INCORPORATION
What makes a holding and subsidiary company in India under section 2(87): board control or more than half the voting power. It covers associates, layers, section 19, consolidation, the small company bar and FEMA.
Incorporation
Written by CA Nandini, Krystal7 Consultants. Last updated 26 October 2026.
A subsidiary company in India is a company in which another company controls the board composition or more than one half of the total voting power. Section 2(87) of the Companies Act, 2013 sets this test, and control held through another subsidiary also counts. The other company is the holding company under section 2(46). Since the 2017 amendment, "company" there includes any body corporate, so a foreign parent qualifies. A subsidiary can never be a small company under section 2(85). If non residents own or control it, FEMA treats its investments in other Indian companies as downstream investment.
This page sets out the three definitions, the board control test and the 2017 change to voting power. It then covers layers, section 19, consolidation, the small company exclusion, related parties and FEMA (the Foreign Exchange Management Act, 1999), with sample structures and a worked example.
Section 2(87) defines a subsidiary in relation to another company, which it calls the holding company. A company is a subsidiary if the holding company does either of two things. It controls the composition of the Board of Directors. Or it exercises or controls more than one half of the total voting power, alone or with its subsidiaries.
The Explanation to the clause adds four rules. Control held through another subsidiary still counts. The other company controls board composition if it can appoint or remove all or a majority of the directors at its discretion. "Company" includes any body corporate. A "layer", for a holding company, means its subsidiary or subsidiaries.
| Test | What the holding company must have | Note |
|---|---|---|
| Board composition, section 2(87)(i) | Power at its discretion to appoint or remove all or a majority of the directors | Control through another subsidiary counts, Explanation (a) |
| Voting power, section 2(87)(ii) | Exercise or control of more than one half of the total voting power | Alone or together with its subsidiaries |
| Who can be the holding company | Any company, and any body corporate, Indian or foreign | Explanation (c) to section 2(87) |
Source: Companies Act, 2013, section 2(87) and its Explanation, as amended by the Companies (Amendment) Act, 2017, read 26 Oct 2026.
The two tests are alternatives. A parent that holds 40 percent of the votes but appoints three of five directors has a subsidiary. A parent with 60 percent of the votes has one even if a partner names most of the board.
The Companies (Amendment) Act, 2017 (Act 1 of 2018, published on 3 Jan 2018) rewrote three definitions that matter here. In section 2(87)(ii), "total share capital" became "total voting power". In section 2(6), the 20 percent associate test moved to voting power in the same way. Section 2(46) gained an Explanation that "company" includes any body corporate.
| Clause | Before the 2017 amendment | After the 2017 amendment |
|---|---|---|
| Section 2(87)(ii), subsidiary | More than one half of the total share capital | More than one half of the total voting power |
| Section 2(6), associate | Control of at least 20% of total share capital, or of business decisions under an agreement | Control of at least 20% of total voting power, or control of or participation in business decisions under an agreement |
| Section 2(6), joint venture | Not defined in the clause | A joint arrangement whose parties have joint control and rights to its net assets |
| Section 2(46), holding company | No Explanation | "Company" includes any body corporate |
Sources: Companies Act, 2013 as published in the Gazette of India on 30 Aug 2013; Companies (Amendment) Act, 2017, read 26 Oct 2026.
Preference shares are where the two tests part. Under section 47(2), a preference shareholder votes only on resolutions that directly affect the rights attached to those shares. If the dividend on a class of preference shares stays unpaid for two years or more, that class votes on all resolutions.
So a holder of most of the share capital, held mainly in preference shares, may have less than half the votes. If the preference dividend then goes unpaid for two years, the votes shift and a subsidiary can appear without any share changing hands. The worked example puts numbers on this.
Section 2(46) defines a holding company, in relation to one or more other companies, as a company of which those companies are subsidiaries. The definition works backwards from section 2(87). Whoever passes the subsidiary test for a company is its holding company.
The Explanation added in 2017 settles the cross border question. "Company" in section 2(46) includes any body corporate. A Delaware corporation, a UK limited company or a Singapore private company can be the holding company of an Indian company.
One company can hold both roles. An Indian subsidiary of a foreign parent becomes a holding company once it holds more than half the votes in another Indian company. Most of the compliance below falls on that middle company.
An associate company is a company in which another company has significant influence, but which is not its subsidiary. The definition includes a joint venture company. Significant influence means control of at least 20 percent of total voting power, or control of or participation in business decisions under an agreement.
Under the same clause, a joint venture is a joint arrangement whose parties have joint control and rights to its net assets. A 50:50 company with no casting vote usually lands here. Neither partner has more than one half of the votes, and neither can name a majority of the board on its own.
Section 2(27) defines control in wider words. It includes the right to appoint a majority of the directors, or to control the management or policy decisions. That right can come from shareholding, management rights, shareholders agreements, voting agreements or any other source. It can be held alone or in concert, directly or indirectly. FEMA borrows this meaning, which is why the shareholders agreement matters as much as the cap table.
Explanation (b) to section 2(87) sets the test. The other company controls the board if it can appoint or remove all or a majority of the directors, by a power it can use at its discretion. The definition does not limit where the power comes from. Articles and shareholders agreements both count if the power is exercisable at the company's discretion.
| Arrangement | Board control under section 2(87)(i)? | Reason |
|---|---|---|
| Articles let the parent appoint 3 of 5 directors | Yes | Power to appoint a majority |
| Shareholders agreement lets the parent remove any director at will | Yes | Power to remove all or a majority |
| Parent nominates 2 of 5 directors; the partner nominates 3 | No | No majority |
| Parent can appoint 3 of 5 directors only with the partner's consent | No | The power is not at the parent's discretion |
| Parent's Indian subsidiary appoints 3 of 5 directors of another company | Yes, for the parent too | Explanation (a): control through a subsidiary |
| Parent appoints 2 of 4 directors and the chair has a casting vote | Not on the appointment test | Two is not a majority of four; check section 2(27) control and FEMA control |
Source: Companies Act, 2013, section 2(87), Explanation (a) and (b), and section 2(27), read 26 Oct 2026.
On our files, we read the articles and every shareholders agreement before we classify a company. A side letter that gives appointment rights changes the answer. So does a consent right that blocks the parent's appointments.
The table applies the definitions to structures we see in foreign owned groups. "Parent" means a foreign body corporate. Votes are on equity shares unless the row says otherwise.
| Structure | Holding company | Subsidiary | Associate or joint venture | Why |
|---|---|---|---|---|
| Parent holds every share but one, the last through a nominee | Parent | The Indian company | None | More than half of the votes, held beneficially in full |
| Parent holds 60%; an Indian company holds 40% | Parent | The Indian company | Associate of the Indian company | 60% of votes; the Indian holder has at least 20% |
| Parent holds 40% but appoints 3 of 5 directors under the articles | Parent | The Indian company | None | Board composition test |
| Parent holds 26%, no board rights | None | None | Associate of the parent | At least 20% of votes, no control |
| Parent holds exactly 50%; an Indian partner holds 50%; joint control | None | None | Joint venture company for both | Not more than one half; joint control |
| The parent's Indian subsidiary holds 55% of another Indian company | Parent and its subsidiary | The second Indian company | None | Explanation (a): control through a subsidiary |
| Two Indian companies, each a subsidiary of the same parent | Parent | Both | None | Fellow subsidiaries; related parties under section 2(76)(viii)(B) |
| An Indian company holds 45% of the equity and all preference shares; dividends paid | None | None | Associate | 45% of votes; preference shares vote only on their own rights |
| Same, but the preference dividend is unpaid for two years | The Indian investor | The investee | None | Preference shares now vote on all resolutions |
Source: Companies Act, 2013, sections 2(6), 2(46), 2(76) and 2(87), as amended, and section 47(2), read 26 Oct 2026.
The proviso to section 2(87) lets the government cap the layers of subsidiaries for prescribed classes of holding companies. Explanation (d) defines a layer as a subsidiary or subsidiaries of the holding company. The Companies (Restriction on Number of Layers) Rules, 2017 carry the restriction.
Rule 2(2) of those Rules lists the classes that the restriction does not reach. Rule 19(3) of the Overseas Investment Rules, 2022 adopts the same list for its own layer limit. Banking companies, non banking financial companies (NBFCs) registered with the RBI and considered systemically important, insurance companies and Government companies are outside.
The overseas investment side has its own limit. Rule 19(3) bars a person resident in India from a financial commitment in a foreign entity that has invested into India. The bar applies where the result is a structure with more than two layers of subsidiaries. This bites when an Indian subsidiary wants to invest back into its foreign group. Our guide to the overseas direct investment (ODI) rules for an Indian company covers that route.
| Provision | What it does | Who it reaches |
|---|---|---|
| Proviso to section 2(87) | Lets the government cap layers of subsidiaries | Prescribed classes of holding companies |
| Explanation (d) to section 2(87) | Defines a layer as a subsidiary or subsidiaries | All holding companies |
| Companies (Restriction on Number of Layers) Rules, 2017, rule 2(2) | Lists the classes outside the restriction | Banking companies, systemically important NBFCs registered with the RBI, insurance companies, Government companies |
| Overseas Investment Rules, 2022, rule 19(3) | No financial commitment in a foreign entity that has invested into India if the structure exceeds two layers of subsidiaries | Persons resident in India, except the same four classes |
Sources: Companies Act, 2013, section 2(87); Foreign Exchange Management (Overseas Investment) Rules, 2022, rule 19(3), on the RBI website, read 26 Oct 2026.
No, with three exceptions. Section 19(1) bars a company from holding shares in its holding company, either by itself or through its nominees. It also bars a holding company from allotting or transferring its shares to a subsidiary. Any such allotment or transfer is void.
The exceptions are narrow. The subsidiary may hold the shares as the legal representative of a deceased member of the holding company, or as a trustee. It may also keep shares it held before it became a subsidiary. In the first two cases it can vote only on the shares held as legal representative or trustee.
Section 19 talks about a "holding company", and section 2(46) now includes any body corporate in that term. We therefore read section 19 as reaching shares of a foreign parent too. An Indian subsidiary that wants shares in its foreign parent must also comply with the overseas investment rules, including the two layer limit in rule 19(3).
Section 129(3), as substituted in 2017, applies to a company with one or more subsidiaries or associate companies. That company must prepare a consolidated financial statement of itself and all its subsidiaries and associate companies. It must also attach a separate statement of the salient features of each subsidiary's and associate's financial statements.
A foreign parent's group accounts abroad do not appear in the text of section 129(3). Its two provisos deal only with the salient features statement and the government's power to prescribe how consolidation is done. On our files, an Indian company whose immediate parent is abroad, and which has its own Indian subsidiary or associate, prepares consolidated statements in India.
Section 129(7) punishes a failure with imprisonment of up to one year, or a fine of ₹50,000 to ₹5 lakh, or both. Our guides on Ind AS for a private foreign owned subsidiary and the Schedule III format cover the standards and the layout.
Only with approval. The first proviso to section 2(41) covers a holding company, subsidiary or associate company of a company incorporated outside India. If it must follow a different financial year for consolidation abroad, it can apply for approval of that period. Since the Companies (Amendment) Act, 2019, the Central Government decides these applications. The Tribunal decides only those that were pending before it when that Act came into force.
Our guide to a 31 March year end versus a December parent covers when the application is worth making.
Section 2(85) defines a small company by two limits, paid up capital and turnover for the immediately preceding financial year. The Act lets the government prescribe limits of up to ₹10 crore and ₹100 crore. From 1 Dec 2025 the prescribed limits sit at those ceilings.
The proviso then removes three kinds of company whatever their size. A holding company or a subsidiary company is one. A company registered under section 8 is another. The third is a company or body corporate governed by a special Act.
So an Indian subsidiary with ₹1 crore of paid up capital and ₹6 crore of turnover is not a small company. A foreign parent's subsidiary and an Indian group's subsidiary are treated alike.
| Point | Company that qualifies under section 2(85) | Subsidiary of the same size |
|---|---|---|
| Small company status | Yes, within ₹10 crore paid up capital and ₹100 crore turnover | No, excluded by proviso (A) |
| Cash flow statement | May be left out, under the proviso to section 2(40) | Required |
| Penalties | Not more than one half, capped at ₹2 lakh for the company and ₹1 lakh for an officer, under section 446B | Full penalty, unless another section 446B category applies |
| Its holding company | Not applicable | Also excluded, by the same proviso (A) |
Sources: Companies Act, 2013, sections 2(40) and 2(85), as amended in 2017; section 446B as substituted by the Companies (Amendment) Act, 2020; small company limits in force from 1 Dec 2025, read 26 Oct 2026.
Section 446B also covers a start up company, as defined by a Central Government notification, and a producer company. A subsidiary that meets one of those definitions can still claim the reduced penalty under that head. We check this on each file before we advise on a penalty.
Two further points apply. Where an Indian public company is the holding company, section 2(71) deems the subsidiary a public company, even if its articles keep it private. Separately, the Corporate Laws (Amendment) Bill, 2026, introduced in the Lok Sabha on 23 Mar 2026, proposes ceilings of ₹20 crore and ₹200 crore. A Joint Parliamentary Committee reported on it on 3 Aug 2026. It was not among the 12 bills both Houses passed in the Monsoon Session (PIB, 13 Aug 2026). Until it passes, the current limits apply.
Section 2(76)(viii) makes a body corporate a related party of a company in three cases. It may be a holding, subsidiary or associate company of that company. It may be a subsidiary of a holding company to which the company is also a subsidiary. Or it may be an investing company or venturer of the company, meaning a body corporate whose investment makes the company its associate.
So a foreign parent, its Indian subsidiary, the subsidiary's own subsidiaries and every fellow subsidiary are related parties of each other. Section 188 then governs the related party contracts between them. Section 188(5) sets a penalty of ₹5 lakh where the company is not listed, and ₹25 lakh where it is listed.
Two money rules turn on the relationship. Section 185(3)(c) takes a holding company's loan to its wholly owned subsidiary outside the section 185 bar. The same applies to a guarantee or security for a loan to that subsidiary, subject to the section's conditions. Section 185(3)(d) covers a holding company's guarantee or security for a bank or financial institution loan to any subsidiary. Both are tests for an Indian lender, so they matter when the Indian subsidiary funds its own Indian subsidiary.
A foreign parent lending to its Indian subsidiary is on a different track, the external commercial borrowing rules. Our guides on related party transactions under section 188 and on an ECB loan from a foreign parent cover each side.
FEMA asks whether resident Indian citizens own and control the company. Rule 23 of the FEMA (Non Debt Instruments) Rules, 2019 defines ownership as beneficial holding of more than 50 percent of the equity instruments. Rule 2(da) gives control the meaning in the Companies Act, 2013. An Indian company owned or controlled by persons resident outside India is what practitioners call an FOCC, a foreign owned or controlled company.
When such a company invests in another Indian company, the investment is downstream investment. The investee receives indirect foreign investment, which must follow the entry route, sectoral caps, pricing guidelines and conditions for its sector. The investing company needs board approval, and must bring the funds from abroad rather than borrow in the domestic market. Internal accruals are allowed, and para 9.3.7 of the RBI Master Direction defines them as profits transferred to reserve after taxes.
| FEMA point | Where it sits | What it means in practice |
|---|---|---|
| Ownership | Rule 23, Explanation (a) | Beneficial holding of more than 50% of equity instruments, so nominee shares follow the parent |
| Control | Rule 2(da) | Same meaning as section 2(27) of the Companies Act, 2013 |
| Downstream investment | Rule 23, Explanation (g) | Investment by an Indian entity with foreign investment into another Indian entity |
| Indirect foreign investment | Rule 23, Explanation (i) | Downstream investment received from an Indian entity not owned and not controlled by resident Indian citizens |
| Funding | Rule 23(4); Master Direction paras 9.3.6 and 9.3.7 | Funds from abroad or internal accruals; no funds borrowed in the domestic market |
| Investment into a wholly owned subsidiary | Rule 23(3) | Indirect foreign investment capped at the investing company's own total foreign investment |
| Reporting | FEMA 395, regulation 4 | Form DI within 30 days of the allotment, filed by the investing company |
| Annual check | Master Direction para 9.7.1 | Statutory auditor's certificate on FEMA compliance for downstream investments |
Sources: FEMA (Non Debt Instruments) Rules, 2019, rules 2(da) and 23; FEMA 395/2019-RB, regulation 4; RBI, Master Direction on Foreign Investment in India (updated up to 15 Jun 2026), read 26 Oct 2026.
The Companies Act and FEMA tests can give different answers. A foreign holder with rights over management or policy decisions can control a company under FEMA. It may still have less than half the votes and no board majority. Our guide to downstream investment by an FOCC and Form DI works through the reporting.
We use "wholly owned subsidiary" for a company whose holding company holds the beneficial interest in every share. A partly owned subsidiary has outside shareholders. Several provisions treat the two differently.
| Provision | Wholly owned subsidiary | Partly owned subsidiary |
|---|---|---|
| Section 185(3)(c), loan by an Indian holding company | Outside the section 185 bar | Not covered by clause (c) |
| Section 185(3)(d), guarantee for a bank or financial institution loan | Covered | Covered |
| Section 186(3) proviso, special resolution for loans, guarantees, security and acquisition of securities | Not needed | Needed where the section's limits are crossed |
| Section 177, audit committee approval of related party transactions | Not needed for transactions with the holding company, other than section 188 transactions | Applies in full |
| Rule 23(3) of the Non Debt Instruments Rules | Indirect foreign investment capped at the investor's total foreign investment | Computed on the actual holding |
| Members on the register | Needs a nominee for the second member | Outside shareholders fill the register |
Sources: Companies Act, 2013, sections 177, 185 and 186, as amended by the Companies (Amendment) Act, 2017; FEMA (Non Debt Instruments) Rules, 2019, rule 23(3), read 26 Oct 2026.
Section 177 matters only for a company that must have an audit committee. Our guide to a wholly owned subsidiary in India covers the setup, including the nominee shareholder.
Assumptions: a Singapore parent owns A India Private Limited. A then invests in two Indian companies, B and C. The share numbers are for illustration, every share has a face value of ₹10, and B's turnover for the previous year is ₹6 crore.
| Company | Shareholders | Shares and amount | Classification |
|---|---|---|---|
| A India Private Limited | Singapore parent 19,99,999 shares; its nominee 1 share | 20,00,000 shares, ₹2 crore paid up | Wholly owned subsidiary of the parent |
| B India Private Limited | A 6,00,000 shares; an Indian founder 4,00,000 shares | 10,00,000 shares, ₹1 crore paid up | Subsidiary of A and, through A, of the parent |
| C India Private Limited | A 3,00,000 shares; other Indian holders 7,00,000 shares; no board rights for A | 10,00,000 shares, ₹1 crore paid up | Associate of A |
Source: Krystal7 worked example applying sections 2(6), 2(46) and 2(87), read 26 Oct 2026.
A is a holding company because it has a subsidiary, B, and it has an associate, C. A prepares consolidated financial statements covering B and C under section 129(3). A attaches the statement of salient features for B and C. A failure exposes the officers responsible under section 129(7).
B has ₹1 crore of paid up capital and ₹6 crore of turnover. Those figures sit well inside ₹10 crore and ₹100 crore, but B is a subsidiary, so it is not a small company. Its financial statements include a cash flow statement. Section 446B does not halve its penalties on the small company ground.
A, B, C and the Singapore parent are related parties of each other under section 2(76)(viii). If A lends ₹25 lakh to B, clause (c) of section 185(3) does not apply, because B is not wholly owned. A works through the section 185 and section 186 conditions instead. Section 19 stops B from buying any shares in A.
A is owned by a person resident outside India, so its ₹60 lakh into B and ₹30 lakh into C are downstream investments. A is not owned and not controlled by resident Indian citizens. On our reading, the whole of A's 60 percent in B and 30 percent in C counts as indirect foreign investment.
A files Form DI within 30 days of each allotment. It funds the ₹90 lakh from the parent's remittances or from internal accruals, not from an Indian bank loan. B and C must be in sectors where that level of foreign investment is allowed. A also needs its statutory auditor's annual certificate on downstream investment compliance.
Now assume a different Indian investor, P India Private Limited, holds 1,80,000 of T India Private Limited's 4,00,000 equity shares. That is ₹18 lakh, or 45 percent of the equity votes. P also holds all of T's ₹2 crore of preference shares.
P holds ₹2.18 crore of T's ₹2.40 crore share capital, about 91 percent. While T pays the preference dividend, P has 45 percent of the votes, so T is an associate of P, not a subsidiary. If the dividend stays unpaid for two years, the preference shares vote on all resolutions. Under the first proviso to section 47(2), votes then follow paid up capital. P's voting power rises to about 91 percent and T becomes P's subsidiary.
Our annual compliance service for companies maps your group and runs the Indian compliance that follows from it. We quote a fixed fee in writing within 48 hours of a scoping call.
A subsidiary is a company in which another company controls the board composition or more than one half of the total voting power. Section 2(87) of the Companies Act, 2013 sets the test. Control held through another subsidiary counts.
The holding company is the one that has control, and the subsidiary is the one that is controlled. Section 2(46) defines the holding company by reference to section 2(87). One company can be both, a subsidiary of its parent and a holding company of its own subsidiary.
Yes. Since the 2017 amendment, "company" in section 2(46) includes any body corporate, and section 2(87) has said so from the start. A foreign parent with more than half the votes is the holding company.
Not on votes alone. Section 2(87)(ii) needs more than one half of the total voting power. A 50 percent holder has a subsidiary only if it also controls the board composition.
A company in which another company has significant influence but which is not its subsidiary. Significant influence means at least 20 percent of total voting power, or control of or participation in business decisions under an agreement. Section 2(6) includes a joint venture company.
No. The proviso to section 2(85) excludes every holding company and subsidiary company, whatever its capital or turnover. A subsidiary therefore prepares a cash flow statement and cannot claim small company penalty relief.
Only if it has its own subsidiary or associate company. Section 129(3) then requires consolidated statements and a statement of salient features. An Indian subsidiary with no investee company prepares standalone statements only.
No, except in three narrow cases. Section 19 bars it, and makes an allotment or transfer to the subsidiary void. The exceptions are shares held as a legal representative, as a trustee, or held before the company became a subsidiary.
A subsidiary of a subsidiary. Explanation (a) to section 2(87) makes it a subsidiary of the top holding company as well. Each step down counts as a layer below the company above it.
An Indian company owned or controlled by persons resident outside India. FEMA measures ownership as beneficial holding of more than 50 percent of the equity instruments, and control in the Companies Act sense. Its investments in other Indian companies are downstream investments reported in Form DI.
Yes. The Companies (Restriction on Number of Layers) Rules, 2017 restrict layers for every company outside four exempt classes. For overseas investment, rule 19(3) of the Overseas Investment Rules, 2022 bars structures with more than two layers of subsidiaries. We map the layers before any new investment.
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WRITTEN BY
Nandini Hasija is a co-founder of Krystal7. She leads brand, business development and marketing, and works with founders to define their engagement. She is a Chartered Accountant and achieved All India Rank 49 in the CA examinations.
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Read the guide ↗ServiceLLP registration in India end to end: DSC, name approval, FiLLiP filing and the LLP agreement in 12 to 15 working days. Fixed fees, foreign partners welcome.
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IncorporationThe documents, beneficial owner checks and foreign director KYC an Indian bank needs for a new subsidiary, how share capital should arrive, the FIRC and FC-GPR link, EEFC rules and a realistic timeline.
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IncorporationHow an Indian company issues shares to foreign investors by private placement under section 42 and rule 14, with PAS-4, the 200 person limit, deadlines, FEMA pricing and FC-GPR.
Read the guide ↗ServiceOne Person Company registration in India: DSC, name approval and SPICe+ filing in about 8 to 10 working days. NRIs can register an OPC since April 2021.
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IncorporationEvery Indian company needs one director who stays in India for 182 days in the financial year. How foreign groups fill the seat, the forms, the liability, the first year rule and the section 172 penalty.
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IncorporationWhich documents a foreign founder or parent company must notarise, apostille or consularise for an Indian incorporation, with a 13 country route table, the German and UAE exceptions, document age rules and a checklist.
Read the guide ↗ServiceRegister your Public Limited Company in India with Krystal7 Consultants. Professional PLC registration services with expert guidance and compliance support.
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IncorporationWhat section 12 and rule 25 require for a new company's registered office, which address proofs work for homes, rented and co working premises, and how the state, GST and bank checks depend on the same address.
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IncorporationEvery government charge in an Indian incorporation, proved with two real SPICe+ challans: nil MCA fee up to ₹15 lakh, ₹1,000 for the name, ₹143 for PAN and TAN, and stamp duty by state.
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Cross-BorderHow a foreign partner sets up a joint venture company in India in 2026. It covers structures, FDI caps, Press Note 3, FEMA pricing, shareholders agreement limits, CCI thresholds, filings, exits and tax, with a 51:49 example.
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IncorporationHow the Registrar tests a proposed company name under section 4 and rules 8, 8A and 8B, how SPICe+ Part A and RUN work, how long a name stays reserved, and the rejection reasons we see most on our filings.
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IncorporationHow a foreign director gets a Class 3 DSC for Indian company filings: the CCA rules, the documents, the video check, personal or organisation certificates, renewal, and when a founder needs no DSC at incorporation.
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Cross-BorderWhat a foreign founder or director may do in India on a business visa or e Business visa, how long each stay lasts, the June 2026 FRRO rule change, payments, employment visa triggers, tax residency and PE.
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Cross-BorderHow a foreign company opens and runs a liaison office in India in 2026: the three year profit and USD 50,000 net worth test, AD bank or RBI approval, permitted work, AAC by 30 September, Form 162, PE risk and closure.
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Cross-BorderWho needs an employment visa in India, the INR 16.25 lakh salary floor, documents the Indian company signs, validity, FRRO registration under the 2025 Rules, director cases, tax, PF and the compounding fees for getting it wrong.
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IncorporationHow a foreign national becomes a director of an Indian company in 2026: the 182 day resident director rule, DIN through SPICe+ or DIR-3, apostille by country, DSC by video, DIR-12 in 30 days and the new three year KYC.
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IncorporationThe structure, steps, licences, costs and transfer pricing model for a foreign parent setting up an Indian software subsidiary or dev center.
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IncorporationHow a foreign parent sets up an Indian manufacturing entity: FDI route, the licence map by authority, honest timelines and the tax position in 2026.
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IncorporationThe FDI position, registration steps, environmental and safety licence map, and costs for foreign investors entering India's chemical sector.
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Cross-BorderThe five types of India advisers compared honestly for foreign founders: who each suits, the questions that expose a bad fit, real fee ranges, and where Krystal7 Consultants fits.
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Country GuidesThe questions global founders actually ask before an India entry: what FEMA compliance means, who is responsible, how registration works from abroad, what it honestly costs, and the calendar that follows.
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IncorporationYes, a foreign-owned Private Limited company can register on Udyam. The revised thresholds, the portal steps, and what changes when the entity has FDI.
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IncorporationThe SPICe+ form on the MCA portal, part by part: name reservation, the Part B fields that cause resubmissions, linked forms, 2026 fees and stamp duty, documents and a realistic timeline.
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IncorporationThe right company registration provider for a foreign founder should assess the investor and proposed activity before quoting the filing. Compare the full scope through banking and investment reporting, the people responsible and the recurring compliance work. A certificate alone does not show that the business is ready to operate.
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IncorporationForeign founders can register a company in India, subject to the proposed activity, investment route and ownership checks. Decide whether you will invest personally or through an existing overseas company before preparing documents. A parent company should use the foreign subsidiary registration service to plan its corporate ownership and reporting.
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IncorporationThe truth about top rated online company registration services in India for 2026: how rankings are made, real costs, 8 to 10 working day timelines, and how to actually choose.
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Cross-BorderChoosing your India entry route in 2026: subsidiary, branch, LO or LLP compared on control, tax, FEMA and speed, with a decision framework for founders.
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Cross-BorderHow India's Production Linked Incentive schemes work in 2026, which sectors they cover, what Uttar Pradesh and Tamil Nadu add, how incentives are taxed under the Income Tax Act, 2025, and a checklist for a foreign manufacturer.
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IncorporationWho qualifies for DPIIT startup recognition under the February 2026 notification, why a foreign subsidiary does not, how to apply on NSWS, the benefits, the section 140 tax holiday and the usual rejection reasons.
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Cross-BorderHow CBIC's AEO programme works in India: the four tiers, eligibility, benefits, monthly deferred duty from 1 Mar 2026, mutual recognition, the application and whether a foreign owned subsidiary should apply.
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Cross-BorderHow customs duty in India is built from BCD, SWS, AIDC and IGST, how customs values imports from a foreign parent, how the bill of entry works on ICEGATE, and what drawback and advance authorisation save.
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Cross-BorderWhich countries have a social security agreement with India, how a certificate of coverage exempts posted workers, how EPFO issues one for Indian staff going abroad, totalisation, PF withdrawal and the 2026 scheme.
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Cross-BorderBengaluru, Hyderabad, Pune or Gurugram for a foreign tech subsidiary: talent, office costs, state IT and GCC policies, professional tax, shops and establishments law, lease stamp duty and a decision table.
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Cross-BorderHow the Budget 2026 data centre tax holiday works under Schedule IV serial 13C, what changed in August 2026, the 15 percent safe harbour, infrastructure status, state policies, power, DPDP localisation and the FDI route.
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Cross-BorderWhat an Indian importer must declare, hold and produce under section 28DA and CAROTAR 2020, how customs verifies a claim, and how it works for imports under the UAE, Australia, UK and EFTA deals.
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Cross-BorderTEPA has applied between India and Switzerland, Norway, Iceland and Liechtenstein since 1 Oct 2025. Tariff cuts, origin proof, the investment goal and how it sits with the DTAAs.
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Cross-BorderHow a foreign group sets up in GIFT IFSC: the IFSCA framework, funds, banking units, leasing, fintech and in house centres, the section 147 tax holiday, currency, FEMA status, approvals, and a Singapore and Dubai comparison.
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Cross-BorderThe 6 Feb 2026 India US framework, the 2025 tariff escalation to 50 percent, what changed after the Supreme Court ruling, and the transfer pricing and customs effects for an Indian subsidiary.
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Cross-BorderWho must register with the FRRO, the 14 day deadline under the Immigration and Foreigners Rules, 2025, e FRRO steps, documents, the certificate of registration, address changes, departure, penalties and the employer's duties.
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Cross-BorderThe India EU FTA was concluded on 27 Jan 2026 but is not yet signed or in force. Tariff cuts by sector, the origin rules, services and what it does not change for an EU parent.
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IncorporationHow Indian private companies issue sweat equity shares under section 54 and rule 8, with limits, valuation, lock in, FEMA rules for non residents, tax as a perquisite and ESOP comparison.
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Cross-BorderHow a foreign company sets up an SEZ unit in India: Form F, the Letter of Approval, the bond, net foreign exchange, tax after the section 10AA sunset, GST zero rating, IT units, exit and the 2025 and 2026 reforms.
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Cross-BorderHow a foreign owned Indian company gets an Importer Exporter Code from DGFT, when service exporters need one, the April to June update, deactivation, and the links to customs, GST and FEMA export reporting.
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Cross-BorderHow a foreign parent seconds staff to an Indian subsidiary: the agreement, the real employer test, GST after Northern Operating Systems, PE and TDS after Centrica, payroll and provident fund, with a checklist.
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Cross-BorderHow a foreign group sets up a global capability centre in India, from entity choice and cost plus pricing to the 15.5 percent safe harbour, SEZ or STPI, GST on exports, PE risk, payroll and the yearly filings.
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FEMA & RBIIndia has no direct conversion of a branch or liaison office into a subsidiary. Here are the steps in order, from incorporation and asset transfer at book value to GST, staff, AD bank closure, Form FC-2, PAN and TAN.
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FEMA & RBIHow an Indian subsidiary runs a section 62(1)(a) rights issue for its foreign parent in 2026: offer periods, FEMA pricing on renounced shares, demat, PAS-3 and FC-GPR within 30 days, with a worked example.
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FEMA & RBIHow an Indian subsidiary turns a foreign parent loan, ECB interest, import payables or pre incorporation costs into shares, with the Companies Act route, FEMA conditions, pricing, filings, tax and a worked example.
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FEMA & RBIHow the Overseas Investment Rules and Regulations 2022 work for an Indian company that sets up or buys a foreign entity in 2026: ODI vs OPI, the 400 percent limit, Form FC and UIN, the two layer rule, APR and late fees.
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FEMA & RBIHow a foreign company opens and runs a branch or project office in India in 2026: the eight permitted activities, the profit and net worth test, AD bank approval, the 35 percent tax rate, AAC, FC-3, profit remittance and closure.
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FEMA & RBISOFTEX stopped applying to software exports invoiced from 1 October 2026, when FEMA 23(R)/2026-RB came into force. What to do with September invoices, how the monthly EDF replaces the form, and the nine month realisation rule.
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FEMA & RBISince 1 October 2026 every exporter of services and software files a monthly Export Declaration Form (EDF) under FEMA. Who files it, where, the due dates, the nine month realisation rule and what a missed EDF costs.
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FEMA & RBIThe legal line between FDI and FPI in India: the NDI Rules 10 percent test, SEBI registration, reclassification within five trading days, tax under the Income Tax Act, 2025, reporting and the right route for a foreign parent.
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FEMA & RBIHow FEMA prices shares issued or transferred to non residents in 2026: rule 21 floor and ceiling, who values, DCF, the 90 day report, CCPS and CCD conversion, swaps, angel tax after its repeal, and rule 57 under the Income Tax Act, 2025.
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FEMA & RBIHow an Indian company files PAS-3 when a foreign investor takes shares: the 30 and 15 day clocks, attachments by route, fees, the order with FC-GPR, penalties and fixing a missed return.
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FEMA & RBIWhat RBI purpose codes are, what P0802 and P0807 mean after SOFTEX ended on 1 Oct 2026, the codes for service exports, FDI and payments to a foreign parent, and how to fix a wrong code with your bank.
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FEMA & RBIHow shares of an Indian Private Limited company move between a resident and a non resident in 2026: FEMA pricing, SH-4 and demat, stamp duty, FC-TRS within 60 days, deferred payment, capital gains, TDS and treaties.
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FEMA & RBIWhat a FIRC and an eBRC are, how to get each from your bank and the DGFT portal, the GST refund link, the 2026 FEMA export rules with EDF and nine month realisation, and fixes for missing certificates.
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FEMA & RBIHow an EEFC account works for a foreign owned Indian company or exporter in 2026: the 100 percent credit rule, permitted debits, the monthly conversion rule, interest, GST refunds, worked examples and a checklist.
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FEMA & RBIHow a foreign parent lends to its Indian subsidiary under the 2026 ECB rules: who can lend, the USD 1 billion limit, end uses, Form ECB 1 and ECB 2, late fees, withholding tax and transfer pricing.
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FEMA & RBIWho files the Annual Performance Report for overseas direct investment, the 31 December due date, when unaudited accounts are allowed, how AD banks file it in 2026, and the flat INR 7,500 late fee.
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FEMA & RBIA practical guide for foreign founders on identifying FDI automatic route sectors in India, understanding when government approval applies, and what to confirm before incorporating or accepting investment.
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FEMA & RBIForm FC-GPR, also written FCGPR: what it reports, the 30 day clock from allotment, the FIRMS portal steps through your AD bank, the certificates the form needs, and what a late filing costs.
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FEMA & RBIA practical guide for foreign founders on FDI reporting requirements in India, covering when RBI reporting applies, which filings to prepare, common mistakes, and when to bring in a compliance advisor.
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FEMA & RBIEvery legal route from an Indian subsidiary to its foreign parent with 2026 rates: dividends under treaty, royalties, buyback after April 2026, and the filings banks actually check.
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FEMA & RBIA step by step guide for foreign investors allotting shares in an Indian company: FEMA and Companies Act requirements, Automatic versus Approval Route, FMV pricing under FEMA valuation norms, FC-GPR filing on the FIRMS portal, and the post allotment compliance calendar covering PAS-3, annual return, and FLA.
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FEMA & RBIA practitioner walkthrough of FEMA compounding under the 2024 Rules: PRAVAAH filing, the INR 10,000 fee, penalty caps and the 180 day order timeline.
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FEMA & RBIThe full FDI compliance map for foreign owned companies in India: FC-GPR, FCTRS, FLA, sectoral caps and the penalties for getting reporting wrong.
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FEMA & RBIFC-GPR and FC-TRS are the two FEMA forms every foreign investor in an Indian company eventually meets. This guide sets out the difference between them in one table, explains when each applies, the 30 and 60 day filing clocks, and how to file correctly on the FIRMS portal.
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FEMA & RBIFC-GPR filing for foreign investment in India: the 30 day timeline, FIRMS portal steps, documents, LSF for delays and how to file without rejections.
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FEMA & RBILate or defective FC-GPR? Understand LSF regularisation versus compounding under the 2024 FEMA Rules, the PRAVAAH process, fees and timelines.
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FEMA & RBIHow Indian exporters net export receivables against import payables with the same overseas buyer, supplier or their group companies under FEMA, with the AD bank's role, EDPMS and IDPMS closure, write off limits and documents.
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FEMA & RBIHow FEMA treats OCI cardholders who invest in or direct Indian companies, with repatriation and non repatriation routes, FEMA and tax residence, DIN and KYC, Press Note 3, property and bank accounts.
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FEMA & RBIHow RBI computes the late submission fee for delayed FC-GPR, FC-TRS, LLP, ODI, FLA and ECB filings, the three year window, the cap, how to pay, the 2026 ECB changes and when compounding takes over.
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FEMA & RBIHow foreign partners invest in an Indian LLP under Schedule VI of the NDI Rules, with the sector test, designated partners, pricing, Form LLP(I) and LLP(II), conversion, tax and when an LLP fits.
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FEMA & RBIHow a foreign company merges into an Indian company under section 234 and rule 25A, the 2024 fast track for a foreign parent and its subsidiary, FEMA deemed approval, two year windows, tax and stamp duty.
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FEMA & RBIHow an Indian company pays a foreign supplier or its parent in advance for goods or services under the FEMA import rules in force from 1 Oct 2026, with guarantees, IDPMS, time limits and repatriation.
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FEMA & RBICase note on published RBI compounding orders for late FC-GPR, ARF and FC-TRS reporting and late share issues, with the amounts RBI charged, the compounding matrix, the late submission fee route and what to do now.
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FEMA & RBIHow rule 9(6) of the NDI Rules lets buyers and sellers defer, escrow or indemnify up to 25 percent of the price for 18 months, and how pricing, FC-TRS, escrow accounts, TDS and capital gains timing work.
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FEMA & RBIHow foreign investors fund Indian companies with CCDs, CCPS, warrants and convertible notes, with the NDI Rules, conversion pricing, coupons, tax, FC-GPR, Form CN and company law steps.
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FEMA & RBIThe time limit to realise and repatriate export value under FEMA for goods and services, the 2025 and 2026 changes, EDPMS, extension, set off, reduction and write off, and the GST refund consequences.
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FEMA & RBIHow rule 23 of the NDI Rules treats investment by a foreign owned or controlled Indian company, with the ownership and control tests, caps, pricing, the funds rule, Form DI and the annual auditor certificate.
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FEMA & RBIWhen an Indian company or foreign owned subsidiary must hold a Legal Entity Identifier under RBI rules for cross border payments, bank loans, forex deals and RTGS, and how to get and renew one.
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FEMA & RBIWhat Press Note 3 (2020) requires, the seven countries it covers, the 2026 beneficial owner test, the 10 percent automatic route, DPIIT reporting, approval timelines and the filing steps.
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Transfer PricingHow India taxes a management fee paid to a UAE parent: no FTS article in the treaty, PE risk, TDS and Forms 145 and 146, reverse charge GST, the benefit test, disallowance risks and UAE corporate tax, with a worked example.
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Transfer PricingA practical guide for foreign founders on India's safe harbour rules for transfer pricing, covering when they apply to related party transactions, how they fit into compliance, and what to check before relying on them.
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Transfer PricingWho files Part A and Part B of Form 56, when an Indian subsidiary files Form 58 or the CbC report itself, the 2026 and 2027 due dates, penalties under sections 442 and 459, and two worked examples.
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Transfer PricingA practical guide for foreign founders on when Form 3CEB applies to an Indian entity, what to prepare for the chartered accountant, and how to avoid missed portal actions around transfer pricing reporting.
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Transfer PricingThe six prescribed methods under section 165 of the Income-tax Act, 2025 (formerly section 92C) with a worked example of each, the 1 to 3 percent tolerance range, safe harbour, and Form 3CEB documentation.
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Transfer PricingA practical guide for foreign founders on transfer pricing documentation requirements in India, covering local file, master file, intercompany agreements, benchmarking, and when to bring in an advisor for an Indian subsidiary.
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Transfer PricingCase note on the Delhi High Court rulings that decide management fee disputes for Indian subsidiaries: benefit, duplication, shareholder costs, allocation keys, aggregation, the 2026 safe harbour and the documents that win.
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TaxHow an Indian subsidiary buys back shares from its foreign parent under section 68, prices the buyback under FEMA, files FC-TRS, and withholds tax now that buybacks are capital gains again.
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Income Tax & TDSHow India's General Anti Avoidance Rule works for foreign groups in 2026: Chapter XI of the Income Tax Act, 2025, the INR 3 crore test, grandfathering, the Approving Panel, PPT and LOB, and the substance file.
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Income Tax & TDSSection 63 of the Income Tax Act, 2025 keeps the INR 1 crore and INR 10 crore tax audit limits. See who needs an audit, the FY 2025-26 forms and dates, Form 26 from tax year 2026-27 and the new flat fee.
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Income Tax & TDSHow an Indian company deducts tax on royalty, fees, interest and dividends paid abroad in 2026, with section 393 and 207 rates, treaty rates for eight countries, rule 217, Forms 41, 128, 144 and 131, and a US example.
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TaxCross border tax for founders in India: permanent establishment risk, withholding tax, treaty relief and transfer pricing, explained for 2026.
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TaxHow the India France DTAA taxes a French parent and its Indian subsidiary: the 10 percent rates, the MFN clause after Nestle SA, technical fees, PE, the 10 percent share rule, the MLI and Form 41.
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Income Tax & TDSHow an Indian company claims credit for tax withheld abroad in 2026: rule 128 and Form 67 for AY 2026-27, rule 76 and Forms 44 and 45 from tax year 2026-27, due dates, documents, disputes and worked examples.
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Income Tax & TDSHow the India Netherlands DTAA taxes a Dutch company in 2026: 10 percent rates, the MFN clause after Nestle SA, share sales under Article 13(5), PE without a service clause, the MLI and Form 41.
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Income Tax & TDSHow the India Mauritius DTAA taxes a Mauritius company in 2026: treaty rates, source taxation of share gains after the 2016 protocol, grandfathering, Article 27A, the 2024 PPT protocol, Tiger Global, TRC and substance.
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TaxHow the India Singapore DTAA taxes a Singapore company in 2026: treaty rates, the make available test, capital gains after 2017, Article 24A, the MLI principal purpose test, PE triggers, Form 41 and substance.
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Income Tax & TDSWhen a foreign company becomes tax resident in India under POEM in 2026: section 6(10), CBDT Circular 6 of 2017, the active business test, the INR 50 crore threshold, founder risk and the tax cost.
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Income Tax & TDSHow India taxes RSUs and ESOPs that a foreign parent grants to staff of its Indian subsidiary in 2026: perquisite value under rule 15, TDS, cross charges, FEMA, capital gains, Schedule FA and Form 44.
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Income Tax & TDSHow the India Germany DTAA taxes a German company in 2026: the flat 10 percent rates, managerial fees, the missing service PE rule, capital gains, the MLI position, the Nestle MFN ruling and Form 41.
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Income Tax & TDSHow a foreign company gets a lower or nil TDS certificate in Form 128 under section 395 and rule 213: who can apply, documents, how the officer sets the rate, validity, the payer's Form 144 entry, and a UK SaaS example.
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Income Tax & TDSWhich return a foreign owned company in India files, the extended AY 2026-27 due dates, the ITR-6 schedules foreign owners trigger, the 22 percent regime and MAT credit choice, late filing costs and the move to the 2025 Act.
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Income Tax & TDSHow a foreign company or foreign national gets an Indian PAN in 2026: Form 96 and Form 95 replace Form 49AA, the apostilled registration certificate, fees, the Indian representative, rule 217 relief from higher TDS, and two worked examples.
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Income Tax & TDSHow an Indian subsidiary or a foreign company gets a TAN under section 397 of the Income Tax Act, 2025: Forms 134 and 135, rule 216 timing, documents, the INR 10,000 penalty, and the TDS work that follows.
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Income Tax & TDSHow the India UAE DTAA taxes a UAE company in 2026: who counts as a UAE resident, treaty rates, technical fees without an FTS article, free zone companies, capital gains, the MLI principal purpose test, PE, UAE corporate tax and documents.
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Income Tax & TDSHow the India UK DTAA taxes a UK company in 2026: Articles 11 to 14 rates, the make available test, service PE day counts, capital gains under Indian law, the MLI principal purpose test and Form 41.
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Income Tax & TDSHow the India US tax treaty taxes a US company in 2026: dividend, interest and royalty caps, fees for included services and the make available test, service PE, Article 24 LOB, capital gains, Form 41 and Form 6166.
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Income Tax & TDSWhat a non resident needs to claim treaty rates in India in 2026: the foreign TRC, Form 41 (old Form 10F) filed online, PAN or rule 217 details, validity rules, and Forms 42 and 43 for an Indian company's own TRC.
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Income Tax & TDSA section and form map from the 1961 Act to the Income Tax Act, 2025 for foreign owned subsidiaries, with the FY 2025-26 transition rule, tax year 2026-27 due dates and the 2026 MAT change.
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Income Tax & TDSA practical guide for foreign founders on how permanent establishment risk arises in India through employees, contracts, offices, and vendors, and how to structure India activity to reduce that exposure before scaling up.
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Income Tax & TDSForms 15CA and 15CB became Forms 145 and 146 on 1 Apr 2026. The four parts of Form 145, the rule 220 exemptions, treaty claims, portal steps, penalties and a worked royalty example.
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Income Tax & TDSThe corporate tax rate in India for foreign companies is 35 percent plus surcharge and cess. Full rate table with effective rates, DTAA withholding relief and the subsidiary comparison.
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TaxFor a foreign owned subsidiary, GST is not just registration, it is export refunds, reverse charge and a monthly filing rhythm. Here is a ranked, honest 2026 guide and who each firm suits.
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TaxWhen minimum alternate tax applies to foreign companies and Indian subsidiaries: section 115JB and section 206, the 14 percent final MAT, book profit, the foreign company exclusions, MAT credit and the section 200 choice.
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TaxHow the single tax year in section 3 of the Income Tax Act, 2025 replaces previous year and assessment year from 1 Apr 2026, how returns, advance tax, TDS and assessments are labelled, and how FY 2025-26 income is handled.
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TaxWhy angel tax under section 56(2)(viib) ended from AY 2025-26, which old share issues to foreign investors are still exposed, and the FEMA, Companies Act and income tax rules that still apply.
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TaxAdvance tax for companies in India: the four due dates, the INR 10,000 threshold, section 405 computation, interest under sections 424 and 425 (old 234B and 234C), online payment and a cost plus example.
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TaxThe history of India's equalisation levy, the end of the 2 percent e commerce levy on 1 Aug 2024 and the 6 percent advertising levy on 1 Apr 2025, and the income tax, withholding and GST rules that now apply.
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TaxHow the India Canada DTAA taxes a Canadian parent and its Indian subsidiary: dividend, interest and royalty caps, fees for included services, the related enterprise service PE, capital gains, the MLI and the papers.
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TaxHow the India Australia DTAA taxes an Australian parent and its Indian subsidiary: 15 percent dividends and interest, the royalty bands, management fees, the 183 day service PE, section 11J and ECTA.
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TaxWhen a foreign company is taxable in India: business connection under section 9 of the Income Tax Act, 2025, the INR 2 crore and 3 lakh user SEP tests, agents, treaty PE override, digital businesses and a decision table.
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TaxThe rates, holding period, withholding, treaty exemptions for Mauritius, Singapore and Netherlands sellers, buyer side fair value rules and FEMA reporting when a non resident sells unlisted Indian shares.
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TaxWhat Union Budget 2026 and the Finance Act, 2026 changed for foreign owned Indian companies and non residents: MAT, buy back tax, withholding, transfer pricing, new exemptions, customs, GST and FEMA.
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TaxHow India's thin capitalisation rule works for Indian subsidiaries: section 94B and section 177, the INR 1 crore trigger, the 30 percent of EBITDA cap, guarantees, exclusions, parent ECBs and the carry forward.
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TaxCase note on AAR v Tiger Global International II Holdings (2026 INSC 60): the facts, the order, grandfathering under Article 13(3A), TRCs, GAAR and what Mauritius and Singapore holding structures should do now.
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TaxHow India decides the tax residency of a foreign employee: the 182 day and 60 plus 365 day tests, not ordinarily resident status, salary for work in India, the 90 day and treaty short stay exemptions, and the papers.
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TaxCase note on AO v Nestle SA (2023 INSC 928): why MFN clauses in India's treaties need a notification, what Switzerland, the Netherlands and France did next, and the dividend rates that apply today.
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TaxHow the India Japan DTAA taxes a Japanese parent and its Indian subsidiary: the 10 percent rates, the wide technical fee definition, JBIC and NEXI interest, PE, capital gains, the MLI and Form 41.
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TaxHow Form 27Q works for TDS on payments to non residents, what goes into it, the 31 July to 31 May due dates, Form 131, corrections, late fee and penalty, and the switch to Form 144 under the Income Tax Act, 2025.
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