PAN, TAN & GST for foreign subsidiary — Onboarding sequence

• PAN, TAN & GST for Foreign Subsidiary in India: The Complete Onboarding Sequence (2026 Guide)

Quick Overview

If you’re setting up a foreign-owned company in India, obtaining PAN, TAN, and GST registration in the correct sequence is essential for smooth business operations. These registrations enable your company to open bank accounts, receive foreign investment, hire employees, issue tax invoices, deduct TDS, and remain compliant with Indian tax laws.

Introduction

India continues to attract multinational corporations, technology startups, manufacturing businesses, and global investors looking to establish a long-term presence in one of the world’s fastest-growing economies. While incorporating a Wholly Owned Subsidiary (WOS) is the first legal step, many foreign investors soon realize that incorporation alone does not allow the company to begin commercial operations.

Before issuing invoices, opening a current account, onboarding employees, receiving foreign investment, or signing contracts with Indian customers, the company must complete several statutory registrations. Among these, PAN (Permanent Account Number), TAN (Tax Deduction and Collection Account Number), and GST Registration form the backbone of every foreign subsidiary’s tax and compliance framework.

Choosing the right onboarding sequence not only prevents delays but also ensures that the business is ready to operate from day one.

Why the Onboarding Sequence Matters

Many overseas businesses assume that GST registration should be the first compliance step after incorporation. In practice, the process is more structured.

Certain registrations depend on others. For example, PAN is required for many tax-related processes, while TAN becomes necessary when the company is liable to deduct TDS. GST registration is typically obtained based on the nature of the business and statutory requirements, often after the company has completed its basic tax identity and banking formalities.

A planned onboarding process reduces documentation issues, accelerates banking approvals, and helps avoid unnecessary compliance risks.

The Ideal Registration Flow

Company Incorporation

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PAN Registration

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TAN Registration

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Current Bank Account

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Foreign Investment (FDI)

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GST Registration

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FEMA & RBI Compliance

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Regular GST, TDS & ROC Filings

Step 1: Incorporate the Indian Company

The journey begins with incorporating an Indian company under the Companies Act, 2013. Most foreign investors choose a Wholly Owned Subsidiary (WOS) because it offers a separate legal identity, limited liability, and operational flexibility.

Upon incorporation, the company receives:

• Certificate of Incorporation
• Corporate Identification Number (CIN)
• Memorandum of Association (MOA)
• Articles of Association (AOA)
• Director Identification Number (DIN)
• Digital Signature Certificate (DSC)

These documents serve as the foundation for all future registrations.

🆔 Step 2: Obtain PAN

The Permanent Account Number (PAN) is the company’s primary tax identity issued by the Income Tax Department.

Without PAN, a company cannot effectively carry out most financial and tax-related activities in India.

PAN is required for:

• Opening a current bank account
• Filing Income Tax Returns
• Applying for GST registration
• Receiving foreign investment
• Entering into high-value financial transactions

Expert Insight

In many incorporation cases, PAN is processed along with the company incorporation, subject to the applicable procedures. However, businesses should verify that PAN has been issued and is active before proceeding with other registrations.

Step 3: Apply for TAN

A Tax Deduction and Collection Account Number (TAN) becomes essential when the company is required to deduct tax at source under the Income-tax Act.

For example, TAN is generally required while making payments such as:

Employee salaries

Professional fees

Consultancy charges

Contractor payments

Rent

Without TAN, the company cannot lawfully deposit TDS or file TDS returns.

Common Mistake

Many startups postpone TAN registration because they initially have no employees. However, the requirement can arise much earlier if the company engages consultants, legal advisors, or contractors.

Step 4: Open the Company’s Bank Account

After obtaining PAN, the next step is opening a current account with an authorised Indian bank.

Banks usually require:

Certificate of Incorporation

PAN

MOA & AOA

Board Resolution

Registered Office Proof

Director KYC Documents

For foreign-owned companies, additional KYC documents relating to foreign shareholders or beneficial owners may also be requested.

A functional bank account is essential before receiving foreign investment.

Step 5: Receive Foreign Investment

Once the bank account is operational, the foreign parent company can remit capital into the Indian subsidiary through authorised banking channels, subject to the applicable FEMA and FDI regulations.

The company should maintain complete documentation, including:

Bank remittance records

Share subscription documents

KYC records

Board resolutions

Share allotment records

Proper documentation at this stage simplifies future FEMA and RBI compliance.

Step 6: GST Registration

GST registration should be obtained whenever the company is legally required to register under GST or where voluntary registration is commercially beneficial.

A GST registration enables the company to:

Issue GST-compliant tax invoices

Collect GST from customers

Claim eligible Input Tax Credit (ITC)

Conduct taxable business activities efficiently

For many B2B businesses, GST registration also enhances credibility with vendors and customers.

Step 7: FEMA & RBI Compliance

Foreign investment does not end with the receipt of funds. Companies must also complete applicable FEMA and RBI reporting requirements.

Depending on the transaction, this may involve:

Share allotment

Valuation documentation

RBI reporting

Beneficial ownership documentation

Maintenance of statutory records

Ignoring FEMA obligations can create complications during audits, future funding rounds, or overseas remittances.

Additional Registrations (Where Applicable)

Depending on the business model, additional registrations may include:

MSME (Udyam) Registration

Import Export Code (IEC)

Shops & Establishment Registration

Professional Tax Registration

EPFO Registration

ESIC Registration

FSSAI Licence

Factory Licence

Trade Licence

Not every business requires all of these registrations, but companies should assess their applicability based on the nature of operations.

Common Mistakes Foreign Subsidiaries Should Avoid

Many compliance issues arise not because of complex laws, but because of poor planning.

Some of the most common mistakes include:

Applying for registrations without complete documentation

Delaying PAN or TAN activation

Receiving foreign investment without understanding FEMA reporting requirements

Incorrect business activity selection during GST registration

Maintaining incomplete statutory records

Ignoring ongoing GST, TDS, and ROC filing obligations

Addressing these issues early helps avoid unnecessary delays and regulatory complications.

Compliance Checklist

Before commencing business operations, ensure that the following have been completed:

• Company incorporated
• PAN issued
• TAN obtained (where applicable)
• Current account opened
• Foreign investment received through authorised channels
• GST registration completed (if applicable)
• FEMA compliance initiated
• Accounting system implemented
• Statutory registers maintained
• Annual compliance calendar prepared

Frequently Asked Questions

Is PAN mandatory for every foreign subsidiary?

Yes. Every Indian company requires a PAN for income tax and financial compliance.

Can GST registration be obtained immediately after incorporation?

It depends on the company’s business activities and GST registration requirements. Many companies obtain it early for operational convenience.

Is TAN compulsory from Day One?

Not necessarily. TAN becomes necessary when the company is required to deduct tax at source under the Income-tax Act.

Can a foreign-owned company receive investment before opening a bank account?

No. A current account with an authorised Indian bank is generally required to receive foreign investment.

Key Takeaways

Incorporation is only the first step in establishing a foreign subsidiary.

PAN serves as the company’s primary tax identity.

TAN is essential for TDS compliance.

GST registration enables lawful taxable business operations.

FEMA and RBI reporting remain critical after receiving foreign investment.

A structured onboarding process reduces compliance risks and supports smooth business operations.

Need Professional Assistance?

Setting up a foreign subsidiary involves multiple legal, tax, and regulatory requirements. Choosing the right sequence can save time, reduce compliance risks, and help your business become operational faster.

TAXAJ provides end-to-end support for:

• Wholly Owned Subsidiary (WOS) Incorporation
• PAN, TAN & GST Registration
• FEMA & RBI Compliance
• FDI Advisory
• Accounting & Payroll
• ROC, GST & Income Tax Compliance
• Cross-Border Tax Advisory

Website: TAXAJ Official Website