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India Business Setup - Setting up a Subsidiary

Setting up a subsidiary in India can be a transformative step for expanding your business operations and accessing one of the world’s largest and most dynamic markets. At Munibgiri, we specialize in providing comprehensive and tailored services for the incorporation of a foreign subsidiary in India. Our team of experts is here to guide you through the complexities of establishing a foreign subsidiary company in India, from understanding the legal requirements and navigating regulatory approvals to assisting with compliance and documentation. Partner with us for the incorporation of a foreign subsidiary in India and unlock India’s vast business potential to drive your company’s growth and success.

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India Business Setup - Setting up a Subsidiary

Subsidiary Company

A subsidiary company, often referred to as a sister company, is controlled by a parent company or holding company, which holds a minimum of 50% of the total share capital. The registration process for a foreign subsidiary company in India is governed by the Companies Act of 2013, ensuring that the parent company exerts significant influence over the subsidiary.

Types of Subsidiaries in India

  • Wholly-Owned Subsidiary:
  • Subsidiary Company:
  • The parent company possesses 100% ownership of the subsidiary's shares, applicable in sectors that permit 100% Foreign Direct Investment (FDI).
  • The parent company owns 50% of the subsidiary's shares.
Before proceeding with establishing a foreign subsidiary company in India, obtaining approval from the Reserve Bank of India is crucial to ensure compliance with foreign investment regulations.

Advantages of Indian Subsidiary Company

  • Entry into the Indian Market:
  • Foreign Direct Investment (FDI):
  • Perpetual Succession:
  • Limited Liability:
  • Scope of Diversification:
  • Separate Legal Identity:
  • Property Ownership and Rental:
  • India offers numerous investment opportunities that attract foreign entrepreneurs.
  • Investments by foreign companies in Indian private companies through share subscriptions or acquisitions.
  • Ensures a company's existence remains intact regardless of changes in management or membership.
  • Protects the personal assets of shareholders and directors, as the company bears responsibility for its debts.
  • Provides a strategic avenue for foreign businesses to expand their operations.
  • Recognized as a distinct legal entity, allowing the company to engage in agreements and legal actions independently.
  • A subsidiary company can purchase or rent properties in India for its business activities.

Regulatory Authorities for Indian Subsidiary Company Registration

  • Ministry of Corporate Affairs (MCA):
  • Registrar of Companies (ROC):
  • Reserve Bank of India (RBI):
  • Sets and enforces rules and regulations for company registration and compliance.
  • Handles procedures related to company incorporation.
  • Regulates foreign currency exchange aspects for foreign subsidiary companies in India.

Requirements and Key Facts about Company Registration in India

  • Company Name:
  • Shareholders:
  • Share Capital:
  • Directors:
  • Registered Address:
  • Annual General Meeting (AGM):
  • Company Secretary:
  • Requires a unique name distinct from existing businesses.
  • The parent company can hold 100% of the shares; no mandatory Indian resident shareholder.
  • No minimum capital requirement.
  • Minimum of two directors, with at least one being an Indian resident.
  • Must have an officially recorded address.
  • Conduct at least one general meeting annually.No minimum capital requirement.
  • Mandatory to file three secretarial returns each year; a statutory auditor must be appointed.

Taxation and Compliance

  • Professional Fees:
  • Profit Tax:
  • GST:
  • Annual Compliance:
  • Includes government fees for company registration.
  • Approximately 25.36% tax rate.
  • Applicable to domestic sales, with monthly and annual returns required.
  • Mandatory statutory audits and annual filings.

How to Register a Subsidiary Company in India

  • Determine the Type of Company:
  • Obtain Digital Signature Certificate (DSC):
  • Apply for Director Identification Number (DIN):
  • Name Approval:
  • Draft MoA and AoA:
  • File Incorporation Documents:
  • Payment of Registration Fees:
  • Obtain Certificate of Incorporation (COI):
  • Apply for PAN and Tax Registration:
  • Open Bank Account:
  • Decide on the company type for incorporation.
  • Required for online registration.
  • Obtain DIN for the directors.
  • Apply for approval of a unique company name.
  • Outline the company's objectives, rules, and regulations.
  • Submit documents to the ROC through the MCA's portal.
  • Pay necessary fees based on authorized capital.
  • Confirms registration of the subsidiary.
  • Obtain PAN and TAN from the Income Tax Department.
  • Open a bank account in the name of the subsidiary company.

Compliance Requirements for Indian Subsidiary Registration

  • FEMA:
  • Companies Act, 2013:
  • RBI Compliances:
  • Income Tax Act, 1961:
  • Annual Returns:
  • SEBI Regulations:
  • Adhere to foreign exchange laws.
  • Comply with the Companies Act provisions.
  • Ensure adherence to RBI regulations.
  • File annual income tax returns.
  • File annual returns with the MCA and the ROC.
  • Comply with SEBI regulations if the subsidiary lists its securities.

Taxation of Indian Subsidiary Companies

  • Income Tax:
  • Tax Rates:
  • Surcharge:
  • Health and Education Cess:
  • Concessional Tax Rates:
  • Taxes on all income earned within or outside India.
  • 50% for royalty received for technical services, 40% for other income.
  • Applied based on income thresholds.
  • 4% added to the total tax amount.
  • Applicable to specific sectors.

FDI in Private Limited Company

100% FDI allowed in most sectors; some sectors require prior approval. Foreign entities can establish wholly-owned Indian subsidiaries with 100% ownership.

For a Private Limited Company

  • No minimum capital requirement
  • Minimum of 2 directors (at least one must be a resident of India)
  • Minimum of 2 shareholders

For a Public Company

  • Minimum of 3 directors
  • At least seven shareholders

How Munibgiri Can Assist with Indian Subsidiary Company Registration

Munibgiri simplifies establishing an Indian subsidiary company by offering comprehensive support at every step. From selecting a unique name and obtaining essential DIN and DSC to assisting with PAN and TAN applications and setting up a dedicated company bank account, we streamline the entire registration process.

Our expert team ensures compliance with regulatory requirements, including FEMA, the Companies Act, 2013, RBI compliances, and the Income Tax Act, 1961. We facilitate filing annual returns, guide you through SEBI compliance, and provide tax services to navigate India’s taxation policies. With Munibgiri as your partner, you can initiate and grow your Indian subsidiary business confidently and efficiently.