\/li><li>Compliances as per all rules and regulations associated with the Companies Act of 2013 and under Secretarial Standards.<\/li><li>Compliances with RBI, FEMA, Transfer Pricing, FDI Authorities, etc.<\/li><li>Compliances under all rules and regulations associated broadly with SEBI<\/li><li>Compliances with ESI and PF Regulations, Intellectual <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Property&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Property refers to the legal designation of ownership over valuable items or assets held by an individual or a business. This ownership grants the holder certain legal rights to use, consume,(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/property\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>Property<\/a> Laws and concerned statutes and legal acts.<\/li><li>And, other compliances demanded or deemed necessary.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Event-Based Reporting <\/h2>\n\n\n\n<p><strong><em>There are two event-based reporting required to be\nmade to RBI in detail-<\/em><\/strong><\/p>\n\n\n\n<p><strong>FC-GPR<\/strong>-In FC-GPR, the foreign inward remittance concerning\nthe issue of share capital to the foreign investor is reported. The form specifies\nthe various mode of payment for the consideration received from investor\nthrough banking channel, NRE \/ FCNR, Escrow A\/c, Swap, etc. The banking\nchannels are generally used for such transactions.<\/p>\n\n\n\n<p><strong><em>While filing the form FC-GPR, following documents are\nrequired to be attached:<\/em><\/strong><\/p>\n\n\n\n<ul><li>KYC of foreign investor<\/li><li>Company Secretary Certificate<\/li><li>Declaration by the authorized representative of the Indian company as per FEMA.<\/li><li>Valuation certificate from <a href=\"https:\/\/enterslice.com\/learning\/get-merchant-banking-license-india\/\"><strong>SEBI registered Merchant Banker<\/strong><\/a> \/ Chartered Accountant \/Cost accountant or any other person as authorized under FEMA 20(R)<\/li><li>Foreign Inward Remittance Certificate<\/li><li>Other documents as applicable on case to case <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Basis&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;In finance, the &amp;quot;basis&amp;quot; is a term with several applications, including representing the difference between the spot price and the future contract price of an asset, which is vital in investment(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/basis\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>basis<\/a>.<\/li><\/ul>\n\n\n\n<p><strong>FC-TRS <\/strong>&ndash;\nIn <strong>FC-TRS<\/strong>, as per the FDI policy, the foreign remittance concerning\nthe transfer of shares by the way of Gift or by the way of sale held in the Indian\ncompany to\/by the foreign investor is reported. The reporting of transfer of\nshares between Residents and Non-residents and vice- versa is to be made and should\nbe reported within 60 days from the date of receipt\/date of payment of the\namount of consideration.<\/p>\n\n\n\n<p><strong>The following documents are required to be attached while filing the form:<\/strong><\/p>\n\n\n\n<ul><li>Relevant\nregulatory approvals and relevant extracts of the transfer agreement, <\/li><li>For the transfer Consent\nletter between donator and receiver,<\/li><li>Declaration by Non-resident\nin the prescribed format<\/li><li>Consent letter\nbetween buyer and seller or in case of sale\/ purchase on the stock exchange,\nthe contract note should be attached.<\/li><li>Valuation\ncertificate <\/li><li>Non-resident\ndeclaration <\/li><li>In case of sale\nby a non-resident, acknowledgment of FC-GPR\/ FC-TRS as applicable for the\ncapital instruments being sold<\/li><li>FIRC \/Outward\nremittance certificate and KYC<\/li><\/ul>\n\n\n\n<div class=\"read\"><p><b>Also, Read<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/annual-compliances-for-wholly-owned-subsidiary\/\" target=\"_blank\" rel=\"noopener noreferrer\">Annual Compliances for Wholly Owned Subsidiary Company in India<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>In India, like any other companies which are managed by Indian people and entities, the foreign subsidiaries are also required to maintain strict and perfect compliances with all the Indian regulatory government bodies and authorities. Foreign subsidiaries located in India are essentially required to make maintain additional compliances as compared to those required from Indian-owned [&hellip;]<\/p>\n","protected":false},"author":25,"featured_media":24437,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2369],"tags":[2732,2733],"acf":{"service_id":"1"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Compliances for Foreign Subsidiary Company in India - Enterslice<\/title>\n<meta name=\"description\" content=\"Foreign Subsidiary located in India are essentially required to make additional compliances as compared to those required from Indian-owned Companies.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/compliances-for-foreign-subsidiary-company-in-india\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Compliances for Foreign Subsidiary Company in India - Enterslice\" \/>\n<meta property=\"og:description\" content=\"Foreign Subsidiary located in India are essentially required to make additional compliances as compared to those required from Indian-owned Companies.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/compliances-for-foreign-subsidiary-company-in-india\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2019-09-10T13:50:35+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-09-12T05:23:36+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/09\/Compliances-for-Foreign-Subsidiary-Company-in-India.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Priyanka Bajpayee","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/09\/81216.jpg","authorDescription":"Priyanka Bajpayee has done Masters in International Business Law and well versed in content writing covering the area of legal and finance. 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