Home / Foreign Subsidiary Company Compliance

Updated on 22 Oct 2020  9.00 AM IST | 4 min read

An Overview to Foreign Subsidiary Company Compliance

As per income tax act, companies act, transfer pricing guidelines & FEMA guidelines, every foreign subsidiary company needs to maintain compliance like a proprietorship,partnership firm, LLP or a company. Foreign subsidiary company compliance mainly includes filing of income tax return to the income tax department, filing of annual returns to the ministry of corporate affairs (MCA) and other filings to authorities like reserve bank of India (RBI) or Securities exchange board of India (SEBI).

Like other companies, foreign subsidiary company also needs to comply with TDS regulations, GST regulations, ESI regulations etc. The requirement of compliance varies depending upon the industry, state of incorporation, number of employees & sales turnover. It falls in the category of annual, public and event based compliances.


What Is Included In Our Package?

Eligibility Consultation

Document Preparation

Application Drafting

Government Fees

Mandatory Compliances For a Foreign Subsidiary Company In India

Mandatory compliances for foreign subsidiary company in India are as follows -

  • Filing Form FC-1 – Form FC-1 is filed by the subsidiary of a foreign company within 30 days after establishment and selection of business place in India. The form should be certified or authorized by RBI or other regulatory bodies in India.
  • Financial Statements – As per provision & regulations given in the schedule 11 of the Indian companies’ act 2013, every foreign subsidiary company active in India must prepare financial statements of its Indian business operations. These financial statements should be filed with registrar of companies (ROC) within 6 months from the end of the financial year of the foreign company. These financial statements must include the following information –
    • Statement of repatriation of earnings & profits
    • Statement connected with related party transactions
    • Statement of funds transfer involving concerned Indian subsidiary and any other companies or related parties of the holding foreign company.
  • Foreign subsidiary accounts – Every foreign subsidiary company should examine & verify their books of accounts by a practicing Chartered accountant of India.
  • Filing Form FC-3 – Form FC-3 is filed by foreign subsidiary company with registrar of companies (ROC) to provide details about the place of business & the financial records of the company.
  • Annual return – Every foreign subsidiary company has to mandatorily file annual returns in form FC-4 within 60 days from the end of its financial year. In addition to it, all documents distributed by subsidiary in India also need to be submitted to the ROC.
  • Validation/Authentication of the translated documents – All company related documents by subsidiary to ROC must be in English and all translated documents must be validated by a lawyer practicing in India.
  • Compliances under GSTN & income tax department.
  • Other annual & periodic compliances with ROC and other regulatory authorities.

Penalty For Non-Compliance foreign subsidiary company

In case of Non-compliance, foreign subsidiary company will be punishable with fine of not less than Rs.1 Lakh which may be extended to Rs.3 Lakh. In case of continuing offence, there is an additional fine of Rs.50000 every day. Every officer will also be punished with imprisonment for a term which may be extended to 6 months and a fine of Rs.25000 which may be extended to Rs.5 Lakh rupees or both.


Foreign Subsidiary Company Compliance FAQ’S

Foreign subsidiary company compliance mainly includes filing of income tax return to the income tax department, filing of annual returns to the ministry of corporate affairs and other filings to authorities like reserve bank of India (RBI) or Securities exchange board of India (SEBI).
Form FC-1 is filed by the subsidiary of a foreign company within 30 days after establishment and selection of business place in India.
Form FC-3 is filed by foreign subsidiary company with registrar of companies to provide details about the place of business & the financial records of the company.
In case of Non-compliance by foreign subsidiary company, there is a penalty of Rs.1 Lakh which may be extended to Rs.3 Lakh whereas in case of continuing offence, there is an additional fine of Rs.50000 every day and every officer will get imprisonment for a term which may be extended to 6 months with a fine of Rs.25000 every day which may be extended to Rs.5 Lakh or both.
MEET US

What Clients Say

Customer delight is our main goal and we are very serious about it.


Prakash Verma

Prakash Verma

“Finacbooks.com is a perfect example of a great customer service dealing with the best of accountancy services.“

Prakash Verma Signature


Praveen Chauhan

Praveen Chauhan

“They offered us good quality services in a least possible time at a best Price.“

Praveen Chauhan Signature


Pradeep Kochhar

Pradeep Kochhar

“Finacbooks.com is a trusted network of highly qualified accounting professionals who not only provided us quality accountancy services but also supported us by answering our each & every query on time without any delay. “

Pradeep Kochhar Signature

Informational, useful and resourceful

Blogs

Catch up our trending topics, news etc. in a simple, detailed and most professional way.

How businesses can recover after COVID-19?
19 Oct, 2020

No one ever thought of a pandemic like Covid-19 that not only shaken the world and its economy but also shut down operations all over the... Read More

Section 194IC of Income Tax Act: TDS on Payment under Joint Development
08 Sep, 2020

What is Section 194IC of the Income Tax Act Any person who is paying rent to a land owner (owner of land or building or both) under the... Read More

Section 194IA of Income Tax Act: TDS on Property Purchase of Immovable Property
31 Aug, 2020

Section 194IA of the income tax act As per section 194IA of the income tax act, it is mandatory for a buyer of immovable property (except... Read More

Due Dates

  • GSTR 3B for August 2020 (15 States/UT’s - Chhattisgarh, MP, Gujarat, Daman and Diu, Dadra and Nagar Haveli, Maharashtra, Karnataka, Goa, Lakshadweep, Kerala, TN, Puducherry, Andaman and Nicobar Islands, Telangana and Andhra Pradesh) Oct 1st, 2020
  • GSTR 3B for August 2020 (22 States/UT’s - Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand, Odisha, Jammu and Kashmir, Ladakh, Chandigarh, Delhi) Oct 3rd, 2020
  • GSTR 1 for September 2020 (turnover more than INR. 1.50 Crore) Oct 11th, 2020
  • Monthly GSTR 6 for September 2020 Oct 13th, 2020
  • Monthly GSTR 7 (Summary of Tax Deducted at Source (TDS) and deposited) for September 2020 Oct 10th, 2020
  • Monthly GSTR 8 (Summary of Tax Collected at Source (TCS) and deposited by e-commerce operators) for September 2020 Oct 10th, 2020
  • CMP 08 for July to September 2020 Oct 18th, 2020
  • GSTR 5 (Non-Resident Foreign Taxpayers) Monthly Filing Due Date for September 2020 Oct 20th, 2020
  • GSTR 5A (Non-Resident OIDAR Service Provider) Monthly Filing Due Date for September 2020 Oct 20th, 2020
  • GSTR 3B for September 2020 (Annual Turnover of more than Rs 5 Cr in Previous FY) Oct 20th, 2020
  • GSTR 9 and 9C (Annual Return) FY 2018-19 Oct 31st, 2020
  • GSTR 1 (Quarterly) for July to September (Summary of outward supplies where turnover is upto Rs 1.5 crore) Oct 31st, 2020
  • Annual GSTR 4 for FY 2019-20 Oct 31st, 2020