Foreign Subsidiary

ANY TWO OR MORE PERSONS WHO ARE INTERESTED TO INCORPORATE A SUBSIDIARY COMPANY IN INDIA WHOSE INTERESTS ARE HELD AND CONTROLLED OR HELD BY ANOTHER COMPANY IN FOREIGN  HAVE A BEST OPTION TO INCOPORATE AN ENTITY IN THE FORM OF INDIAN SUBSIDIARY COMPANY.

THE SHARE CAPITAL STRUCTURE OF THE SUBSIDIARY COMPANY CAN BE USED TO DETERMINE THE HOLDING COMPANY AND SUBSIDIARY COMPANY RELATIONSHIP.

ADVANTAGES OF INDIAN SUBSIDIARY:

 

  • Subsidiary company gets financial support from holding company.
  • Technical support.
  • Training support.
  • Inflow of funds because holding company subscribed shares of subsidiary company.
  • Low R&D cost.
  • Free of cost consultancy or at very cheap price.
  • No need of taking debt from outside.
  • Government provide various benefits to this types of companies for promoting trade and commerce between two countries.

 

ALL THE ANNUAL COMPLIANCES WHICH ARE APPLICABLE ON THE FOREIGN SUBSIDIARY ARE PRESCRIBED UNDER INDIAN LAW AND ALL THE FOREIGN SUBSIDIDARY MUST COMPLY THE INDIAN LAWS FOR THE SURVIVAL IN INDIAN MARKET BECAUSE IN CASE OF NON COMPIANCES OF INDIAN LAW BY FOREIGN SUBSIDIARIES, LEADS THEM TO HEAVY PENALTY BY THE RESERVE BANK OF INDIA AND OTHER STATUTORY AUTHORITIES WHO GOVERN THE FOREIGN SUBSIDIARY IN INDIA.

THE LIST OF ANNUAL COMPLIANCES ON FOREIGN SUBSIDIARY ARE AS FOLLOWS:-

  • THEY HAVE TO COMPLY ALL THE GUIDELINES WHICH ARE PRESCRIBED UNDER FOREIGN EXCHANGE MANAGEMENT ACT(FEMA) WHICH ARE APPLICABLE ON THEM.
  • THEY HAVE TO FILE INCOME TAX RETURN WITH INCOME TAX DEPARTMENT.
  • THEY HAVE TO FILE ANNUAL RETURN WITH MINISTRY OF CORPORATE AFFIARS.
  • THEY HAVE TO COMPLY ALL THE RESERVE BANK OF INDIA(RBI) GUIDELINES AND SEBI GUIDELINES.
  • THEY HAVE TO COMPLY ALL THE TRANSFER PRICING GUIDELINES AS PER INTERNATIONAL TRANSACTIONS.
  • THEY HAVE TO COMPLY ALL THE OTHER INDIAN LAWS AND ACT LIKE ESI REGULATIONS, GST ACT, TDS, ETC DEPENDING ON THEIR BUSINESS ACTIVITIES AND NUMBER OF STAFF.

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