Setting up a Subsidiary in India
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Setting up a subsidiary in India offers foreign businesses a gateway to one of the fastest-growing economies in the world. Governed by the Companies Act, 2013, the process involves regulatory approvals, legal formalities, and compliance with Indian laws. Below is a streamlined guide to establishing a subsidiary in India.
Types of Subsidiaries
- Wholly-Owned Subsidiary: A foreign parent company holds 100% ownership, applicable in sectors with 100% Foreign Direct Investment (FDI) approval.
- Partially-Owned Subsidiary: The parent company owns at least 50% of the subsidiary, allowing substantial control while partnering with local investors if required.
Step-by-Step Process for Setting Up a Subsidiary
Regulatory Approvals: Obtain necessary approvals from the Reserve Bank of India (RBI) to ensure compliance with FDI regulations.
Director Identification Number (DIN): Each proposed director must secure a DIN through an online application.
Digital Signature Certificate (DSC): Essential for e-filing of incorporation documents by directors and authorized signatories.
Company Name Reservation: Select a unique name and submit it for approval through the Ministry of Corporate Affairs (MCA) portal.
Legal Documentation: Draft and finalize the Memorandum of Association (MoA) and Articles of Association (AoA), defining business objectives and governance.
Incorporation Filing: Submit incorporation documents via the SPICe+ form on the MCA portal, ensuring all regulatory requirements are met.
Payment of Fees: Pay the prescribed registration fees, determined by the company’s authorized capital.
Certificate of Incorporation: Upon approval, the Registrar of Companies (RoC) issues the Certificate of Incorporation, granting legal status.
Tax Registrations: Obtain a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department. Register for Goods and Services Tax (GST) if applicable.
Bank Account Setup: Open a corporate bank account in India to facilitate business transactions.
Regulatory Compliance
Foreign subsidiaries in India are treated as domestic entities and must comply with local laws, including tax regulations and mandatory filings with the MCA. GST registration is required if the business engages in taxable transactions
Tax Benefits and Considerations
Foreign subsidiaries may be eligible for concessional tax rates in certain industries such as shipping and aviation. However, sectors like defense, telecom, and banking require additional approvals for foreign investment.
By following this structured process, foreign businesses can seamlessly establish a subsidiary in India, positioning themselves for growth in one of the world’s most dynamic markets. For expert guidance on company incorporation and regulatory compliance, consult .com today RMCAuditors is here to help! Text us on whatsApp or call us today .
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