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What is an Indian Subsidiary?
An Indian subsidiary is a company incorporated in India that is partially or wholly owned by a foreign parent company.
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Can a foreign company fully own an Indian subsidiary?
Yes. A foreign company can own 100% of the shares, making it a wholly-owned subsidiary, subject to sectoral FDI regulations.
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Under which law are Indian subsidiaries governed?
Indian subsidiaries operate under the Companies Act, 2013, and must comply with various Indian tax and regulatory laws.
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What are the types of Indian subsidiaries?
The main types are Wholly-Owned Subsidiary (WOS), Partly-Owned Subsidiary, and Joint Venture (JV).
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Is it mandatory to register an Indian subsidiary as a Private Limited Company?
Mostly yes. Private Limited Company is the preferred structure due to flexibility, credibility, and ease of doing business.
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What compliances are required under Company Law for Indian subsidiaries?
They must conduct board meetings, AGMs, maintain statutory records, and file annual returns (MGT-7) and financial statements (AOC-4) with the RoC.
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Do Indian subsidiaries need to file Income Tax Returns?
Yes. They must file annual Income Tax Returns regardless of profit or loss. Tax audits may apply if turnover exceeds prescribed limits.
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Are there transfer pricing regulations for Indian subsidiaries?
Yes. If there are financial transactions with related foreign parties, transfer pricing rules apply, requiring detailed documentation and reports.
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Is GST registration mandatory for Indian subsidiaries?
Yes, if their turnover exceeds the GST threshold or they conduct interstate business, they must register and file regular GST returns.
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What FEMA compliances apply to Indian subsidiaries?
They must report foreign investments to RBI through FC-GPR and FLA filings under FEMA regulations.
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Are statutory audits required for Indian subsidiaries?
Yes. All Indian subsidiaries must undergo an annual statutory audit by a Chartered Accountant.
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What licenses might an Indian subsidiary require?
Depending on business type, they may need GST registration, Import Export Code (IEC), Shops & Establishment License, Professional Tax, etc.
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What are the benefits of setting up an Indian subsidiary?
Benefits include full control, limited liability, access to India’s large market, favorable FDI policies, tax incentives, and separate legal identity.
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How can a foreign company register an Indian subsidiary?
By following steps like obtaining DSC, DIN, reserving name, filing incorporation forms (SPICe+), and obtaining PAN, TAN, and necessary licenses.
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What is the role of the Memorandum of Association (MOA) and Articles of Association (AOA)?
MOA and AOA define the company’s objectives, scope of business, and internal governance rules.
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What is the Certificate of Incorporation (COI)?
The COI is the official document issued by the Registrar of Companies recognizing the company as a legal entity.
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Do directors of Indian subsidiaries need DIN?
Yes. Every director must obtain a Director Identification Number (DIN) to serve on the board.
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What documents are required for the incorporation of an Indian subsidiary?
Key documents include ID/address proofs of directors and shareholders, MOA, AOA, DSC, DIN, COI, NOC, and property ownership documents.
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Can an Indian subsidiary repatriate profits to its foreign parent?
Yes, but it must comply with FEMA guidelines, applicable taxes, and RBI regulations for profit repatriation.
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Are there sector restrictions on foreign ownership in Indian subsidiaries?
Yes. While most sectors allow 100% FDI, some sectors have caps or require government approval.