Foreign Subsidiary in India — Post-Registration Compliance Guide
Incorporating a foreign subsidiary in India is only the starting point — what follows is an ongoing calendar of filings with the Registrar of Companies (ROC), the GST Network (GSTN), the Income Tax Department, and the Reserve Bank of India (RBI) under FEMA. Missing any one of these can trigger late fees that compound daily, additional fees on ROC forms, or in serious cases a strike-off of the company or restrictions on repatriating funds abroad. This guide walks through the recurring obligations a wholly owned subsidiary (WOS) or joint venture typically faces in its first year and every year after — from the FC-GPR filing on the RBI's FIRMS portal after share allotment, to board meetings, statutory audits, GST returns, TDS compliance, and the annual FLA return. Because thresholds, forms, and penalty structures are periodically revised by the MCA, CBIC, and RBI, we flag anywhere a figure should be reconfirmed against the current notification before you rely on it. PNPC Global manages this calendar end-to-end for our subsidiary clients so your India entity stays in good standing while your parent company focuses on the business itself.
Before you start
- Valid Certificate of Incorporation issued by the Registrar of Companies (ROC)
- PAN and TAN allotted to the new Indian entity
- GST registration certificate, if the entity has crossed the applicable turnover threshold or opted in voluntarily
- Current account opened and operational with a scheduled commercial bank in India
- At least one director who is a resident of India as required under Section 149(3) of the Companies Act, 2013
- Shares allotted to the foreign parent/investor and reported to RBI via Form FC-GPR on the FIRMS portal
- Statutory auditor appointed by the Board within the prescribed timeline post-incorporation
- Registered office address confirmed and evidenced (rent agreement/NOC or ownership proof) for MCA records
Step-by-step
Appoint the first statutory auditor
The Board of Directors must appoint the company's first statutory auditor within 30 days of incorporation; if the Board fails to act, the members must appoint one at an extraordinary general meeting within 90 days. The auditor holds office until the conclusion of the first AGM.
While intimation of the first auditor's appointment via Form ADT-1 is not strictly mandated by the Act for the very first auditor, most practitioners file it as good governance practice — confirm the current MCA position with your company secretary before skipping it.
Report the foreign share allotment to RBI (Form FC-GPR)
Within 30 days of allotting equity shares (or compulsorily convertible instruments) to the foreign parent or investor, the company must file Form FC-GPR on the RBI's FIRMS portal, supported by a valuation certificate from a SEBI-registered merchant banker or a chartered accountant (as applicable) and a share certificate copy.
Late filing does not block the allotment but exposes the company to compounding proceedings under FEMA — the compounding fee schedule is revised periodically, so confirm the current rate before assuming a specific amount.
Hold Board Meetings through the year
A minimum of four Board Meetings must be held each calendar year, with the gap between two consecutive meetings not exceeding 120 days. Minutes must be recorded and maintained in the statutory minutes register within 30 days of each meeting.
Maintain statutory registers and books of account
Keep the register of members, register of directors and KMP, register of charges (if any borrowing is secured), and other statutory registers required under the Companies Act, 2013 updated at all times. Books of account must be maintained on an accrual basis and kept at the registered office (or another approved location with ROC intimation).
File GST returns on the applicable cycle
Depending on aggregate turnover, the entity will either file GSTR-1 and GSTR-3B monthly, or opt into the Quarterly Return Monthly Payment (QRMP) scheme with quarterly GSTR-1/GSTR-3B and monthly tax payment via PMT-06. Reconcile outward supplies, inward ITC claims (auto-populated in GSTR-2B), and e-invoicing data (where applicable) before each filing.
An annual return in Form GSTR-9 (and GSTR-9C reconciliation statement where turnover exceeds the audit threshold) is also due after the financial year closes — check the current due date, as CBIC has extended it in several past years.
Deduct and deposit TDS, and file quarterly TDS returns
Tax must be deducted at source on salaries, professional fees, rent, and payments to vendors as applicable, deposited with the government by the 7th of the following month (with a separate timeline for March), and reported via quarterly TDS returns (Form 24Q for salaries, Form 26Q for other payments, Form 27Q for payments to non-residents). Late deposit attracts interest, and late filing of the return attracts a late fee that was levied under Section 234E of the Income-tax Act, 1961 — renumbered Section 427 under the Income-tax Act, 2025, which governs tax years from 1 April 2026 onward. Confirm which Act and section applies to the relevant tax year with your advisor.
Hold the Annual General Meeting (AGM)
The first AGM must be held within nine months of the close of the first financial year; every subsequent AGM must be held within six months of financial year end, and the gap between two AGMs should not exceed 15 months. The AGM approves audited financial statements, considers dividends, and appoints/ratifies the statutory auditor.
File financial statements (Form AOC-4) with the ROC
Audited financial statements, the Board's report, and the auditor's report must be filed in Form AOC-4 (or AOC-4 XBRL, where XBRL filing applies) within 30 days of the AGM. Additional fees apply per day of delay on a slab basis — confirm the current MCA fee slab, as it has been revised in the past.
File the Annual Return (Form MGT-7/MGT-7A) with the ROC
The company's annual return, covering shareholding pattern, director details, and key corporate changes during the year, must be filed within 60 days of the AGM. Small companies may be eligible to use the abridged Form MGT-7A — confirm eligibility based on the entity's paid-up capital and turnover for the year.
File the Income Tax Return and Tax Audit / Transfer Pricing report
A subsidiary of a foreign company generally files ITR-6. Where turnover exceeds the tax-audit threshold (previously governed by Section 44AB of the Income-tax Act, 1961, renumbered Section 63 under the Income-tax Act, 2025), a tax audit report is also required — historically Form 3CA/3CD, with Form 26 proposed to take over that role from Tax Year 2026-27 under the new Act. Where the company has cross-border transactions with its foreign parent or group entities, an accountant's report on international transactions is required to support transfer-pricing compliance — this was Form 3CEB and is being replaced by Form 48 under the Income-tax Act, 2025 from Tax Year 2026-27 onward per draft CBDT rules.
Because the Income-tax Act, 2025 and its forms/section numbers are still transitioning in, confirm with your advisor which Act, section numbering, and form version applies to the relevant tax year before filing, and confirm the exact due date, as CBDT extensions are common.
File the Annual Return on Foreign Liabilities and Assets (FLA Return)
Any Indian entity that has received FDI or made overseas investment in the previous financial year (including the year of receipt) must file the FLA Return directly with the RBI, typically by mid-July each year based on unaudited or audited provisional figures, with a revised return submitted once audited financials are finalized. This is a distinct filing from FC-GPR and is often missed by first-year subsidiaries — confirm the current due date each cycle.
Review dividend repatriation and withholding tax position
Dividends declared to the foreign parent can generally be freely repatriated once GST, TDS, and income-tax dues are cleared, since India taxes dividends in the hands of the recipient shareholder rather than levying dividend distribution tax on the company. Withholding tax at the time of remittance is typically governed by the domestic rate or the applicable Double Taxation Avoidance Agreement (DTAA) rate, whichever is more beneficial, subject to filing Form 15CA/15CB with the authorized dealer bank — confirm the applicable DTAA rate with your tax advisor before remitting.
Common mistakes to avoid
- Missing the 30-day window to file Form FC-GPR after share allotment, which can trigger FEMA compounding proceedings
- Confusing the AOC-4 (financial statements) and MGT-7/MGT-7A (annual return) deadlines, which run from the AGM date, not the financial year end
- Not filing the FLA Return with the RBI separately, assuming FC-GPR or ROC annual filings already cover it
- Treating GST return filing as optional below the registration threshold once voluntarily registered
- Letting the gap between two Board Meetings exceed 120 days, or between two AGMs exceed 15 months
- Assuming no resident director is needed because the company is wholly foreign-owned
- Remitting dividends or royalty payments without filing Form 15CA/15CB or confirming the correct DTAA withholding rate
- Skipping the transfer-pricing accountant's report (Form 3CEB, being replaced by Form 48 under the Income-tax Act, 2025) on the assumption that only large multinationals need it
Frequently asked questions
What happens if the company misses the AOC-4 or MGT-7 filing deadline?
The MCA charges additional filing fees on a per-day slab basis once the deadline passes, and the ROC's system will not process other filings against the company until the pending forms are regularized. Persistent, prolonged non-compliance can also trigger a show-cause notice or, in extreme cases, action against the directors — confirm the current additional-fee slab with your company secretary, as it has been revised over time.
Can the subsidiary repatriate profits to the foreign parent without further RBI approval?
Dividend repatriation is generally permitted under the automatic route once the company has cleared its GST and income-tax obligations, filed Form 15CA/15CB with the remitting bank, and applied the correct withholding tax rate. It does not require a separate RBI approval in the way share allotment reporting (FC-GPR) does, but the authorized dealer bank will verify the compliance documentation before releasing funds.
Is a resident director mandatory for a wholly foreign-owned subsidiary?
Yes. Section 149(3) of the Companies Act, 2013 requires every company, regardless of shareholding pattern, to have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year.
What is the difference between the FC-GPR filing and the FLA Return?
FC-GPR is a one-time report filed within 30 days of each share allotment to a foreign investor, confirming the shares were issued in compliance with FEMA. The FLA Return is a separate annual filing made directly with the RBI by any entity holding foreign investment on its books, regardless of whether new shares were allotted that year.
How often must the subsidiary file GST returns?
Most entities file GSTR-1 and GSTR-3B monthly, though eligible smaller taxpayers can opt into the QRMP scheme for quarterly filing with monthly tax payment. An annual return (GSTR-9, plus GSTR-9C above the audit threshold) is also due after the financial year closes.
Does the subsidiary need a tax audit every year?
A tax audit is required once turnover crosses the prescribed threshold for the relevant financial year — this requirement sat under Section 44AB of the Income-tax Act, 1961, and has been renumbered Section 63 under the Income-tax Act, 2025, which governs tax years from 1 April 2026 onward. Because both the threshold and the section/form numbering are in transition, confirm the current limit and applicable Act with your tax advisor rather than assuming it matches a prior year.
What is Form 3CEB and when does it apply?
Form 3CEB was the accountant's report on international transactions and specified domestic transactions between the Indian subsidiary and its associated enterprises (typically the foreign parent or group companies), filed under the Income-tax Act, 1961. It is required wherever such related-party cross-border transactions exist, supporting the company's transfer-pricing documentation, and is filed alongside the income tax return. Under the Income-tax Act, 2025, draft CBDT rules propose replacing it with Form 48 from Tax Year 2026-27 onward — confirm the current form with your tax advisor.
When is the first AGM due, and how does it differ from later years?
The first AGM must be held within nine months of the close of the company's first financial year. Every subsequent AGM must be held within six months of financial year end, with no more than 15 months between two consecutive AGMs.
What records must be kept to support FEMA compliance during an RBI audit?
Maintain documentation for every foreign remittance, capital inflow, share allotment, and related-party payment — including FC-GPR acknowledgements, FIRC/BRC certificates from the bank, board resolutions, and valuation reports. As a general practice, financial and statutory records should be retained for several years; confirm the specific retention period applicable to your filings with your compliance advisor.
Can the company change its GST return frequency mid-year?
Eligibility for the QRMP scheme is assessed based on the previous financial year's turnover and can generally be opted into or out of only at specified windows each quarter, not at any point mid-cycle. Check the current GSTN opt-in window before assuming a change can be made immediately.
Does PNPC Global handle both the ROC/tax filings and the FEMA/RBI filings?
Yes — our compliance team coordinates ROC filings (AOC-4, MGT-7, ADT-1), GST and TDS returns, income tax and transfer-pricing filings, and RBI/FEMA filings (FC-GPR, FLA Return) on a single compliance calendar so nothing falls through the gap between advisors.
What penalty applies for a delayed FC-GPR filing?
A delayed FC-GPR filing is technically a contravention of FEMA reporting requirements and can be regularized through the RBI's compounding process, which involves a fee calculated on the transaction value and the delay period. Because the compounding fee formula has been revised in the past, get a current calculation from your FEMA advisor rather than relying on an old rate.
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