Annual Compliance for Wholly Owned Subsidiary in India

A wholly owned subsidiary incorporated in India must comply with the Companies Act, income-tax law, FEMA, RBI reporting requirements and other tax and regulatory laws applicable to its activities. Foreign ownership does not reduce the annual compliance responsibilities of the Indian company.

For a typical foreign-owned private limited company, annual compliance includes Board meetings, maintenance and audit of accounts, annual general meeting, ROC filings, director KYC, income-tax return, transfer pricing where applicable, FEMA reporting and other activity-based compliances such as GST, TDS, payroll and MSME reporting.

This guide provides a practical annual compliance checklist for foreign companies operating through an Indian subsidiary. For the broader incorporation structure, see Wholly Owned Subsidiary in India.

What Annual Compliances Apply to a Wholly Owned Subsidiary in India?

The WOS Is a Separate Indian Company

An Indian wholly owned subsidiary is a separate legal entity from its foreign parent. It must maintain its own statutory records, accounts, tax registrations and regulatory filings in India even where its entire share capital is held by one overseas corporate group.

A WOS Does Not Qualify as a Small Company Merely Because It Is Small

This is an important compliance point. Under the Companies Act, the small-company definition does not apply to a holding company or subsidiary company. Therefore, an Indian WOS should not automatically rely on compliance relaxations available to small companies merely because its capital or turnover is low.

Annual and Event-Based Compliance Should Be Tracked Separately

Some filings recur every year, while others arise only when an event occurs. For example, the FLA return is generally annual where applicable, whereas FC-GPR is linked to an issue of equity instruments to a non-resident investor.

Board Meetings and Corporate Governance Compliance

Minimum Four Board Meetings Every Year

Section 173 of the Companies Act, 2013 generally requires a company to hold at least four Board meetings every year, with not more than 120 days between two consecutive meetings. The first Board meeting of a newly incorporated company must be held within 30 days of incorporation.

Because a subsidiary company is excluded from the definition of a small company, a normal WOS should not assume that the relaxed Board-meeting requirement applicable to small companies is available to it.

Board Minutes and Supporting Papers Should Be Maintained

The company should maintain proper notices, agendas, attendance records, minutes and supporting documents for Board meetings. Important matters such as approval of financial statements, related-party transactions, banking authorities, inter-company agreements and statutory filings should be placed before the Board where required.

Foreign Directors Can Be Part of the Indian Board

Foreign directors may serve on the Board of the Indian subsidiary, subject to applicable company-law requirements. Meeting planning should take into account Indian statutory requirements, availability of directors and permitted modes of participation.

Foreign investors can refer to the official Companies Act, 2013 for the statutory Board-meeting framework.

Annual Compliance Requirements for Directors

Disclosure of Interest by Directors

Directors should provide the applicable disclosures of their interests and update the company when relevant changes occur. This is particularly important for foreign-owned subsidiaries entering into agreements or transactions with the overseas parent, fellow subsidiaries or other related entities.

Director Disqualification Declarations

The company should obtain and maintain the prescribed declarations regarding director eligibility and disqualification as part of its annual corporate compliance process.

DIR-3 KYC by 30 September

A person who has been allotted a Director Identification Number up to 31 March of a financial year is generally required to complete the applicable DIR-3 KYC process on or before 30 September of the immediately following financial year.

The official MCA DIR-3 KYC Instruction Kit provides the current filing requirements.

Books of Account and Annual Financial Statements

Proper Books of Account Must Be Maintained

The Indian subsidiary must maintain proper accounting records supporting its assets, liabilities, income, expenses and business transactions. Records should also support statutory liabilities, inter-company balances and foreign currency transactions.

Financial Statements Must Be Prepared for Each Financial Year

The company should prepare its annual financial statements in accordance with the Companies Act and the applicable accounting standards. These generally include the balance sheet, statement of profit and loss, cash-flow statement where applicable, notes and other required disclosures.

Board’s Report and Corporate Disclosures

The annual financial statements are accompanied by the Board’s Report and other disclosures required by the Companies Act. Foreign-owned companies should ensure that related-party transactions, foreign exchange matters, loans, guarantees, investments and other relevant disclosures are properly captured.

Companies requiring ongoing finance support can review our Accounting and Bookkeeping Services in India.

Statutory Audit of an Indian Wholly Owned Subsidiary

Statutory Audit Is Generally Mandatory

Every Indian company is generally required to have its financial statements audited under the Companies Act, irrespective of the fact that it may have low turnover, limited operations or only one foreign corporate shareholder.

Auditor Appointment Must Be Properly Documented

The first auditor of a non-government company is generally appointed by the Board within 30 days of registration. Subsequent appointment is dealt with at the annual general meeting in accordance with Section 139 and the applicable rules. Where an auditor is appointed, the prescribed notice of appointment is filed with the Registrar within the applicable period.

Audit Records Should Support Inter-Company Transactions

Foreign-owned subsidiaries should maintain agreements, invoices, bank records, cost allocations, transfer pricing workings and evidence of services for transactions with the overseas parent and other group entities. Weak documentation can create issues during statutory audit, tax audit or assessment proceedings.

Annual General Meeting Requirements

First AGM Has a Separate Timeline

The first annual general meeting is generally required to be held within nine months from the close of the company’s first financial year. If the first AGM is held within this period, no AGM is required in the year of incorporation merely because the company was incorporated during that year.

Subsequent AGM Generally Within Six Months of Year-End

For subsequent financial years, the AGM is generally required within six months from the close of the financial year, and not more than 15 months should normally elapse between two AGMs. For a company following a 31 March year-end, this commonly results in a 30 September deadline, subject to applicable law and permitted extensions.

Financial Statements Are Placed Before the Members

The audited financial statements, auditor’s report and Board’s Report are placed before the members at the AGM along with other business required to be considered under the Companies Act and the company’s constitutional documents.

ROC Annual Filing Requirements for a WOS

AOC-4 for Financial Statements

Under Section 137 of the Companies Act, the financial statements and required attachments are generally filed with the Registrar within 30 days of the AGM in the prescribed form, commonly Form AOC-4 or the applicable variant.

MGT-7 for Annual Return

The annual return is generally filed with the Registrar within 60 days from the date of the AGM. The filing captures corporate particulars such as registered office, principal business activities, shareholding, directors and other prescribed information.

Since an Indian WOS is a subsidiary company and therefore does not fall within the statutory small-company definition, the normal annual return requirements should be reviewed rather than assuming small-company filing relaxations.

Other ROC Forms May Apply Based on Events or Thresholds

Forms relating to auditor appointment, changes in directors, registered office, allotment of shares, beneficial ownership and other corporate events may arise during the year. These should be tracked separately from the annual AOC-4 and annual return filings.

Official MCA filing information is available through the Ministry of Corporate Affairs.

FEMA and RBI Annual Compliance for a Foreign-Owned Subsidiary

FLA Return Is a Key Annual FEMA Compliance

An Indian company that has received foreign direct investment and has the relevant foreign liabilities or assets is generally required to submit the Annual Return on Foreign Liabilities and Assets to the Reserve Bank of India.

FLA Return Is Due by 15 July

The FLA return is generally required by 15 July every year with reference to the foreign liabilities and assets position as at the preceding 31 March.

Unaudited Figures Can Be Used if Audit Is Pending

RBI guidance provides that where audited accounts are not ready by the filing date, the entity should not simply wait for completion of audit. The return may be filed using provisional or unaudited figures and subsequently revised after the audited figures become available through the prescribed RBI process.

Foreign-owned companies can refer to the Reserve Bank of India and our detailed guide on FDI and FEMA Compliance in India for Foreign Companies.

Event-Based FEMA Compliance During the Year

FC-GPR After Issue of Equity Instruments

Where the Indian company issues equity instruments to a person resident outside India and the issue constitutes FDI, Form FC-GPR is generally required to be filed within 30 days from the date of issue of the equity instruments.

Share Transfers and Other Foreign Investment Events Need Separate Review

Transfers of shares involving a non-resident, additional capital infusions, rights issues, conversion of instruments, cross-border borrowings and other foreign investment events may trigger separate FEMA reporting or pricing requirements. These are not replaced by the annual FLA return.

The RBI’s foreign investment reporting framework can be reviewed through the official Foreign Investment Reporting Requirements.

Income Tax and Transfer Pricing Annual Compliance

Corporate Income-Tax Return Must Be Filed

An Indian company is generally required to file an annual income-tax return even if it has a loss or has not commenced substantial operations. The applicable due date depends on the tax framework and whether transfer pricing reporting is required.

Transfer Pricing Applies to International Transactions

Transactions between the Indian subsidiary and its foreign parent or other associated enterprises may be subject to Indian transfer pricing provisions. Common transactions include service income, management fees, software services, purchase or sale of goods, royalties, loans, guarantees and cost allocations.

Transfer Pricing Documentation Should Be Prepared Contemporaneously

Inter-company agreements, cost workings, allocation keys, invoices and benchmarking support should be maintained during the year rather than reconstructed only when the return or accountant’s report becomes due. Where prescribed, the applicable transfer pricing report must also be furnished within the statutory timeline.

For a detailed tax overview, see Taxation of Wholly Owned Subsidiary in India. Current income-tax filing services and information are also available through the Income Tax Department.

GST, TDS and Payroll Compliance

GST Returns and Annual GST Requirements Where Applicable

A GST-registered subsidiary must comply with the return, payment, reconciliation and invoicing requirements applicable to its registration and turnover. Annual GST return and reconciliation requirements should also be reviewed based on the statutory threshold and exemptions applicable for the relevant financial year.

TDS Returns Are Periodic, Not Merely Annual

The company may need to deduct and deposit tax on salaries, professional fees, contractor payments, rent, interest and other specified payments. Quarterly TDS returns and year-end reconciliations should form part of the compliance calendar.

Payroll and Employee-Related Compliance

Where employees are hired in India, the company should also track salary withholding and applicable labour, provident fund, employee insurance, professional tax and other state or central employment compliances based on eligibility and location.

GST-related filings can be managed through the official GST Portal.

Dematerialisation Compliance for a Private WOS

Rule 9B Is Particularly Relevant to Foreign-Owned Private Companies

Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules requires private companies other than small companies, subject to the applicable provisions and exemptions, to issue securities only in dematerialised form and facilitate dematerialisation of their securities after the applicable compliance date.

Because a subsidiary company is excluded from the small-company definition, this requirement should be specifically checked for an Indian WOS rather than assuming that private-company status alone provides an exemption.

New Issues and Transfers Require Demat Planning

Once Rule 9B applies, the company and its shareholders must consider the dematerialisation requirements before specified issues or transfers of securities. Foreign parents should coordinate the Indian depository and demat process well before any proposed capital increase or share transfer.

The applicable company-law rules can be reviewed through the MCA Companies Act and Rules.

Other Conditional Annual and Half-Yearly MCA Filings

DPT-3 by 30 June Where Applicable

A company other than a government company may be required to file Form DPT-3 in accordance with the Companies (Acceptance of Deposits) Rules. The annual return, where applicable, is generally due by 30 June with information as at 31 March.

The official MCA DPT-3 Instruction Kit should be referred to for the applicable reporting category.

MSME Form I Where Applicable

Specified companies having reportable outstanding dues to micro or small enterprise suppliers should examine the half-yearly MSME Form I requirement. The standard filing dates are 30 April for the October-March period and 31 October for the April-September period.

Threshold-Based Compliance Should Be Reviewed Every Year

As the Indian subsidiary grows, additional requirements may become applicable based on paid-up capital, turnover, borrowings, profitability or business activity. These can include internal audit, CSR, XBRL filing, annual-return certification and other company-law compliances. Applicability should therefore be reassessed annually rather than relying on the previous year’s checklist.

Annual Compliance Calendar for a Typical Indian WOS

Key Annual Due Dates at a Glance

The following is an indicative calendar for a typical company having a 31 March financial year-end. Actual due dates should always be checked for extensions, notifications and the company’s specific facts.

Compliance	Typical Due Date / Timeline
MSME Form I for October-March	30 April, where applicable
DPT-3	30 June, where applicable
FLA Return to RBI	15 July, where applicable
DIR-3 KYC	30 September for applicable DIN holders
Subsequent AGM for 31 March year-end	Generally by 30 September
AOC-4 / applicable financial statement form	Generally within 30 days of AGM
MSME Form I for April-September	31 October, where applicable
Corporate income-tax return	Generally 31 October; transfer-pricing cases commonly have a later prescribed due date
MGT-7 annual return	Generally within 60 days of AGM
GST annual return / reconciliation	As prescribed for the relevant year, where applicable

Monthly and Quarterly Compliance Must Run Alongside Annual Filings

The annual calendar should not cause the finance team to overlook monthly and quarterly GST, TDS, payroll, withholding tax and other periodic filings. For foreign-owned subsidiaries, a consolidated compliance tracker is usually more effective than maintaining separate calendars for each law.

Common Annual Compliance Mistakes by Foreign-Owned Subsidiaries

Assuming Low Turnover Means Minimal Compliance

A foreign-owned subsidiary remains an Indian company even where its turnover is low. Statutory audit, corporate records and applicable ROC filings do not disappear merely because operations are limited.

Waiting for Audit Before Filing the FLA Return

RBI specifically permits FLA filing using provisional or unaudited figures where audited accounts are not ready. Missing the 15 July deadline merely because audit is pending can therefore create an avoidable FEMA compliance issue.

Treating ROC, Tax and FEMA as Separate Data Sets

The same share capital, foreign investment, related-party balances and financial information may appear across financial statements, ROC filings, income-tax records and FEMA returns. These figures should be reconciled before filing to reduce inconsistencies and regulatory queries.

Frequently Asked Questions

Does every wholly owned subsidiary in India require a statutory audit?

Yes, an Indian company is generally subject to statutory audit under the Companies Act irrespective of whether it is wholly foreign owned or has limited turnover.

How many Board meetings must an Indian WOS hold each year?

A normal Indian WOS should generally plan for at least four Board meetings each year with no more than 120 days between two consecutive meetings. A subsidiary company should not assume the small-company relaxation applies to it.

When is the FLA return due for a foreign-owned subsidiary?

The Annual Return on Foreign Liabilities and Assets is generally due to RBI by 15 July every year where the company meets the applicable foreign investment criteria.

Can the FLA return be filed before the statutory audit is completed?

Yes. RBI permits filing based on provisional or unaudited figures where audited accounts are not ready. The filed return can subsequently be revised through the prescribed process after audited figures become available.

When are AOC-4 and MGT-7 normally filed?

The financial statements are generally filed within 30 days of the AGM, while the annual return is generally filed within 60 days of the AGM, subject to the applicable form and filing provisions.

Is transfer pricing compliance required every year?

Transfer pricing should be reviewed for every year in which the Indian subsidiary has applicable international transactions with associated enterprises. The documentation and accountant-reporting requirements depend on the nature and value of the transactions and the applicable tax provisions.

Does a WOS need dematerialised shares?

Rule 9B should be specifically reviewed for a private WOS because private companies other than small companies are covered by the dematerialisation framework, and subsidiary companies are excluded from the statutory definition of a small company. Applicability and the relevant compliance date should be checked for the company concerned.

Related Services

• Wholly Owned Subsidiary in India
• Cost of Setting Up a Wholly Owned Subsidiary in India
• Taxation of Wholly Owned Subsidiary in India
• Foreign Company Registration in India
• FDI and FEMA Compliance in India for Foreign Companies
• Accounting and Bookkeeping Services in India
• Income Tax Assessment and Litigation Services in India
• Setting Up Business in India
• India Market Entry Consulting

Prepared By: EzyBiz India Consulting LLP

Reviewed By:
Anil Agrawal, Chartered Accountant
Founder, EzyBiz India Consulting LLP
20+ Years of Experience in Tax, Regulatory and Business Advisory

Last Updated: 6 September 2026

Disclaimer:
This article is intended for general informational purposes only and does not constitute legal, tax, FEMA, RBI, GST, accounting or professional advice. Applicability of forms, due dates and regulatory requirements depends on the company’s financial year, capital structure, foreign investment, turnover, borrowings, transactions, registrations and other facts. Due dates may also be extended or modified by notifications, circulars or regulatory changes. Foreign-owned companies should verify the latest requirements applicable to their specific circumstances before filing any return or taking any compliance action.