Foreign Company
Registration in India
Subsidiary · Branch · Liaison · Joint Venture — 2025-26

Yes — this is mandatory under Section 149(3) of the Companies Act 2013. Every company incorporated in India must have at least one director who has stayed in India for 182 days or more in the previous calendar year. For a newly incorporated company, the requirement applies from the end of the first full calendar year from incorporation. The resident director can be a nominee director, a local hire, or any Indian resident. TAXAJ can assist in providing a nominee director if needed for initial setup. The resident director requirement is separate from the business control structure — the foreign parent retains 100% ownership and management control.

This is a significant difference. Wholly Owned Subsidiary (Indian Pvt Ltd): For companies opting under Section 115BAA (concessional regime), the tax rate is 22% + 10% surcharge + 4% education cess = effective ~25.17%. New manufacturing subsidiaries incorporated after Oct 1, 2019 and commencing before March 31, 2024 qualify for 15% rate (effective ~17.01%). Branch Office / Liaison Office / Project Office: Taxed as a foreign company at 40% + 2% or 5% surcharge (on total income >₹1 Cr and >₹10 Cr) + 4% cess = effective ~43.68% in most cases. The substantially lower tax rate for a subsidiary is one of the primary reasons most foreign companies prefer the WOS structure over a branch office.

There are two primary routes: (1) Dividend: The Indian subsidiary declares a dividend to the foreign parent. A 20% withholding tax (TDS) is deducted unless a DTAA (Double Taxation Avoidance Agreement) reduces this rate. India has DTAAs with 90+ countries — the DTAA rate for dividends varies (e.g., India-USA: 25%, India-Singapore: 15%, India-Mauritius: 7.5%, India-Netherlands: 10%). After paying withholding tax, the net dividend can be freely remitted through an authorized dealer bank. (2) Buyback of shares: Subject to buyback provisions of Companies Act 2013. An effective tool for repatriation in certain scenarios but complex. Branch/LO profits: Branch offices can remit profits after paying Indian taxes — no dividend withholding tax as it's not a dividend per se. All remittances must go through FEMA-compliant channels via AD Category-I banks and appropriate Form 15CA/15CB must be filed.

As of 2025-26, sectors under the approval route (requiring prior government permission via FIFP portal) include: Multi-brand retail trading (up to 51% FDI — approval required for even this), Defence manufacturing above 74%, Broadcasting content services, Print media (newspapers, periodicals) up to 26%, Satellite establishment and operations, Mining of specified minerals, and certain types of financial services. Additionally, proposals from entities from countries sharing a land border with India (China, Pakistan, Nepal, Bhutan, Bangladesh, Myanmar, Afghanistan) require government approval regardless of sector. This border-country restriction applies to all sectors including those otherwise under automatic route. TAXAJ advises on sector classification before initiating any FDI.

Form FC-GPR (Foreign Currency — Gross Provisional Return) is filed with the Reserve Bank of India through the Indian company's authorized dealer bank to report receipt of FDI. It must be filed within 30 days of allotment of shares to the foreign investor. FC-GPR is filed on the RBI's FIRMS portal (firms.rbi.org.in) and requires: Copy of the FIRC (Foreign Inward Remittance Certificate) from the bank, KYC of the foreign investor, Board resolution for share allotment, Certificate from a SEBI-registered valuer confirming fair market value of shares, CS certificate (Form FC-GPR declaration), and PAN of all parties. Failure to file FC-GPR within 30 days attracts compounding penalty — typically ₹10,000 per day or 5× the amount of the transaction, whichever is higher. TAXAJ handles FC-GPR filings as part of subsidiary setup.

Section 380 of the Companies Act 2013 requires every foreign company that establishes a place of business in India (branch office, liaison office, or project office) to register with the Registrar of Companies by filing Form FC-1 within 30 days of establishing the place of business. FC-1 registration is separate from the RBI FEMA approval process — it's the MCA (corporate law) registration requirement. For a WOS (subsidiary), FC-1 is not required since the WOS is a separately incorporated Indian company and not a "foreign company" under the Act. After FC-1 registration, the branch/LO/PO must also file FC-2 (annual return) and FC-3 (financial statements) with the ROC every year. Failure to register under FC-1 within 30 days attracts ₹50,000 penalty plus ₹1,000 per additional day of default.