Compliances to be done by a Foreign Subsidiary Company in India

A foreign-owned subsidiary incorporated in India is required to comply with various corporate, foreign exchange, tax and other regulatory requirements throughout its business lifecycle.

These compliances may be annual, periodic or event-based and can arise under the Companies Act, FEMA and RBI regulations, Income-tax law, transfer pricing provisions, GST and other applicable laws.

Compliance requirements may also vary depending on factors such as the nature of business, foreign shareholding, transactions with overseas group entities, number of employees and the activities undertaken by the Indian subsidiary.

This guide provides an overview of the key foreign subsidiary compliance requirements in India, including corporate filings, FEMA and FDI reporting, income tax, transfer pricing, GST, TDS, payroll and other ongoing regulatory obligations.

What is a Foreign-Owned Subsidiary in India?

A foreign-owned subsidiary is an Indian company in which a foreign parent company or foreign shareholders hold a controlling ownership interest. Where the foreign investor holds 100% of the permitted equity share capital, the Indian entity is generally referred to as a wholly owned subsidiary.

Although the Indian subsidiary may be owned or controlled by an overseas parent, it remains an Indian incorporated company and is required to comply with applicable Indian corporate, foreign exchange, tax and other regulatory requirements.

The applicable compliance framework therefore differs from that of a Branch Office, Liaison Office or Project Office of a foreign company

Key Compliances for a Foreign Subsidiary Company in India

A foreign-owned subsidiary incorporated in India is generally subject to the same corporate and tax compliance framework applicable to other Indian companies, together with additional foreign exchange and FDI reporting requirements arising from foreign ownership and cross-border transactions.

The key compliance areas are discussed below.

1. Companies Act and ROC Compliances

A foreign-owned subsidiary incorporated as an Indian company is required to comply with the Companies Act, 2013 and applicable rules.

Key corporate compliances generally include:

• maintenance of statutory registers and corporate records;
• holding Board Meetings and shareholder meetings as applicable;
• preparation and audit of annual financial statements;
• filing of annual financial statements with the Registrar of Companies;
• filing of annual return with the ROC;
• disclosure of directors’ interests and related-party transactions;
• appointment or reappointment of directors and auditors, wherever applicable;
• maintenance of minutes of Board and shareholder meetings; and
• event-based ROC filings for changes in directors, registered office, share capital and other corporate matters.

The specific forms and filing requirements depend on the nature and circumstances of the company.

2. FEMA and Foreign Investment Compliances

Since the Indian subsidiary has foreign investment, it must also comply with the applicable provisions of FEMA and India’s foreign investment framework.

Depending upon the transaction, relevant compliances may include:

• reporting the issue of equity instruments to non-resident investors;
• reporting transfer of shares between resident and non-resident shareholders;
• annual reporting of foreign liabilities and assets;
• compliance with applicable pricing and valuation requirements;
• reporting of downstream investment, where applicable; and
• compliance with sectoral caps, entry routes and other conditions applicable to foreign investment.

For example, RBI’s current foreign-investment reporting framework requires FC-GPR for qualifying issues of equity instruments to persons resident outside India and FC-TRS for specified transfers of equity instruments. It also provides for the annual FLA Return for Indian companies with qualifying foreign investment.

3. Annual FLA Return

Where applicable, an Indian company having foreign direct investment is required to submit the Annual Return on Foreign Liabilities and Assets (FLA) to the Reserve Bank of India.

The return captures information relating to foreign liabilities, foreign assets, foreign investment and other relevant financial information of the Indian entity.

RBI’s current guidance states that FLA reporting is mandatory for Indian companies that have received FDI, subject to the applicable reporting framework.

4. FC-GPR – Issue of Shares to Foreign Investor

Where an Indian subsidiary issues equity instruments to a person resident outside India and the issue constitutes foreign direct investment, the transaction is required to be reported in Form FC-GPR, subject to the applicable FEMA rules and reporting requirements.

The reporting should also be supported by appropriate corporate approvals, valuation and other documentation, wherever applicable. RBI’s reporting regulations currently provide for FC-GPR reporting within the prescribed period following issue of the equity instruments.

5. FC-TRS – Transfer of Shares

Where shares or other eligible equity instruments are transferred between a resident and a non-resident, or in other transactions covered by the foreign-investment reporting framework, Form FC-TRS may be required.

The applicability of FC-TRS depends on the nature of the transfer, parties involved and the manner in which the shares are held.

6. Income Tax Compliances

A foreign-owned subsidiary incorporated in India is treated as an Indian company for income-tax purposes and is required to comply with the applicable provisions of the Income-tax Act.

Key income-tax compliances generally include:

• maintenance of appropriate books of account and supporting records;
• computation and payment of advance tax, where applicable;
• filing of the annual income-tax return;
• tax audit, where applicable;
• withholding and deposit of TDS on specified payments;
• filing of periodic TDS returns; and
• compliance relating to transactions with associated enterprises.

Where the Indian subsidiary makes payments to its foreign parent or other overseas group entities, the applicable withholding-tax and treaty provisions should also be examined.

7. Transfer Pricing Compliance

Transfer pricing is particularly important for foreign subsidiaries because transactions with the foreign parent or overseas group companies may constitute international transactions.

Typical transactions may include:

• provision or receipt of management or support services;
• software development or IT services;
• purchase or sale of goods;
• royalty or licence fees;
• reimbursement or allocation of group expenses;
• inter-company loans or guarantees; and
• use or transfer of intellectual property.

Where applicable, the Indian subsidiary is required to maintain prescribed transfer-pricing documentation and obtain an accountant’s report in Form 3CEB under section 92E. The Income Tax Department confirms that Form 3CEB applies to persons entering into international transactions and is filed electronically.

8. GST Compliances

Where the Indian subsidiary is registered under GST, it must comply with the applicable GST requirements based on the nature of its business and transactions.

These may include:

• issuance of GST-compliant tax invoices;
• filing of applicable GST returns;
• payment of GST within prescribed timelines;
• reconciliation of input tax credit;
• maintenance of GST records;
• compliance relating to reverse charge, wherever applicable; and
• GST treatment of inter-company and cross-border transactions.

For a foreign-owned subsidiary providing services to its overseas parent, the GST treatment of such services should also be examined from the perspective of export of services and applicable place-of-supply provisions.

9. TDS and Withholding Tax Compliances

The Indian subsidiary may be required to deduct tax at source on specified payments such as:

• salaries;
• professional and technical fees;
• rent;
• contractor payments;
• interest;
• commission; and
• certain payments to non-residents.

The applicable withholding requirement should be evaluated separately for payments made to overseas parent companies and other foreign group entities, including the possible application of Double Taxation Avoidance Agreements.

10. Payroll and Employment Compliances

A foreign subsidiary employing personnel in India should establish an appropriate payroll and employment compliance framework.

Depending upon applicability, this may include:

• monthly payroll processing;
• deduction and deposit of salary TDS;
• Provident Fund compliance;
• Employee State Insurance compliance;
• professional tax, wherever applicable;
• labour welfare and other state-specific requirements; and
• maintenance of employment and payroll records.

EPFO provides employer registration, ECR filing and online contribution-payment facilities for establishments covered under the provident-fund framework

Annual Compliance Checklist for Foreign Subsidiaries in India

The exact compliance requirements may vary depending on the size of the company, nature of business, foreign shareholding, transactions with associated enterprises, employee strength and sector-specific regulations. Therefore, a company-specific compliance calendar should be prepared and reviewed periodically.

Event-Based Compliances for Foreign Subsidiaries

In addition to regular monthly, quarterly and annual compliances, a foreign-owned subsidiary may also be required to complete certain filings when specific corporate or cross-border events take place.

Common event-based compliances may arise in case of:

• issue of shares to a foreign investor;
• transfer of shares between resident and non-resident shareholders;
• change in directors;
• increase or alteration of share capital;
• change in registered office;
• receipt of additional foreign investment;
• inter-company loans or funding arrangements;
• change in business activities; and
• restructuring of the ownership or management of the Indian subsidiary.

Such transactions should ideally be reviewed before implementation so that the applicable Companies Act, FEMA, valuation, tax and reporting requirements can be identified in advance.

Compliance Checklist for CFOs and Foreign Parent Companies

For effective oversight of an Indian subsidiary, the foreign parent and local finance team should periodically review the following:

• whether all ROC annual and event-based filings have been completed;
• whether foreign investment reporting is up to date;
• whether the FLA Return has been filed, wherever applicable;
• whether related-party and cross-border transactions have been reviewed from a transfer pricing perspective;
• whether Form 3CEB and other tax reporting requirements are applicable;
• whether GST, TDS and payroll compliances are being completed on time;
• whether inter-company agreements are current and properly documented;
• whether statutory registers, Board minutes and corporate records are maintained;
• whether foreign remittances and repatriations have been reviewed from FEMA and tax perspectives; and
• whether any proposed restructuring, funding or share transfer requires prior regulatory review.

Frequently Asked Questions- FAQs

1. What are the main compliances for a foreign subsidiary in India?
A foreign-owned subsidiary is generally required to comply with the Companies Act, FEMA and foreign investment regulations, Income-tax law, transfer pricing provisions, GST, TDS, payroll and other applicable laws. The exact requirements depend on the company’s activities and circumstances.

2. Is FLA Return mandatory for every foreign subsidiary?
The applicability of the FLA Return depends on the company’s foreign investment and foreign asset/liability position under the applicable RBI reporting framework. Its applicability should therefore be checked each year.

3. When is Form FC-GPR required?
Form FC-GPR is generally relevant where an Indian company issues eligible equity instruments to a person resident outside India, subject to the applicable FEMA reporting provisions.

4. Is transfer pricing applicable to a foreign subsidiary in India?
Transfer pricing provisions may apply where the Indian subsidiary enters into international transactions with its foreign parent or other associated enterprises, such as service transactions, purchase or sale of goods, royalties, loans or other inter-company dealings.

5. Are foreign subsidiaries required to comply with GST and TDS provisions?
Yes, where the relevant provisions apply. A foreign-owned Indian subsidiary is subject to applicable GST, TDS and other Indian tax requirements in the same manner as other Indian companies, subject to the nature of its transactions.

6. Why should a foreign parent maintain a separate compliance calendar for its Indian subsidiary?
A separate compliance calendar helps track annual, periodic and event-based obligations across ROC, FEMA, tax, GST, payroll and other regulatory areas and reduces the risk of missed filings or delays.

Foreign subsidiary compliance is an important part of a broader India market entry strategy, covering entity setup, FEMA/FDI reporting, tax, accounting and ongoing regulatory management.

Why Choose EzyBiz India for Foreign Subsidiary Compliance?

EzyBiz India Consulting LLP assists foreign-owned companies with ongoing corporate, FEMA, tax and regulatory compliances in India.

Our support includes:

• ROC and Companies Act compliance;
• FEMA and foreign investment reporting;
• FLA, FC-GPR and FC-TRS support, where applicable;
• income-tax and TDS compliance;
• transfer pricing compliance and coordination;
• GST compliance;
• accounting and payroll support; and
• ongoing advisory for cross-border and event-based transactions.

Our multidisciplinary team supports foreign companies in managing their Indian subsidiaries through a coordinated compliance framework covering corporate, tax and foreign exchange requirements.

Related Services

• Wholly Owned Subsidiary in India 
• Company Registration Services in India 
• India Market Entry Consulting 
• Transfer Pricing Services 

Prepared By:
EzyBiz India Consulting LLP – India Market Entry, FEMA & Cross-Border Advisory Team

Last Updated:
August 2026

Disclaimer:
This article is intended for general informational purposes only and should not be construed as legal, tax, regulatory or investment advice. Compliance requirements may vary depending on the nature of business, foreign shareholding, sector, transactions, employee strength and specific facts of the Indian subsidiary. Professional advice should be obtained to determine the compliances applicable in a particular case.