Home / Foreign Subsidiary Company Compliance

Updated on 17 Jun 2021  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.

Job work under GST – Form GST ITC-04
11 Jun, 2021

Job work as the name states is a very crucial term under the GST services. Job work under GST is defined under section 2(68) of the CGST... Read More

GST E-way bill exemption- cases when it is not required?
03 Jun, 2021

GST was introduced by the Government of India to make the taxation process transparent. The implementation of GST has served the purpose of... Read More

QR code generation in E-invoicing
27 May, 2021

Abbreviated as a QR code, a Quick Response code is a two-dimensional barcode applied to various items to access their information in a... Read More

Due Dates

  • Due date for deposit of Tax deducted/collected for the month of May, 2021. However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan

    Jun 07th ,2021
  • Monthly GSTR 8 (Summary of Tax Collected at Source (TCS) and deposited by e-commerce operators) for May 2021

    Jun 10th ,2021
  • Monthly GSTR 7 (Summary of Tax Deducted at Source (TDS) and deposited) for May 2021

    Jun 10th ,2021
  • GSTR 6 (Details of ITC received and distributed by ISD) Monthly Filing Due Date for May 2021

    Jun 13th ,2021
  • Due date for issue of TDS Certificate for tax deducted under section 194-IA in the month of April, 2021

    Jun 14th ,2021
  • Due date for issue of TDS Certificate for tax deducted under Section 194-IB in the month of April, 2021

    Jun 14th ,2021