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Indian Subsidiary

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Overview

What is the Indian Subsidiary? 

An Indian subsidiary company is also known as a subsidiary or a sister company; and the company which practices control over it, is known as the parent company, or holding company. It can be controlled by the parent company partially or wholly. 


Investment in Indian Subsidiary

In this company investment and acquisition of equity shares are categorized divided into two categories: investment under automatic route and investment under the Government approval route. No prior regulatory approval required through the automatic route for investment in equity shares of an Indian business and only post facto filing/intimation from RBI within 30 days of receipt of investment money in India and filing of prescribed documents and particulars of allotment of shares within 30 days of allotment of shares to foreign investors. 

FDI of up to 100% is allowed under the automatic route in most activities/sectors in India. Investment in activities/industries where the automatic route is not available can be made with the approval of the Government under the Government Approved FDI method. OnFiling can be your legal and professional partner in India to get your New Company / Subsidiary in India started quickly and cost-effectively.

What are the features of Indian Subsidiary ?

  • A company is having a perpetual succession until it is legally dissolved.
  • The company can acquire, own and enjoy property in its own name.
  • This company can institute legal proceedings to bring a suit in a court of law.
  • Indian subsidiary can make a valid and effective contracts with any of its members.
  • It is a separate legal entity established under law.

Advantages

  • Separate legal entity
  • Foreign direct investment is possible
  • Uninterrupted existence
  • Easy share transferability
  • Limited liability

Disdvantages

  • Sometime the issue of limited freedom in management comes into picture.
  • Decision making can become time consuming
  • Legal paperwork involved with creating a subsidiary can be lengthy and expensive.

What is the registration process of the Indian Subsidiary?

 Apply for digital signature and reservation of name

Here we apply for a digital signature for each director and a shareholder. You have to sign notarize and apostille the DSC form and courier it to the onfiling Team along with passport and address proof copies. The name is reserved by filing RUN application. It takes 3-4 days to get the name reserved.

To Prepare articles and charter of the company

The AOA and MOA are the charter documents f the company which contain all the rules the shareholder and the directors of the company. It is a specified format available in Companies Act, 2013.

Filing the incorporation form along with MOA and AOA

In this step we will file your incorporation form. Once this is approved you will get the certificate of incorporation, PAN and TAN.

Opening of bank account

To open a bank account one of the directors needs to be physically present here. Other director can sign the application form and courier the same to the banks.

Deposit of share application money and issue of shares

Once the bank account is opened the foreign shareholders should transfer the share capital amount in the bank account of the Indian company within 30 days of incorporation. Once the share application money is deposited the company will issue the share certificates to the foreign shareholders.

Filing of FCGPRA with RBI

Once the money is received the company will then inform the RBI about this receipt within 30 days.

 

What is the common registration process of the Indian Subsidiary?

Establishment Registration

Every shop and the commercial establishment are required to obtain establishment registration with the Labour Department within 30 days of starting their business. It is mandatory for all states in India.

Trade License

No one should be adversely affected by health hazard and nuisance by the improper carrying of trade a License is necessary from the municipality within 30 days of starting the business.

Professional Tax Registration

Specific legislation have been passed by majority state governments to impose a tax on profession, employment of calling of any nature, however, and the fees for it is Rs. 2500 per annum.

Goods and Services Tax (GST)

GST Registration is mandatory for each business engaged in providing services or supply of products, where the turnover exceeds Rs. 40 Lac.

Food License / FSSAI Registration

During a business of producing, trading, storing or dealing in any manner of food items, then the state level FSSAI registration or Central License is mandatory based on the turnover.

Drug License

This location-based Drug License is granted by the State Government based on fulfilling certain norms and criteria. No entity can start or continue sale/trade of medicine without drug license.

Private Security Agency License

Private Security Agency may be a lucrative business with immense potential; however, it can be started or continued only after obtaining a license from the competent authority as designated by the state government.

Import Export Code (IEC)

IEC is a ten-digit pan based registration with the DGFT. IEC is a mandatory prerequisite to start a business of Import or Export in India. Only one IEC code can be issued against a pan.

FAQS

Once the company is incorporated the following steps and registrations are required 1. Opening a bank account and depositing the share capital amount. 2. Issuing the share certificates 3. Appointing a Auditors within 30 days of registration 4. GST registration 5. Shop and Establishment Act and Professional Tax 6. Having important agreements like employment agreement, vendor agreement in place.

Minimum 2 directors are required and atleast one should be Indian resident. Minimum 2 shareholders are required. An individual, company, foreign company, NRI or foreign national can hold shares in the company.

For registration of company in India, the office address is mandatory. It can be commercial, residential or a virtual office. For documentation, the proof of utility bill of the provided address and the rental agreement is required.

It is not mandatory to give shares to a Indian resident. Foreigners are allowed to hold 100% shares in the Indian company. But it is important to note that there should be minimum 3 shareholders. Therefore in subsidiary company 99.99% shares can be held by the foreign company and the remaining 0.01% can be help by any other foreign individual or a foreign company.

It’s necessary to have an address proof that is any utility bill and a rent agreement. You can register the company at residential address, commercial address or a virtual address. Business Setup can provide you with virtual addresses in all major cities in India.

The Parent company is having limited liability to the extent of its shareholding in the WOS. A foreign company asset is an exception for any kind attachments.

No minimum capital requirement for a company. You can register a company with as low as $1 capital.

The subsidiary company can transfer the fees in form of royalty, fees or dividend after paying taxes in India.

1. Tax Filing • GST filing every month • TDS filing every quarter • Annual income tax return filing 2. Audit • Statutory Audit annually • Tax Audit annually • GTs Audit annually 3. Secretarial compliances • 4 board meeting every year • Annual general meeting of shareholders • AOC 4 and MGT 7 filing annually

The labour laws in India are not that stringent: 1. Professional tax of Rs 200/employee per month has to be paid 2. ESIC (employee state insurance scheme) id number of employees is above 10 3. PF (provident fund) is applicable if the employees is above 20

The process to open an account in India is a bit tedious. For opening company I India minimum 20-25 days is required. All the notarized and appostiled documents of foreign nationals are required to be submitted to the bank.

Wholly owned subsidiary is defined as an incorporated entity formed and registered under the Companies Act, 2013. It is a separate legal entity, distinct from its shareholders. It has a limited liability and can have upto 200 shareholders. For registration of a subsidiary company minimum 2 directors are required and atleast 1 should be a Indian resident. It is not necessary to have an Indian shareholder, so foreign national can hold 100% shareholding.

The tax rate is similar rate as compare to the domestic companies i.e. 26% if income is below 10 Million INR. And in case the company repatriates, the dividend to the parent company the dividend distribution tax is 20.592%.
Plan Start Rs. 29899 Only

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For Foreigner

List of Documents

  • Foreign National: 2 Photographs
  • Foreign Company: Registration Certificate of a company- Duly attested by foreign notary and apostilled
  • Indian Director: Copy of PAN card
  • Indian Director: Proof of Identity- Copy of electricity bill/mobile bill/bank statement or telephone bill not older than 2 months
  • Indian Director: Proof of address- Copy of Passport
  • Foreign National: Proof of Address- Any utility bill not older than 6 months duly attested foreign notary and apostilled
  • Foreign Company: Board resolution for investment in Indian company. It should also mention the details of representative director in Indian company- Duly attested by foreign notary and apostilled
  • Foreign National: Proof of Identity- Copy of passport duly attested foreign notary and apostilled

Pricing Plan

BASIC ₹29899
One Time

  • 3 Class 2 Digital Signatures  & 2 DIN
  • 50+ Document Formats & Incorporation Kit
  • 1 RUN Name Approval 
  • Upto 10 Lakhs Authorized Capital 
  • Incorporation Fee , Stamp Duty &  Incorporation Certificate
  • Hard-copy Share Certificates
  • GST Registration & GST eWay Bill Software
  • PAN ,TAN & ICICI Bank Current Account
Get Plan

SILVER ₹17475
Quarterly

  • INCLUSIVE OF BASIC PACKAGE
  • FDI Reporting to RBI
  • Commencement of Business Certificate
  • Financial Statement & Board Resolution Preparation
  • Annual & Director's Report
  • 1 Year Dedicated Compliance Manager Support
  • MCA Annual Return Filing
  • Income Tax Return Filing
Get Plan

GOLD ₹19975
Quarterly

  • INCLUSIVE OF SILVER PACKAGE
  • Book keeping and Accounting Software upto 800 entries
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Get Plan

PLATINUM ₹22475
Quarterly

  • INCLUSIVE OF GOLD PACKAGE
  • Book keeping and Accounting Software upto 2000 entries
  • Payroll Software upto 20 employees
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Disclaimer : 1) Class 2 digital signature from eMudhra with 2 year validity along with ePass 2003 token. 2) Statutory Auditor fee is payable on actuals directly to the Independent Auditor appointed by the Board of Directors. Onfiling will only be responsible for accounting, preparation of financial statements and filing of returns on behalf of the Company. 3) Upto 4 name options can be given in 1 RUN name approval request. 4) Additional Directors can be added for an additional price of Rs.999 - if DSC & DIN is available. In case no DIN or DSC is available, cost for adding additional Director will be Rs.1999, inclusive of GST. 5) Authorised capital is the amount of shares a company can issue at anytime and can be increased further in the future. Paid-up capital is the amount invested by shareholder and can be even Rs.2. 6) Additional authorised capital can be purchased if required at time of incorporation 7) In case of incorporation in Madhya Pradesh, an additional stamp duty of Rs.7550 will be applicable. In case of incorporation in Punjab, an additional stamp duty of Rs.15025 will be applicable. In case of Kerala, an additional stamp duty of Rs.3025 will be applicable.

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