Taxation & Regulatory Services in India

Direct Taxation

An Indian subsidiary is taxed as a domestic company regardless of how much of its capital is foreign-owned. Most newly incorporated subsidiaries opt into the concessional 22% corporate tax rate (plus applicable surcharge and cess) rather than the standard 25% or 30% rate that otherwise applies depending on turnover; a narrower 15% rate is available to new manufacturing companies meeting specific conditions — see our banking & taxation guide for the full rate breakdown. A foreign company operating through a branch or project office rather than an incorporated subsidiary is taxed differently, and generally less favourably, than an incorporated subsidiary — one of several reasons most foreign parents structure India entry as a wholly owned subsidiary. All of this now sits under the Income Tax Act, 2025, which replaced the 1961 Act for periods beginning on or after 1 April 2026. Our direct tax practice covers:

Goods & Service Tax (GST)

GST registration is triggered once aggregate turnover crosses the applicable threshold — Rs 20 lakh for a services business in most states (lower in a handful of special-category states) and Rs 40 lakh for a goods-only supplier — not by incorporation or foreign ownership itself. Many foreign-owned entities register voluntarily well before crossing that threshold, particularly where the Indian entity bills only its overseas parent, since registration allows filing a Letter of Undertaking (LUT) and invoicing exports as zero-rated rather than charging GST. Once registered, GST compliance becomes a recurring monthly (or quarterly, under the QRMP scheme for smaller filers) obligation: GSTR-1 and GSTR-3B returns, e-invoicing once aggregate turnover crosses Rs 5 crore in any financial year since 2017-18, and the GSTR-9 annual return once turnover exceeds Rs 2 crore (with the GSTR-9C reconciliation statement layering in above Rs 5 crore). A cross-border point worth flagging early: payments an Indian entity makes to its foreign parent for services — a management fee, a software licence, a group recharge — are generally treated as an import of services and taxed under the reverse charge mechanism (RCM), with the Indian entity itself liable to pay the GST rather than the parent charging it.

Regulatory Services

Beyond direct tax and GST, a foreign-owned entity's regulatory footprint depends on what it actually does in India. FEMA compliance applies to any entity holding foreign investment on its books — see our regulatory compliance framework for the fuller RBI reporting sequence (Form FC-GPR, Form FC-TRS, the annual FLA return) this triggers. FCRA registration is relevant only to NGOs and not-for-profits receiving foreign contributions, not to commercial subsidiaries. FSSAI registration or licensing is triggered by handling, manufacturing or selling food products; MSME (Udyam) registration is optional but unlocks specific government benefits and payment-protection provisions for smaller entities; and an Import-Export Code (IEC) from the DGFT is a one-time registration required before any cross-border trade in goods can begin. Trade licenses, by contrast, are issued at the municipal/local-body level and depend on the specific business activity and location.

Secretarial & Legal

Corporate secretarial compliance runs on its own calendar under the Companies Act, 2013 — Form AOC-4 (financial statements) and Form MGT-7/MGT-7A (annual return) filed with the Registrar of Companies every year following the Annual General Meeting, alongside the statutory audit our accounting & assurance practice supports directly. SEBI compliance applies only to listed entities or those raising capital from the public markets — most foreign-owned subsidiaries won't encounter it unless a listing or public fundraise is specifically planned. IPR registration (trademarks, patents, designs) isn't a mandatory compliance item, but is worth doing early: foreign companies that already hold trademark or patent protection at home can extend it into India through the Madrid Protocol or the Patent Cooperation Treaty rather than filing entirely fresh applications. Labour law and contract management round out the ongoing legal workstream alongside tax and secretarial filings.

The Tax & Regulatory Compliance Calendar

Direct tax, GST and secretarial filings run on independent but overlapping schedules. This sits alongside the one-time, incorporation-linked filings (FC-GPR, the annual FLA return) covered in our company registration compliance roadmap, and the books-driven audit calendar covered in full on our accounting & assurance page:

Transfer Pricing, Safe Harbour & DTAA Relief

Almost every foreign-owned Indian entity has international related-party transactions with its parent — management fees, software licences, cost recharges, intercompany services — and those transactions carry their own compliance regime, separate from ordinary corporate tax and GST. For the US-parent-specific version of this — Section 482, Form 5471, and keeping both countries' filings reconciled — see our transfer pricing guide for US-owned subsidiaries:

If your India entity is a Global Capability Centre or software/ITeS delivery operation, the 2026 Safe Harbour changes are worth reading in full — see our dedicated breakdown of the 15.5% margin and Rs 2,000 crore threshold, or our GCC setup guide for the broader entity and operational picture.

Why AU Corporate, Not Four Separate Vendors

Direct tax, GST, FEMA/regulatory and corporate secretarial compliance all draw on the same underlying transactions and the same books — a management fee to the parent is simultaneously a transfer pricing question, a GST reverse-charge question, and potentially an FEMA reporting question, depending on how it's structured. Running these through four disconnected vendors means the same fact pattern gets re-explained four times, often with gaps between them. Our taxation and regulatory practice sits inside the same firm that handles company registration and accounting & assurance for the same clients, so the compliance calendar, the books, and the filings are built from one coordinated view of the entity rather than reconciled after the fact. If you'd rather run the bookkeeping and filing work itself as an ongoing managed function, see Accounting, Reporting and Audit Support.

Frequently Asked Questions