Service Details

INDIAN SUBSIDIARY

A Foreign National (other than a citizen of Pakistan or Bangladesh) or an entity incorporated outside India (other than entity incorporated in Pakistan or Bangladesh) can invest and own a Company in India by acquiring shares of the company, subject to the FDI Policy of India. In addition, a minimum of one Indian Director who is a Indian Director and Indian Resident is required for incorporation of an Indian Company along with an address in India. Investment and acquisition of equity shares of a Company can be broadly divided into two categories: investment under automatic route and investment under Government approval route. The automatic route requires no requirement of any prior regulatory approval for investment in equity shares of an Indian business and only post facto filing/intimation with the Reserve Bank of India within 30 days of receipt of investment money in India and filing of prescribed documents and particulars of allotment of shares within 30 days of allotment of shares to foreign investors. Foreign Direct Investment of upto 100% is allowed under the automatic route in most activities/sectors in India. Investment in activities / industries where automatic route is not available can be made with the approval of the Government under the Government Approved FDI method. Lucem Legal can be your legal and professional partner in India to get your New Company / Subsidiary in India started quickly and cost-effectively.

Reasons for Indian Subsidiary

1. Separate Legal Entity

A company is a legal entity and a juristic person established under the Act. Therefore a company form of organization has wide legal capacity and can own property and also incur debts. The members (Shareholders/Directors) of a company have no liability to the creditors of a company for such debts.

2. Easy Transferability

Shares of a company limited by shares are transferable by a shareholder to any other person. Filing and signing a share transfer form and handing over the buyer of the shares along with share certificate can easily transfer shares.

3. Uninterrupted Existence

A company has 'perpetual succession', that is continued or uninterrupted existence until it is legally dissolved. A company, being a separate legal person, is unaffected by the death or other departure of any member but continues to be in existence irrespective of the changes in membership.

4. Owning Property

A company being a juristic person, can acquire, own, enjoy and alienate property in its own name. No shareholder can make any claim upon the property of the company so long as the company is a going concern.

5. Foreign Direct Investment

100% Foreign Direct Investment (FDI) is allowed in many of the sectors through Company type business entity without any prior Government approval. FDI is not allowed in Proprietorship or Partnership, LLP requires prior Government approval.

Features of Wholly Owned Subsidiary Company in India

For repatriation dividend no requirement of prior approval.

Equity, Debt (Foreign and Local) and Internal accruals are the available funding mechanisms.

Indian Transfer pricing regulations apply on Indian Subsidiary Company.

For all other applicable laws and purpose of income tax, it is treated as an Indian company.

In comparison to foreign company it is taxed at lower rate of 30% whereas foreign company is taxed at 40%

It is subject to 16.995% dividend distribution tax (DDT)

Wholly Owned Indian Subsidiary Company Registration Process in India

1. Digital Signature Certificate (DSC)

All Proposed directors/promoters of the company should have a digital signature and digital signature will be used to file the incorporation form, ROC compliance forms, and Income Tax returns. There is no need of a physical signature to register a company.

2. Director Identification Number (DIN)

As soon as Digital signature is approved, the next step is to apply for DIN (Director Identification Number) by all the proposed directors in the company. DIN application will be certified by the professional; thereafter you will get an approval email from the Registrar of companies that now you are eligible to become director in a company. It takes one working day to approve DIN.

3. Company Name approval

For name availability, we have to make sure that there is no trademark on the same name and no company is already registered on the proposed name. Thereafter we will file a Name approval application to ROC on your behalf.

4. Final Incorporation and CIN

After Name approval from the Registrar of Companies, we will file a final incorporation form with all supporting documents like registered address proof, Declaration from all the directors. We will certify all the required documents of the proposed company by the Practicing Professional.

5. PAN

Then we will file PAN application which will take around one working day.

6. Open your Bank Account and Start business

We will assist you in bank account opening and start business.

7. RBI Compliances for FDI in India

A newly incorporated wholly owned subsidiary company in India has to comply with the RBI compliances by filing necessary forms. Compliances can be done simultaneously with the business.

8. Necessary Registrations

Wholly Owned Subsidiary Company can apply for other mandatory registrations such as GST registration, in case of import export business then it is required to apply for IEC registration in India. In case there are employees more than 10 or 20 then they would have to apply for ESI or PF registration.

Documents Required for Wholly Owned Indian Subsidiary Company Registration

From All Directors and Shareholders

1. •  A copy of Passport of foreign directors (duly notarized by the Indian embassy).


2. •  Scanned copy of incorporation certificate issued by the respective foreign government (LLC/ INC) (duly notarized by the Indian embassy).


3. •  A Resolution from LLC / INC for opening a subsidiary company in India. (Duly notarized by the Indian embassy).


4. •  Scanned copy of Voter's ID/Passport/Driver's License & PAN of Indian director.


5. •  Passport-sized photograph of all directors and shareholder. Proposed Registered Office (Residential or commercial)

For Proposed Registered Office (Residential or commercial)

1. •  Any Utility bills


2. •  Scan copy of Rent agreement with NOC from owner

Income Tax Norms for Wholly Owned Subsidiary Company in India

Every wholly owned subsidiary company registered in India is a tax resident and they would have to pay tax in India on its global income no matter whether the tax have been paid of its parent company in the home country on its profits. If the Indian Subsidiary company is an `associated enterprise’ as per section 92A of the Income Tax Act than the provisions concerning arm length pricing on its international transactions will be applicable.

To facilitate globalization of economic activities India is reforming its tax policies. In India for foreign companies, corporate tax rate is 40% and for domestic companies and LLP tax rate is 30%. On account of various deductions and exemptions available under the tax laws, net tax rate is lower. Special Economic Zones set up to make industry globally competitive, tax holidays are available there. Special tax treatment/holidays are enjoyed by Infrastructure Sector Projects. As there is an electronic filing of documents, a user friendly tax administration has been introduced by the authority.

Indian Subsidiary Company Annual Compliances

Indian Subsidiary Companies are required to comply with Income Tax Act, Companies Act, transfer pricing guidelines and FEMA guidelines. From time to time, they had to file income tax return with the Income Tax Department, annual return with the Registrar of Companies and other mandatory filings with the Reserve Bank of India or Securities & Exchange Board of India (SEBI). They would also have to comply with other regulations such as TDS regulations, GST regulations and ESI regulations etc. The requirement is also based on the type of industry, number of employees and turnover.