Annual Compliance Checklist for Foreign Subsidiaries in India | TAXAJ
To avoid penalties and maintain smooth operations, foreign subsidiaries must adhere to several annual compliance requirements. This article outlines a practical checklist to help you stay ahead.
Foreign subsidiaries registered as private limited companies in India must comply with various requirements under the Companies Act, 2013, Income Tax Act 1961, FEMA, and GST laws.
At least four board meetings must be conducted every financial year, with a maximum gap of 120 days between two meetings. Minutes must be documented properly and signed.
AGMs must be held within six months from the end of the financial year, unless it’s a wholly owned subsidiary, where decisions can be passed through written resolutions.
These must be filed with the Registrar of Companies (ROC):
MGT-7: Contains company structure, shareholding, and governance details.
AOC-4: Includes the audited financial statements.
Regardless of turnover, a statutory audit is compulsory. An Indian Chartered Accountant must certify the books and issue an audit report.
Filed annually by October 31, if audit is applicable. Transfer pricing rules also require Form 3CEB if international related-party transactions occur.
Foreign subsidiaries must report various transactions under the Foreign Exchange Management Act (FEMA):
FLA Return (Foreign Liabilities and Assets): Must be filed online with the RBI by July 15 every year.
FC-GPR/FC-TRS Forms: Report capital inflow/outflow within 30 days of the transaction.
Failure to comply may lead to significant penalties and restriction of future foreign investments.
Here’s
a summarized table of recurring annual tasks for easy tracking:
Compliance
Due Date
Applicable Form
Board Meetings
Quarterly
Board Minutes
AGM
By Sept 30 (if applicable)
Resolutions, Notices
Annual Return (ROC)
Within 60 days of AGM
MGT-7
Financial Statement Filing
Within 30 days of AGM
AOC-4
Income Tax Return
Oct 31
ITR-6, 3CEB (if needed)
GST Annual Return
Dec 31
GSTR-9 / GSTR-9C
FLA Return
July 15
RBI Portal
Director KYC
Sep 30
DIR-3 KYC
Non-compliance can be costly and damaging:
ROC late fees: ₹100 per day, per form, with no cap.
ITR delay: ₹5,000–₹10,000 plus interest.
FEMA breaches: Can attract penalties up to three times the involved sum.
DIN deactivation: If director KYC is not done.
Maintain a compliance calendar: Keep reminders for all due dates.
Engage a local expert: A Chartered Accountant or Company Secretary familiar with Indian laws can prevent oversight.
Stay updated: Regulations in India evolve frequently. Subscribe to MCA and RBI updates.
Document everything: Minutes, notices, resolutions, and reports should be well-structured and safely archived.
Compliance in India may seem daunting initially, but with the right processes in place, it can be smoothly managed. A proactive approach ensures that foreign subsidiaries not only avoid fines but also build credibility with stakeholders and regulators.
📍 Tip: Consider quarterly internal compliance checks to identify and correct gaps before they become liabilities.
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