A UK company can own up to 100% of an Indian subsidiary in most sectors. The usual route is a private limited company: UK documents notarised and apostilled, digital signatures and director IDs, one SPICe+ filing, a bank account, share capital remitted from the UK and reported to the RBI. It takes 4 to 6 weeks to incorporate. Since 15 July 2026 the India-UK trade agreement and social security convention make staffing easier, and the 1993 tax treaty caps Indian withholding at 10% on dividends.
This guide is written for the founders, finance directors and operations leads of UK companies deciding how to enter India. It follows the order of the decisions: structure, set-up, money, tax, UK-side duties, compliance and people. Each section links to a deeper guide. Indian tax law changed on 1 April 2026, when the Income-tax Act, 2025 replaced the 1961 Act; where a form has a new name, we show the new name with the earlier one in brackets.
India subsidiary at a glance
| Item | What to know |
|---|---|
| Typical structure | Wholly owned private limited company under the Companies Act, 2013 |
| Foreign ownership | Up to 100% in most sectors under the Automatic Route; a few sectors have caps or need approval |
| Directors and shareholders | At least two directors and two shareholders; a wholly owned subsidiary uses a nominee or group company as the second shareholder |
| Resident Director | At least one director who has stayed in India 182 days or more in the financial year |
| Minimum capital | None by law; plan 12 to 18 months of costs |
| Registered office | A physical address in India |
| Incorporation filing | SPICe+ with the MoA and AoA, linked to PAN, TAN and other registrations |
| Travel | Not required |
| RBI reporting | Form FC-GPR within 30 days of share allotment; allotment within 60 days of receiving funds |
| Financial year | 1 April to 31 March, which matches the usual UK group year end |
| Governing laws | Companies Act, 2013; FEMA, 1999 and the Non-Debt Instruments Rules, 2019; the Income-tax Act, 2025; GST laws |
What is specific to UK companies
| Tax treaty | India-UK DTAA (1993): 10% on dividends (15% for certain property vehicles), 15% on interest (10% for banks), 15% on royalties and technical fees (10% for equipment) |
|---|---|
| Service permanent establishment | A 90-day services test, much shorter than in many treaties |
| Tax residency certificate | HMRC certificate of residence, with Form 41 (previously Form 10F) |
| Social security agreement | India-UK Double Contributions Convention, in force since 15 July 2026: a certificate of coverage keeps temporary assignees in their home scheme |
| Apostille | FCDO Legalisation Office, one UK process, with e-apostilles available |
| Parent's financial year | Usually 31 March, the same as India |
| Time difference | India is 4.5 hours ahead of the UK in summer and 5.5 hours in winter |
| Court judgments | The UK is a reciprocating territory under Section 44A CPC: UK superior court money judgments can be executed in India |
| Trade agreement | India-UK CETA, in force since 15 July 2026 |
| Data transfers | No UK adequacy for India: use the International Data Transfer Agreement or the UK Addendum |
| FDI route | Automatic Route in most sectors; Press Note 3 does not apply |
Why UK companies are looking at India now
Three things changed in 2025 and 2026: the India-UK trade agreement, the social security convention and India's new data protection rules.
- Trade agreement: the CETA came into force on 15 July 2026 and gives UK service firms defined market access and staff mobility routes. See India-UK CETA for UK companies.
- Social security: the Double Contributions Convention, in force the same day, ends double contributions for staff on temporary assignment. See UK employees in India: treaty and social security.
- Data rules: India's Digital Personal Data Protection Rules were notified in November 2025, with main duties from 13 May 2027, so build the controls now. See Data protection: UK GDPR and DPDP.
- Capability centres: more UK groups are building captive teams, a model covered in Global Capability Centres.
Which structure should a UK company choose?
Most choose a wholly owned private limited company. A branch or liaison office needs RBI approval and track-record tests; an Employer of Record fits a first pilot.
| Structure | Best for | Key limits |
|---|---|---|
| Wholly owned subsidiary | Sales, development, captive centres | Two directors (one resident), annual audit and ROC compliance |
| Branch office | The parent's own activities such as consultancy or trade | RBI approval; taxed as a foreign company; parent directly liable |
| Liaison office | Market research and liaison | No income or invoicing; RBI approval; costs funded from the UK |
| LLP | Partnership-style set-ups in eligible sectors | Tax treatment needs review in the UK and India |
| Employer of Record | First hires without an entity | The EOR is the legal employer; not a long-term substitute |
Full comparison, including whether to hold directly from the UK: Subsidiary, branch, liaison office or LLP.
How to incorporate, step by step
Nine steps take a UK parent from board decision to a compliant subsidiary. The sequence matters because each step feeds the next.
- Check the sector. Match your activity to the FDI Policy to confirm the Automatic Route.
- Prepare and legalise the UK documents. Certificate of incorporation, articles, board resolution and identity papers, notarised and apostilled by the FCDO.
- Choose the Resident Director. An Indian hire, a relocating UK colleague or an adviser-nominated director.
- Get DSCs and DINs. Digital signatures and director IDs for each proposed director.
- Reserve the name and file SPICe+. The Registrar issues the Certificate of Incorporation with the CIN, PAN and TAN.
- Open the bank account. The bank checks the UK parent's documents and ultimate owners.
- Send the capital from the UK. From the parent's own account, after the valuation is ready.
- Allot shares and report to the RBI. Allot within 60 days; file Form FC-GPR within 30 days of allotment.
- Commence business. File INC-20A within 180 days, appoint the Auditor and register for GST, provident fund and ESI.
Typical timeline: 4 to 6 weeks to incorporate from complete documents. Deeper guides: Incorporation: a 12-week plan and Documents: Companies House, notary and apostille.
How money moves between the UK parent and the Indian subsidiary
Money goes in through shares or a loan, and comes out through dividends, fees, royalties, interest and loan repayments. Each route has its own tax, paperwork and UK result.
- Going in: equity or compulsorily convertible instruments, priced at or above fair value, with an ECB for loans.
- Reporting in: Form FC-GPR and the annual FLA return by 15 July.
- Coming out: dividends (10% under the treaty, normally exempt in the UK); fees and royalties priced at arm's length; interest at up to 15%.
- Paperwork out: Form 145, and Form 146 where a Chartered Accountant certifies the payment.
Related guides: Funding and FEMA and Getting money out of India.
The tax treaty, trade agreement and social security convention
Three agreements matter to a UK parent, and they do three different jobs: the tax treaty limits withholding and defines permanent establishment, the CETA opens services and mobility, and the Double Contributions Convention avoids double social security.
| Agreement | What it does | Key numbers | Guide |
|---|---|---|---|
| India-UK tax treaty (1993, as modified by the MLI) | Caps Indian withholding and sets permanent establishment tests | Dividends 10%; interest 15%; royalties and technical fees 15% (equipment 10%); services PE after 90 days, or 30 days for services to an associated enterprise | India-UK tax treaty, article by article |
| India-UK CETA (in force 15 July 2026) | Services access, staff mobility, digital trade, dispute rules | Business visitors up to 90 days; intra-corporate transferees up to three years, as reported | India-UK CETA for UK companies |
| Double Contributions Convention (in force 15 July 2026) | Keeps a detached worker in the home scheme | Up to five years per the Indian government; certificate of coverage needed | UK employees in India: treaty and social security |
Tax and transfer pricing: what the UK parent should know
An Indian subsidiary pays Indian tax on its Indian profits, and the parent's exposure comes from payments, people and pricing between the two.
- Transfer pricing: Indian rules apply with no small-company exemption, even where the UK parent is exempt from UK transfer pricing.
- Withholding Tax: payments to the UK parent suffer Indian withholding under Section 393 of the Income-tax Act, 2025, reduced by the treaty where the documents are in place.
- Permanent establishment: UK staff days and contract authority can create a taxable presence, and the UK treaty's 30-day test for services to a group company is short.
- GST: services to the UK parent can be zero-rated exports.
Related guides: Transfer pricing, India-UK tax treaty, article by article and Getting money out of India.
UK law that follows the group into India
UK duties do not stop at the border. They shape what the Indian team does, and what the UK parent must be able to show.
- Tax: dividend exemption, CFC rules and foreign tax credit relief on the UK side.
- Criminal law: the Bribery Act 2010 and the failure to prevent fraud offence can reach the subsidiary's conduct.
- Data: UK GDPR treats a transfer to India as a restricted transfer.
- Regulated firms: PRA and FCA outsourcing rules apply when work moves to a group company in India.
See UK parent obligations, Data protection: UK GDPR and DPDP and Global Capability Centres.
Annual compliance: what the subsidiary files
The subsidiary has monthly, quarterly and annual filings, on a 31 March year end that suits most UK groups.
| Filing | Frequency | Typical timing | Authority |
|---|---|---|---|
| Statutory audit and financial statements | Annual | Before the AGM | Companies Act |
| Annual General Meeting | Annual | Within 6 months of the year end | Companies Act |
| AOC-4 and MGT-7 | Annual | 30 and 60 days after the AGM | MCA |
| Income tax return and Form 48 | Annual | By the due date; transfer pricing cases later | Income-tax Act, 2025 |
| Advance tax | Quarterly | 15 June, 15 September, 15 December, 15 March | Income-tax Act, 2025 |
| TDS deposit and returns | Monthly and quarterly | 7th of the next month; quarterly returns | Income-tax Act, 2025 |
| GST returns | Monthly or quarterly | 11th and 20th | GST |
| Provident fund and ESI | Monthly | By the 15th | EPFO, ESIC |
| FLA return | Annual | By 15 July | RBI |
| Form FC-GPR | Per share issue | Within 30 days of allotment | RBI |
The maintained version, with the UK dates beside it, is in the Compliance calendar.
People: hiring, secondments and share plans
Indian employment is contract and statute driven. UK staff on assignment need the right visa, a tax plan and a certificate of coverage.
- Hiring locally: provident fund, ESI, gratuity, the labour codes and state rules. See Hiring in India.
- Sending UK staff: visas, registration and day counts. See Relocating UK staff and UK employees in India: treaty and social security.
- Share plans: Indian employees can receive UK parent shares, taxed as a perquisite on exercise.
What it costs and how long it takes
Cost has three parts: one-time setup, recurring compliance and variable items such as transfer pricing and disputes.
- One-time: government fees and stamp duty (by state and authorised capital), professional fees and the valuation.
- Recurring: accounting, statutory audit, GST, TDS, payroll and ROC filings.
- Variable: transfer pricing documentation, tax notices, secondments and legal work.
Indicative setup fee: AU Corporate's fee for setting up the subsidiary is USD 750 to USD 1,000 for share capital up to ₹10 lakh (about £7,900 at an indicative ₹126.9 per pound in mid-October 2026). The costing depends on your plan.
Tell us what you plan to set up and we will prepare a costing and book a call.
Six mistakes UK companies make
- Starting UK documents late. The notary and apostille step sets the pace.
- Missing the 60-day and 30-day RBI clocks. Late reporting costs fees or compounding.
- Assuming UK transfer pricing exemptions apply in India. They do not.
- Letting UK staff drift into a permanent establishment. Count days and limit contract authority.
- Moving UK personal data without a transfer mechanism. India has no UK adequacy.
- Forgetting the UK Bribery Act and fraud-prevention duties. They reach the Indian team.
More detail: 13 common mistakes.
The full guide series
India-UK CETA for UK companies
What the trade agreement changes and what it does not.
Read the guide →India-UK tax treaty, article by article
Rates, permanent establishment and relief.
Read the guide →UK employees in India: treaty and social security
Article 16, residence and the Double Contributions Convention.
Read the guide →UK parent obligations
Dividend exemption, CFC rules, Bribery Act and fraud prevention.
Read the guide →Documents: Companies House, notary and apostille
What the UK parent must prepare first.
Read the guide →Incorporation: a 12-week plan
Week by week from UK board to first payroll.
Read the guide →Subsidiary, branch, liaison office or LLP
Choose the structure and the holding route.
Read the guide →Funding and FEMA
Instruments, valuation and Form FC-GPR.
Read the guide →Getting money out of India
Dividends, fees, royalties and loans to the UK.
Read the guide →Transfer pricing
Form 48, benchmarking and where India differs from the UK.
Read the guide →Hiring in India
Contracts, payroll, labour codes and share plans.
Read the guide →Data protection: UK GDPR and DPDP
Transfers to India and India's new law.
Read the guide →Contracts, courts and arbitration
Enforcing English judgments and London awards in India.
Read the guide →Compliance calendar
Indian dates beside the UK parent's dates.
Read the guide →Global Capability Centres
Models, outsourcing rules and pricing.
Read the guide →Relocating UK staff
Visas, FRRO, housing and day-count controls.
Read the guide →Selling, restructuring or closing
Options, tax and the UK exemption.
Read the guide →13 common mistakes
And the fix for each.
Read the guide →122 FAQs on setting up an India subsidiary
From pre-incorporation to closure.
Read the guide →How AU Corporate can help
AU Corporate is a New Delhi-based advisory firm, established in 2016, that supports foreign companies at every stage of an Indian subsidiary. We work with UK finance teams and advisers so that the Indian and UK positions agree.
Set up
Choose the structure and incorporate.
- Entity structuring
- Wholly owned subsidiary
- SPICe+ incorporation
- Bank account support
Fund and FEMA
Bring capital in and report it.
- FEMA
- FC-GPR
- Share valuation
- ECB
Operate
Books, payroll and indirect taxes, with a UK reporting pack.
- Accounting and bookkeeping
- GST
- Withholding Tax
- Payroll
- Monthly MIS
- UK consolidation support
People and relocation
Hire, pay and relocate your team.
- Employer of Record
- HR services
- Expat visa
- Certificate of coverage support
Repatriate funds
Move money to the UK with the paperwork and treaty position in order.
- Forms 145 and 146
- India-UK treaty relief
- Dividends
- Royalties and service fees
- Intercompany agreements
Tax and transfer pricing
Keep the India position defensible.
- Direct and indirect tax
- Transfer pricing
- Form 48
- PE review
- CbCR filing (parent-prepared report)
Audit and assurance
Satisfy Indian law and your UK Auditors.
- Statutory audit
- Internal audit
- Internal financial controls
- GST and tax audit
Legal, disputes and arbitration
Defend your position and protect contracts.
- Tax litigation
- Arbitration support
- Agreement drafting and vetting
Restructure and exit
Scale, reorganise or leave.
- Restructuring
- Mergers and acquisitions
- Due diligence
- Valuation
- Winding up
Scope note: we handle the Indian side. UK tax, UK company law and UK regulatory advice come from your UK advisers, and we coordinate with them.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, HMRC, Companies House and the UK legalisation service for apostilles.
Frequently asked questions
Can a UK company own 100% of an Indian subsidiary?
Yes, in most sectors. India allows 100% foreign ownership under the Automatic Route for most activities. A few sectors have caps, conditions or need government approval, so check your activity against the FDI Policy first.
Does a UK company need to visit India to set up a subsidiary?
No. The incorporation is online. Directors need Digital Signature Certificates and apostilled identity documents, and nobody has to travel.
How long does it take to set up an Indian subsidiary from the UK?
Usually 4 to 6 weeks from complete documents, and around 12 weeks to a working bank account, payroll and first filings.
What does it cost to set up a subsidiary in India?
AU Corporate's fee for setting up the subsidiary is USD 750 to USD 1,000 for share capital up to ₹10 lakh (about £7,900 at an indicative ₹126.9 per pound in mid-October 2026). The costing depends on your plan.
What is the withholding tax on dividends under the India-UK DTAA?
Article 11 caps Indian tax on a dividend paid to a UK company at 10% of the gross amount, or 15% for certain property investment vehicles. The domestic rate for non-residents is 20% plus surcharge and cess, so the treaty rate is lower where the documents are in place.
How many days in India create a permanent establishment under the India-UK DTAA?
Services furnished through employees create a PE after more than 90 days in any 12 months, and services to an associated enterprise after more than 30 days in any 12 months. Building and construction projects create one after more than 6 months.
Do UK employees in India have to pay provident fund?
A foreign national working in an Indian establishment is an international worker and generally contributes to provident fund on full wages, unless an agreement with their home country exempts them. The India-UK Double Contributions Convention, in force from 15 July 2026, exempts a worker on a covered temporary assignment who holds a certificate of coverage.
Is India adequate for UK GDPR transfers?
No. India does not currently have a UK adequacy regulation, so a UK controller sending personal data to an Indian subsidiary needs a transfer mechanism such as the International Data Transfer Agreement or the UK Addendum, plus a transfer risk assessment.
Can an English court judgment be enforced in India?
Yes, for a money judgment of a UK superior court. The UK is a reciprocating territory under Section 44A of the Code of Civil Procedure, so the decree can be filed for execution in India, subject to the statutory exceptions.
How does a UK company send money to an Indian subsidiary?
By subscribing to shares in the subsidiary, with a remittance from the parent's own UK bank account to the subsidiary's Indian bank account, valued at not less than fair value. The subsidiary allots the shares within 60 days and files Form FC-GPR within 30 days of allotment.
How does a UK parent receive dividends from an Indian subsidiary?
The subsidiary declares a dividend out of distributable profits, deducts Withholding Tax at 10% where the treaty documents are on file, files Form 145 and, where required, Form 146, and pays the net amount to the parent within 30 days of declaration.
Does the CETA reduce Indian tax on dividends paid to a UK parent?
No. CETA is a trade agreement. Withholding Tax on dividends, interest, royalties and fees is governed by the Income-tax Act, 2025 and the 1993 India-UK tax treaty, which caps dividends at 10%.
Sources and how this page is maintained
This guide is based on the Companies Act, 2013, FEMA and the Non-Debt Instruments Rules, 2019, the Consolidated FDI Policy, the Income-tax Act, 2025, the 1993 India-UK tax convention (HMRC consolidated text), the India-UK CETA and Double Contributions Convention announcements, and India's Digital Personal Data Protection Rules, 2025. Rules change often. We review this page at least quarterly and show the review date at the top.
Last updated 19 October 2026. General information only, not legal or tax advice. Indian and UK rules change often; confirm current requirements before acting.