Accounting and Bookkeeping for Wholly Owned Subsidiaries in India

A Wholly Owned Subsidiary (WOS) incorporated in India is a separate Indian legal entity, even when its entire share capital is owned by a foreign parent company. It must maintain appropriate accounting records, prepare financial statements and comply with applicable Indian corporate, taxation and regulatory requirements. At the same time, its accounting information often needs to satisfy monthly reporting and consolidation requirements of the overseas headquarters.

EzyBiz India Consulting LLP provides accounting and bookkeeping services for wholly owned subsidiaries and foreign-owned Indian companies. Our services include general ledger maintenance, accounts payable and receivable, bank reconciliation, payroll accounting, month-end closing, financial statements, GST and TDS accounting, intercompany reconciliation, foreign currency accounting, management reporting, FDI-related accounting and statutory audit preparation.

Our team of Chartered Accountants, Company Secretaries and other specialists, including Big Four alumni, supports international businesses operating in India. We combine practical accounting operations with an understanding of Indian corporate law, FEMA, taxation and cross-border reporting requirements.

For our complete service offering, visit Accounting and Bookkeeping Services in India. Foreign investors planning a subsidiary can also explore our Wholly Owned Subsidiary in India and India Market Entry Services pages.

Accounting Requirements for Wholly Owned Subsidiaries in India

A foreign-owned Indian subsidiary must maintain its own accounting records and distinguish its financial position from that of the overseas parent. This is important for statutory compliance, taxation, management reporting and corporate governance.

Separate Books for the Indian Legal Entity

A WOS should independently record its revenue, expenses, receivables, payables, bank accounts, employees, fixed assets, liabilities, share capital and other financial transactions. These records form the foundation for its financial statements, tax compliance and statutory audit.

Accrual Accounting and Double-Entry Bookkeeping

Section 128 of the Companies Act, 2013 requires companies to maintain books of account on an accrual basis and according to the double-entry system of accounting. Transactions should therefore be recorded in the appropriate accounting period rather than solely when money is received or paid.

Indian Statutory Accounts and Parent-Company Reporting

The subsidiary’s records should support financial statements under the accounting framework applicable in India. Overseas headquarters may additionally require reporting under IFRS, US GAAP or another group accounting framework. Differences between local and group reporting must be appropriately documented and reconciled.

Outsourced Accounting and Bookkeeping Services for Indian Subsidiaries

EzyBiz India provides recurring accounting assistance tailored to the subsidiary’s transaction volume, business activities, internal finance resources and overseas reporting requirements.

General Ledger and Daily Transaction Accounting

Services may cover chart-of-accounts maintenance, sales and purchase accounting, journal entries, expense recording, ledger scrutiny, trial balance preparation and supporting schedules. We can assist with accounting under the company’s existing systems or an appropriately selected platform.

Bank and Credit Card Reconciliations

Regular bank reconciliations help identify unidentified receipts, unpresented payments, bank charges, foreign exchange differences and unmatched transactions. Reconciliation frequency can be agreed according to business volume and financial control requirements.

Accounts Payable and Accounts Receivable

Our team can assist with supplier invoices, customer billing records, payment accounting, customer collections, vendor reconciliations, credit notes and receivable/payable ageing reports. Commercial approvals and bank payment authorisations remain with designated client personnel.

Books of Account Under the Companies Act, 2013

The Companies Act prescribes record-keeping and financial-reporting obligations for Indian companies. Foreign ownership does not generally remove these responsibilities.

Section 128 and Maintenance of Books

Section 128 requires books of account and relevant records giving a true and fair view of company affairs and explaining its financial transactions. Books are ordinarily maintained at the registered office or another permitted location in India, subject to applicable procedural requirements.

Electronic Books and Accounting Software Audit Trail

Electronic books must comply with the applicable Companies (Accounts) Rules and prescribed conditions. Companies using accounting software should consider the applicable audit-trail or edit-log requirements, including controls over transaction changes, record retention and system accessibility.

Software arrangements should also address access to records, backups, applicable electronic-record storage requirements and oversight by authorised company personnel.

Retention of Accounting Records

Under Section 128, relevant books and vouchers are generally required to be preserved for at least eight financial years immediately preceding the current financial year, or for the company’s period of existence if shorter. Longer preservation may be required in specified circumstances.

Refer to the official Companies Act, 2013 for the underlying statutory provisions.

Accounting for Share Capital and Foreign Direct Investment

Foreign capital contributions must be correctly classified and reconciled with banking records, allotment documents, statutory registers and applicable FEMA reporting.

Accounting for Foreign Share Capital

Money received from an overseas shareholder must be recorded based on its legal nature and stage of allotment. Depending on the transaction, the accounting may involve a designated share-application account, equity share capital, securities premium or another appropriate classification.

Receipts from a parent company should not automatically be treated as business revenue.

FC-GPR Reporting and Share Allotment Reconciliation

Where applicable, Form FC-GPR is required to be filed within 30 days of the issue of equity instruments to a person resident outside India. The accounting records should reconcile the inward remittance, allotment date, number of instruments, issue price, share capital and securities premium with the reported particulars.

The applicable framework can be reviewed through the RBI FIRMS Portal and the Reserve Bank of India.

Annual Foreign Liabilities and Assets Reporting

Indian entities covered by the RBI’s Foreign Liabilities and Assets (FLA) reporting requirements must provide prescribed information within applicable timelines. Relevant accounting records include foreign equity, reserves, liabilities and other reportable balances.

The subsidiary’s annual financial information should be appropriately reconciled with the figures used for FLA reporting.

Intercompany Accounting With the Foreign Parent

Transactions between an Indian WOS and its foreign parent or other overseas group companies require accurate classification, proper supporting agreements and periodic reconciliation.

Management Fees, Royalties and Service Charges

Intercompany charges may relate to management services, software, technical support, shared resources, royalty, employee secondments or other group arrangements. Accounting records should identify the nature of each transaction and link it to the relevant contract, invoice and supporting documentation.

Intercompany Receivables and Payables

Periodic reconciliation should compare balances in the Indian subsidiary’s books with corresponding balances maintained by the overseas parent or group companies. Timing differences, exchange rates, credit notes, invoices in transit and other discrepancies should be investigated.

Reimbursements and Cost Allocations

Reimbursement of expenses, cross-charges and allocation of shared costs may have different accounting and tax implications. The accounting classification should reflect the underlying substance rather than relying solely on a generic reimbursement ledger.

Cross-border arrangements should be reviewed for applicable withholding-tax, GST, transfer-pricing and FEMA implications.

Revenue, Receivables and Customer Accounting

Revenue accounting should reflect the company’s business model, contracts, applicable accounting standards and relevant transaction documentation.

Revenue Recognition and Customer Invoices

Service income, product sales, project revenue and other operating income should be recognised under the applicable accounting framework. Cash receipts, billing milestones and accounting revenue may arise in different reporting periods.

Customer Ageing and Revenue Adjustments

Customer-wise receivable ageing, unbilled revenue, deferred revenue, advances, credit notes and expected credit losses or impairment considerations should be reviewed where applicable.

Related-Party Sales and Export Accounting

Indian subsidiaries often supply services or goods to their overseas parents or group companies. Such transactions should be separately identified, supported by contractual documents and reconciled with foreign-exchange receipts and relevant tax records.

Vendor Accounting, Expenses and Working Capital

Systematic vendor and expense accounting helps management maintain reliable cost information and identify outstanding liabilities.

Vendor Invoices and Expense Accruals

Expenses should be recorded in the correct period based on the nature of the transaction. Missing invoices, unrecorded liabilities, prepaid costs and accrued expenses should be reviewed during month-end closing.

Payables Ageing and Working Capital Reporting

Supplier statements, outstanding balances, payment records and ageing reports should be reconciled periodically. Management can use these reports to plan payments and monitor working-capital requirements.

Payroll and Employee Accounting for Foreign-Owned Companies

Foreign-owned Indian subsidiaries may employ local personnel, directors, consultants and, in some cases, expatriate employees. Proper payroll accounting should be coordinated with the applicable employment, tax and statutory compliance framework.

Salary, Employee Benefits and Payroll Reconciliation

Payroll accounting may include salaries, incentives, employee reimbursements, bonus accruals, leave-related liabilities and other employee costs. Payroll reports should reconcile with bank payments, employee records and the general ledger.

PF, ESI, Professional Tax and Salary TDS

Applicable employee and employer contributions, salary withholding tax and other statutory liabilities should be recorded in appropriate ledger accounts and reconciled with payments and returns.

Expatriate Costs and Employee Recharges

Payments and cross-charges involving foreign employees or overseas group companies may raise questions relating to tax residency, permanent establishment, transfer pricing, GST and employment arrangements. Accounting treatment should follow the actual contractual and legal facts.

Foreign Currency Accounting and Exchange Differences

A wholly owned subsidiary frequently has foreign-currency transactions and reporting obligations beyond ordinary domestic accounting.

Recording Transactions in Foreign Currency

Export invoices, service imports, royalties, group charges and foreign-currency balances should be translated into Indian rupees under the applicable accounting standards and consistently applied accounting policies.

Period-End Foreign Exchange Revaluation

Foreign-currency monetary balances may require revaluation at the reporting date. Resulting exchange gains or losses should be recognised and classified in accordance with the applicable accounting framework.

Converting Indian Accounts for Group Consolidation

The foreign parent may require reporting in USD, GBP, EUR, JPY, SGD or another currency. Group-currency translation and consolidation adjustments should be separately traceable to the Indian statutory accounts.

Fixed Assets, Depreciation and Capital Expenditure

Asset accounting is particularly relevant where a WOS establishes offices, IT infrastructure, manufacturing facilities, development centres or other Indian operations.

Fixed Asset Register and Capitalisation

The asset register may include acquisition date, cost, location, useful life, accumulated depreciation, disposals and other relevant particulars. Expenditure should be assessed for capitalisation or expense recognition according to the applicable accounting framework.

Depreciation Under Companies Act and Income Tax

Companies Act depreciation and income-tax depreciation may differ. Separate schedules and reconciliation workings should be maintained where necessary for statutory financial statements and income-tax computation.

Monthly MIS and Reporting to Overseas Headquarters

One of the main advantages of professional accounting for foreign-owned subsidiaries is the ability to provide consistent monthly financial information to the overseas finance team.

Monthly Financial Reporting Package

Depending on the engagement, the reporting package may include:

• Trial balance and general ledger schedules.
• Profit and loss statement and balance sheet.
• Cash-flow summary and bank reconciliation.
• Accounts receivable and payable ageing.
• Payroll and employee-cost summary.
• GST, TDS and other statutory liability reconciliation.
• Intercompany receivables and payables.
• Fixed assets, depreciation and capital expenditure.
• Budget comparison and management commentary.

Budget Variance and Group Reporting Adjustments

Actual financial performance may be compared with budgets, previous periods and group forecasts. Material variances should be explained and, where required, supported by schedules for IFRS, US GAAP or other parent-company reporting adjustments.

Businesses requiring senior-level financial oversight can explore our Virtual CFO Services in India.

GST, TDS and Income Tax Accounting Compliance

Indian subsidiary accounting must be coordinated with recurring tax compliance obligations arising from its actual business activities.

GST Accounting and Input Tax Credit Reconciliation

GST-related accounting may include sales and purchase records, output tax, input tax credit, reverse-charge liabilities, credit notes and reconciliation with relevant GST return information.

Applicable registration, tax treatment and filing obligations depend on the transactions and legal requirements. See the GST Portal and our GST and Indirect Tax Services.

TDS, Income Tax and Statutory Liability Reconciliation

Accounting processes should identify relevant withholding-tax transactions, maintain tax liability balances, reconcile challans and returns and support income-tax computation with suitable accounting schedules.

Transactions with non-residents may require separate analysis of withholding-tax provisions and applicable tax treaties. The Income Tax Department provides official compliance resources.

Transfer Pricing and Related-Party Transaction Accounting

International transactions between an Indian subsidiary and associated enterprises require appropriate accounting records and consideration of India’s transfer-pricing provisions.

Separate Ledgers for International Transactions

Intercompany service fees, goods purchases, royalties, reimbursements, financing arrangements and other relevant transactions should be separately identifiable. Supporting agreements, invoices, workings and reconciliations should be maintained.

Form 3CEB and Transfer Pricing Documentation Support

Where transfer-pricing reporting obligations apply, the accounting team should provide relevant financial information for transaction classification, reconciliation and preparation of applicable documentation and Form 3CEB.

Transfer-pricing analysis, benchmarking and certification are separately scoped professional assignments where required.

Statutory Audit, Annual Accounts and ROC Compliance

A WOS incorporated as an Indian company is subject to the applicable statutory audit and financial reporting framework under the Companies Act, regardless of foreign ownership.

Statutory Audit and Year-End Finalisation

Year-end accounting may involve trial balance finalisation, reconciliation of balance sheet items, provisions, fixed assets, related-party schedules, tax balances and supporting information for the statutory auditor.

Statutory audit must be performed by a duly appointed eligible auditor observing applicable independence requirements. An accounting service provider cannot substitute for the company’s statutory auditor.

Financial Statements and Annual ROC Filings

Preparation of financial statements under the applicable Accounting Standards or Ind AS, Schedule III presentation and ROC-related accounting information should be coordinated with the corporate secretarial team.

Relevant annual filings may include Form AOC-4 and Form MGT-7 or MGT-7A, as applicable. Other event-based and annual requirements depend on the company’s circumstances.

For further information, see our Corporate Secretarial and ROC Compliance Services and Audit and Assurance Services.

Outsourced Accounting Process, Controls and Fees

Foreign-owned subsidiaries can outsource their accounting operations while retaining the necessary management supervision, statutory responsibilities and approval controls.

Transition, Accounting Setup and Monthly Controls

Our engagement begins with understanding the company’s business model, accounting software, transaction volume, opening balances, bank accounts, existing records, group reporting requirements and statutory accounting needs.

The agreed process may include document collection, transaction processing, reconciliations, month-end review, management reporting and escalation of unresolved issues. Appropriate user access, maker-checker controls and client payment approvals should be maintained.

Professional Fees and Service Deliverables

Fees depend on the number and complexity of transactions, existing accounting records, number of locations, reporting frequency, tax requirements, foreign currency accounting and intercompany activity.

Engagements may cover basic monthly bookkeeping, complete finance-function outsourcing or co-sourcing alongside an existing finance team. Additional services such as audit, income-tax returns, GST filing, payroll processing, FEMA reporting, transfer pricing and Virtual CFO support are included only where specifically agreed.

For a comparison of operating models, read Outsourced Accounting vs In-House Accounting in India.

Frequently Asked Questions About WOS Accounting in India

Does a Wholly Owned Subsidiary Need Separate Books in India?

Yes. A WOS incorporated in India is a separate Indian company and must maintain appropriate books of account under the Companies Act and other applicable legal requirements.

Can the foreign parent’s accounting software be used?

A group accounting or ERP platform may be used where it satisfies applicable Indian statutory, audit trail, record-keeping, accessibility and other compliance requirements. The Indian company’s financial information must remain separately identifiable.

How should money received from the foreign parent be recorded?

The transaction must be classified according to its legal and commercial substance. It may represent equity funding, a permitted borrowing, reimbursement, service income or another arrangement. The accounting should reconcile with relevant corporate documents and regulatory filings.

Are foreign-parent transactions subject to transfer pricing?

International transactions with associated enterprises may be covered by India’s transfer-pricing requirements. Applicable documentation, reporting and arm’s-length analysis depend on the nature and circumstances of the transactions.

Can EzyBiz India Manage Monthly WOS Accounting?

Yes. EzyBiz India provides accounting and bookkeeping support for foreign-owned Indian subsidiaries, including ledger accounting, reconciliation, financial reporting, intercompany records and coordination of agreed tax and regulatory accounting requirements.

Does a WOS need monthly MIS?

Monthly MIS is generally a management or group reporting requirement rather than a standalone statutory filing. It is highly useful for financial consolidation, working-capital monitoring and performance review.

Does an Indian WOS require statutory audit?

Yes. An Indian company generally requires statutory audit under the Companies Act, including when it is wholly owned by a foreign company. The statutory auditor is separately appointed in accordance with applicable law.

Can bookkeeping be outsourced without hiring a full-time accountant?

Yes. A company may outsource recurring accounting functions to a professional service provider while retaining appropriate control, supervision and statutory responsibility.

How can the foreign parent obtain a proposal?

Share the Indian subsidiary’s business activities, transaction volume, accounting systems, staff strength, existing books and parent-company reporting requirements. EzyBiz India can review the scope and propose an appropriate accounting engagement.

Related Services and Contact EzyBiz India

Related Accounting and Foreign Company Services

• Accounting and Bookkeeping Services in India
• Accounting for Branch, Liaison and Project Offices
• Outsourced Accounting vs In-House Accounting
• Accounting Compliance Calendar in India
• Month-End Accounting Checklist
• Wholly Owned Subsidiary in India
• Foreign Company Registration in India
• India Market Entry Services
• GST and Indirect Tax Services
• Corporate Secretarial and ROC Compliance
• Audit and Assurance Services
• Virtual CFO Services

Contact Our Indian Subsidiary Accounting Team

Are you operating or establishing a wholly owned subsidiary in India? EzyBiz India can assist with outsourced accounting, bookkeeping, intercompany reconciliation, monthly MIS, accounting records for statutory compliance and financial reporting to overseas headquarters.

EzyBiz India Consulting LLP
306, 3rd Floor, Vishwa Sadan Building, District Centre, Janakpuri, New Delhi – 110058, India.

Mobile: +91 98992 17778

Email: anil@ezybizindia.in

WhatsApp: Discuss WOS Accounting Services

Enquiry: Contact EzyBiz India

Reviewed By: CA Anil Agrawal, Founder, EzyBiz India Consulting LLP. Over 20 years of professional experience in taxation, regulatory compliance, international business advisory and corporate finance.

Last Updated: October 2026

Disclaimer: This article provides general information on accounting and bookkeeping requirements for wholly owned subsidiaries and foreign-owned Indian companies. The applicable accounting standards, financial reporting obligations, tax requirements, FEMA filings, transfer-pricing rules and company-law compliance depend on the entity’s circumstances and applicable law. Regulatory requirements and deadlines may change. Outsourcing accounting functions does not transfer the company’s statutory responsibilities to the service provider. Audit, certification and other regulated professional services must be undertaken by appropriately eligible professionals subject to applicable independence requirements. Specific professional advice should be obtained before relying on the information for any accounting, tax, investment or compliance decision.