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Frequently asked Questions
A foreign subsidiary is a company outside India, where an Indian entity owns over 50% of shares or exercises control, acting as the parent company, per FEMA regulations.
The best known case of a foreign subsidiary is Japan's 7-Eleven owned by its parent company in the United States, 7-Eleven.
A foreign subsidiary’s income is taxable in India only if it has a Permanent Establishment (PE) or earns India-sourced income, per the Income Tax Act, 1961 and DTAAs.
विदेशी सहायक कंपनी वह है जो भारत के बाहर निगमित है और जिसमें भारतीय इकाई के पास 50% से अधिक शेयर या नियंत्रण है, जो FEMA नियमों के तहत मूल कंपनी के रूप में कार्य करती है।
A foreign subsidiary bank is a banking entity incorporated abroad but majority-owned by a parent company from another country, operating under the host country’s laws.
A foreign subsidiary is a separate legal entity with majority ownership by a parent company, while a branch is an extension of the parent, fully subject to its governance and liabilities.
In India, a Controlled Foreign Corporation (CFC) is a foreign entity controlled by Indian residents. A foreign subsidiary may qualify if over 50% is owned by Indian taxpayers, per Income Tax rules.
Examples include YouTube (owned by Alphabet Inc.), Instagram (owned by Meta) and Nestlé India (owned by Nestlé S.A.), each controlled by a parent company.
Yes, under Section 195 of the Income Tax Act, 1961, TDS applies to payments made to foreign companies (including subsidiaries) if the income is taxable in India, reported via Form 15CA.
Examples include PT Bank SBI Indonesia (76% owned by SBI) and SBI (Mauritius) Ltd., both operating as subsidiaries under local regulations.
A foreign subsidiary is a company where a parent from another country owns over 50% of shares, operating independently under the host country’s laws, like India’s Companies Act.
A foreign company operates in India without local incorporation (e.g., via a branch). A foreign subsidiary is a locally incorporated entity (e.g., private limited company) with over 50% foreign ownership.
Foreign companies in India include Google India, Microsoft India and Coca-Cola India, operating as subsidiaries or branches under Indian laws.
A branch is an extension of the parent company, fully liable for its debts. A subsidiary is a separate entity with limited liability, offering greater independence.
As of October 2022, India had 5,081 registered foreign companies, with 3,291 actively operating, per Ministry of Corporate Affairs (MCA) data.
A foreign subsidiary company in India is a private limited company where over 50% of equity is owned by a foreign parent, governed by the Companies Act, 2013.
Incorporate by securing DSCs, DINs and name approval, filing SPICe+ with MoA/AoA and meeting capital (₹1 lakh) and director (one Indian resident) requirements.
File annual returns (Form AOC-4, MGT-7), maintain accounts, conduct audits and comply with FEMA, RBI and tax regulations, per the Companies Act, 2013.
Benefits include global market access, limited liability, tax optimization via DTAAs, intellectual property protection and strategic control over operations.
Yes, foreign subsidiaries can receive dividends from Indian companies, subject to TDS (10-20% under DTAAs) and compliance with RBI regulations.
Loans to foreign parents require RBI approval under FEMA’s External Commercial Borrowing (ECB) guidelines and compliance with Section 185 of the Companies Act, 2013.
Notable examples include Google India Pvt. Ltd. (Alphabet Inc.), Microsoft India Pvt. Ltd. (Microsoft Corp.) and Coca-Cola India Pvt. Ltd. (The Coca-Cola Company).
Maintain proper accounts, file ROC returns, adhere to FEMA/RBI rules, conduct audits and meet tax obligations under the Income Tax Act and GST laws.
Foreign subsidiaries pay 25-40% corporate tax on India-sourced income. Global income is exempt unless tied to a PE, with DTAAs preventing double taxation.
Access lists via the MCA portal (mca.gov.in), industry reports or business directories like Zauba Corp, which detail registered foreign subsidiaries.