# INC-20A Commencement of Business for a Foreign Subsidiary in 2026

> Source: https://krystal7.com/insights/inc-20a-commencement-of-business-foreign-subsidiary
> Publisher: Krystal7 Consultants (Krystal7 Innovations Private Limited), Gurugram, India
> Author: Nihal Srivastava
> Published: 21 Aug 2026; updated 01 Oct 2026
> Summary: INC-20A is due within 180 days of incorporation, and a late filing costs the company INR 50,000 and each officer in default up to INR 1,00,000.

*Written by Nihal Srivastava, Krystal7 Consultants. Last updated 27 September 2026.*

**INC-20A is the declaration a director files with the Registrar of Companies before a new company starts business. Section 10A of the Companies Act, 2013 and rule 23A of the Companies (Incorporation) Rules, 2014 require it. It confirms that every subscriber to the memorandum has paid for its shares. A company with share capital must file it within 180 days of incorporation and cannot trade or borrow before then. A late filing costs the company INR 50,000 and each officer in default INR 1,000 a day, up to INR 1,00,000.**

This page covers the order of steps when a foreign parent pays, the evidence, and the penalty and strike off risk on 27 Sep 2026. INR 1,00,000 is one lakh (100,000).

| Item | Position on 27 Sep 2026 |
|---|---|
| Form | INC-20A, declaration for commencement of business |
| Law | Section 10A of the Companies Act, 2013; rule 23A of the Companies (Incorporation) Rules, 2014 |
| Who files | Every company with a share capital incorporated after 2 Nov 2018 |
| Signed by | A director, with a digital signature certificate (DSC) |
| Verified by | A Chartered Accountant, Company Secretary or Cost Accountant in practice |
| Due date | Within 180 days of the date of incorporation |
| What it declares | Every subscriber to the memorandum has paid for the shares it agreed to take |
| Main attachment | Proof of payment by each subscriber, usually the bank statement |
| Before filing | No business and no borrowing |
| Normal fee (INR) | 200 to 600, by nominal share capital |
| Penalty on the company (INR) | 50,000 |
| Penalty on each officer in default (INR) | 1,000 a day, capped at 1,00,000 |
| ROC power | Strike off when no declaration is filed and no business is carried on |
| Portal | MCA V3 |

## What is INC-20A?

INC-20A is the declaration for commencement of business. A director files it with the Registrar of Companies (ROC) on the MCA V3 portal. It states that every subscriber to the memorandum has paid for its shares. Until the company files it, the company cannot start business or use its borrowing powers.

The duty comes from section 10A(1) of the Companies Act, 2013 (the Act). Clause (a) asks for the director's declaration within 180 days of incorporation. Clause (b) asks the company to file verification of its registered office under section 12(2). The Companies (Amendment) Act, 2019 inserted section 10A, with effect deemed from 2 Nov 2018.

Rule 23A of the Companies (Incorporation) Rules, 2014 adds two conditions. A Company Secretary, Chartered Accountant or Cost Accountant in practice must verify the contents. Where the objects need approval from a sectoral regulator, such as the Reserve Bank of India (RBI), the company must attach it.

For a foreign owned company, Form FC-GPR reports the same shares to the RBI.

## Which companies must file INC-20A?

Every company with a share capital incorporated after 2 Nov 2018 must file INC-20A. That covers a Private Limited company owned by a foreign parent, a one person company and a Section 8 company with share capital. A company limited by guarantee without share capital does not file it.

Section 10A(1) applies to "a company incorporated after the commencement of the Companies (Amendment) Act, 2019 and having a share capital". Section 1(2) of that Act deems the provision in force from 2 Nov 2018.

A branch or liaison office of a foreign company is not a company incorporated under the Act, so it does not file INC-20A. Our guide to a [wholly owned subsidiary in India](/insights/wholly-owned-subsidiary-in-india) compares the options.

Shares allotted after the subscribers need Form PAS-3 and a fresh FC-GPR instead, as in a [rights issue to a foreign parent](/insights/rights-issue-indian-subsidiary-foreign-parent).

## What is the due date for INC-20A?

INC-20A is due within 180 days of the date of incorporation on the certificate of incorporation. The 180 days are calendar days, and nothing pauses the clock: not a bank delay, a holiday or a pending KYC. For a company incorporated on 1 Jul 2026, the last day is 28 Dec 2026.

We count from the day after incorporation, as in the table below, and plan every filing to land a month early.

| Date of incorporation | Last day for INC-20A (incorporation date plus 180 days) |
|---|---|
| 1 Apr 2026 | 28 Sep 2026 |
| 1 Jul 2026 | 28 Dec 2026 |
| 15 Aug 2026 | 11 Feb 2027 |
| 1 Oct 2026 | 30 Mar 2027 |

There is no minimum waiting period, and we file within a week of the money landing.

## What evidence does INC-20A need when the shareholder is foreign?

INC-20A needs proof that each subscriber paid the full value of its shares. For a foreign parent, the proof is the Indian company's bank statement showing the inward remittance. The Foreign Inward Remittance Certificate (FIRC) from the bank backs it up.

We mark each credit on the bank statement, name the subscriber behind it, and add the FIRC because it names the remitter and the purpose.

| Document | Needed for | Required or advisable | Who provides it |
|---|---|---|---|
| Bank statement showing each subscriber's payment | INC-20A | Required as proof of payment | Indian bank |
| FIRC for each foreign remittance | INC-20A and FC-GPR | Advisable for INC-20A; required for FC-GPR | Authorised dealer (AD) bank |
| KYC report on the foreign remitter | FC-GPR | Required | Overseas bank, through the AD bank |
| Certificate of incorporation and memorandum (subscriber sheet) | Both | Reference | MCA records |
| Sectoral regulator's registration or approval | INC-20A | Required where the objects need it (rule 23A proviso) | Regulator |
| Government approval for foreign investment on the approval route | FC-GPR | Required where the route applies | Administrative ministry |
| Board resolution authorising a director to sign | INC-20A | Advisable | Company |
| DSC of the signing director | INC-20A | Required | Certifying authority |
| Verification by a practising CA, CS or Cost Accountant | INC-20A | Required (rule 23A) | Practising professional |

Two points trip foreign subsidiaries. First, each subscriber must pay from its own account; a payment from a group treasury company does not prove that the subscriber paid. Second, the credit must cover the full value. If intermediary banks deduct charges, the declaration is untrue until the gap is paid.

A nominee holding one share for the parent must pay too, because the declaration covers "every subscriber". Under section 89, the nominee files Form MGT-4 and the parent Form MGT-5. The company then files Form MGT-6 within 30 days of receiving them.

## In what order should the subscription money, FC-GPR and INC-20A happen?

The order that works is: bank account, inward remittance, FIRC and KYC, board meeting, share certificates, INC-20A, then FC-GPR. INC-20A does not legally depend on FC-GPR, but both need the money first. INC-20A has the longer deadline and is the quicker filing, so we file it first.

| Step | Action or filing | Portal or party | Due date | Legal basis |
|---|---|---|---|---|
| 1 | Incorporate through SPICe+ (INC-32) | MCA V3 | Day 0 | Section 7 |
| 2 | Hold the first board meeting and appoint the first auditor | Board | Within 30 days of incorporation | Sections 173(1) and 139(6) |
| 3 | Open the bank account and clear the bank's KYC | Indian bank | As early as possible | Bank KYC rules |
| 4 | Register the company and a business user on FIRMS | RBI FIRMS, AD bank | Before FC-GPR | FIRMS user manual |
| 5 | Receive the subscription money from each subscriber's own account | AD bank | Before INC-20A; ideally within 30 days of incorporation | FEMA 395/2019-RB, regulation 3.1 |
| 6 | Obtain the FIRC and the KYC report on each remitter | AD bank, overseas bank | Soon after the credit | FIRMS user manual |
| 7 | Board records the receipt and approves share certificates | Board | Within 60 days of receiving the money | Regulation 3.1 |
| 8 | Deliver share certificates (Form SH-1) with stamp duty paid | Company | Within 2 months of incorporation | Section 56(4)(a) |
| 9 | File INC-20A | MCA V3 | Within 180 days of incorporation | Section 10A; rule 23A |
| 10 | File FC-GPR | RBI FIRMS | Within 30 days of the date of issue | Regulation 4(1) |
| 11 | File MGT-6 after the nominee declarations | MCA V3 | Within 30 days of receiving the declarations | Section 89(6) |

Step 5 is the bottleneck. After it, INC-20A needs only the bank statement and the professional's verification, while FC-GPR waits for the overseas bank's KYC report. We aim for INC-20A within 45 days of incorporation. Our [SPICe+ guide](/insights/spice-incorporation-spice-plus-guide-2026) covers steps 1 and 3.

## What does the first 180 days look like for a foreign subsidiary?

Some dates run from incorporation and some from the day the money lands. Mapping both at the start avoids most defaults.

| Day or trigger | Event | Law or source | Owner |
|---|---|---|---|
| Day 0 | Certificate of incorporation with CIN, PAN and TAN | SPICe+ | MCA, Income Tax Department |
| Within 30 days | Registered office in place; verification of the office furnished to the ROC | Sections 12(1) and 12(2) | Company |
| Within 30 days | First board meeting; first auditor appointed by the board | Sections 173(1) and 139(6) | Board |
| Within 30 days | Nominee and parent declare the beneficial interest (MGT-4, MGT-5) | Section 89 | Nominee, parent |
| As early as possible | Bank account open, money received, FIRC issued | Bank practice | Bank, parent |
| Within 60 days of the money | Subscriber shares recorded as issued and fully paid | FEMA 395/2019-RB, regulation 3.1 | Board |
| Within 2 months of incorporation | Share certificates delivered to subscribers | Section 56(4)(a) | Company |
| Within 30 days of issue | FC-GPR on FIRMS | Regulation 4(1) | Company, AD bank |
| Within 30 days of a BEN-1 declaration | BEN-2 on MCA V3, where an individual is a significant beneficial owner | Section 90 | Company |
| By day 180 | INC-20A on MCA V3 | Section 10A(1)(a) | Director |
| After INC-20A | Trade, invoice, borrow and sign customer contracts | Section 10A(1) | Company |

Section 10A(1)(b) makes the registered office verification a condition for starting business. If your SPICe+ filing did not give the registered office address, file Form INC-22 within 30 days of incorporation. For a parent in a chain of holding companies, see our note on [BEN-2 when the parent is foreign](/insights/significant-beneficial-owner-ben-2-foreign-parent).

## What date of issue goes in FC-GPR for subscriber shares?

No RBI circular or FAQ we have found settles the date of issue for subscriber shares. The Companies Act treats subscribers as members on registration, which points to the date of incorporation. FEMA expects the company to issue shares after the money arrives. We use the date the board records the receipt, after checking with the AD bank.

FC-GPR does apply to subscriber shares: the RBI's FIRMS user manual lists "Subscription to Memorandum of Association (MoA)" as a nature of issue. FEMA 395/2019-RB is the Foreign Exchange Management (Mode of Payment and Reporting of Non Debt Instruments) Regulations, 2019. Its regulation 4(1) sets the due date at 30 days from the date of issue.

On the incorporation date reading, FC-GPR falls due 30 days after incorporation, often before the money lands. So we push for the money within 30 days of incorporation, which keeps both readings compliant. Where that fails, we agree the date with the AD bank before filing. If the bank insists on the incorporation date, a late submission fee applies under A.P. (DIR Series) Circular No. 16 of 30 Sep 2022: INR 7,600 on INR 10,00,000 filed less than a month late.

The Master Direction on Foreign Investment in India, updated up to 15 Jun 2026, covers price in paragraph 8.5. Shares taken by subscription to the memorandum are at face value, subject to entry route and sectoral caps. We read this as removing the need for a valuation report. Our [FC-GPR filing guide](/insights/fc-gpr-filing-timeline-and-process-for-foreign-founders) covers the FIRMS screens.

## How do INC-20A and FC-GPR differ?

INC-20A tells the ROC that the subscribers have paid, so the company may start business. FC-GPR tells the RBI, through the AD bank, that a person resident outside India now holds shares. A foreign owned subsidiary needs both.

| Point | INC-20A | FC-GPR |
|---|---|---|
| Law | Section 10A of the Act; rule 23A | Regulation 4(1) of FEMA 395/2019-RB |
| Regulator | Registrar of Companies (MCA) | RBI, through the AD bank |
| Portal | MCA V3 | FIRMS (Single Master Form) |
| Who is covered | Every subscriber, resident or not | Only persons resident outside India |
| Trigger | Incorporation | Issue of shares to a person resident outside India |
| Deadline | 180 days from incorporation | 30 days from the date of issue |
| What it proves | Subscribers have paid; the company may start business | Foreign investment received and reported |
| Key attachments | Proof of payment; sectoral approval where needed | FIRC, KYC report, declaration, Company Secretary certificate, face value basis, approvals |
| Signed by | A director, verified by a practising professional | The company's authorised business user |
| Filing fee (INR) | 200 to 600, by nominal share capital | None |
| Late consequence | Penalty under section 10A(2); additional fees; possible strike off | Late submission fee for up to three years; compounding after that |
| Processing | A declaration; section 10A sets no approval step, and the SRN is the proof of filing | AD bank verifies, then approves or returns |

A late FC-GPR beyond three years goes to compounding, covered in our guide to a [FEMA compounding application](/insights/fema-compounding-application-a-complete-guide-to-resolving-fema-contraventions-in-2026).

## Why do bank accounts and remittances get delayed?

The bank runs KYC on the new company, its directors and its foreign beneficial owners. It may then hold the remittance until it is satisfied about the remitter and the purpose. Each delay eats into the 180 days.

| Delay | Why it happens | Fix |
|---|---|---|
| Foreign director KYC rejected | Passport and address proof not apostilled as the bank requires | Get apostilled copies before incorporation |
| Beneficial owner KYC incomplete | The bank cannot trace the parent's owners to individuals | Send a signed group chart and the parent's register of members |
| Signatory cannot attend | The bank needs an in person or video KYC of each signatory | Appoint a signatory who can attend |
| Board resolution rejected | The resolution does not follow the bank's format | Use the bank's draft resolution word for word |
| Registered office proof mismatch | Utility bill differs from the SPICe+ address | Use the proofs that went into SPICe+ |
| Remittance held on arrival | The SWIFT message does not state the purpose | State "subscription to equity shares of [company name], CIN [number]" |
| Credit short of the subscription | Intermediary banks deduct charges | Send with charges borne by the sender (SWIFT code OUR) and add a small buffer |
| KYC report not received | The overseas bank has not answered the AD bank | Ask the parent's relationship manager to send it through SWIFT |
| Remitter name mismatch | A group treasury company or a founder pays instead of the subscriber | Pay from the subscriber's own account only |
| FIRC not issued | Some banks issue it only on request | Request it in writing when the credit appears |

We send the parent a one page remittance instruction with the exact INR amount, the account details, the purpose text and the charge code. A parent from a country that shares a land border with India may need government approval before the money moves.

## Can the company trade or sign contracts before INC-20A?

No. Section 10A(1) bars any business and any borrowing until INC-20A is filed and the registered office is verified. Invoices, revenue contracts, parent loans and inter corporate deposits all wait. Set up steps, such as the bank account and GST registration, can go ahead.

The Act does not define "commence any business". The table gives our reading, not a ruling.

| Activity before INC-20A | Our reading | Why |
|---|---|---|
| Open a bank account, apply for GST, register on FIRMS | Allowed | Set up steps, not trading |
| Take the registered office on lease | Allowed | Section 12(1) needs a registered office within 30 days |
| Appoint the auditor, hold board meetings | Allowed | Statutory duties from day one |
| Sign a customer or intercompany service contract | Wait | Revenue activity is business |
| Raise an invoice or export a service | Wait | Revenue activity is business |
| Take a loan from the parent, a director or a group company | Not allowed | Section 10A(1) bars borrowing powers |
| Accept an inter corporate deposit or a bank overdraft | Not allowed | Borrowing |
| Hire employees | Grey | We set joining dates after INC-20A where we can |

Section 10A(2) applies to any default in complying with the section. So borrowing before INC-20A draws the penalty even when the form is on time. The MCA publishes ROC adjudication orders on its site.

Where the parent pays early costs such as legal fees, we record a documented reimbursement as a payable, not a loan. We settle it after INC-20A. Further funding goes through a share issue or, after INC-20A, an [ECB loan from the foreign parent](/insights/ecb-loan-from-foreign-parent-india).

## What if the foreign parent has not remitted within 180 days?

File INC-20A the day the money lands, even after day 180. The default runs from day 181, and each day adds INR 1,000 to each officer's penalty until the cap of INR 1,00,000. The ROC then adjudicates under section 454. Section 403(1) lets the company file late on payment of the additional fee shown in the fee tables below.

The FEMA clock still runs. The company must issue the shares within 60 days of receiving the money, or refund it within the next 15 days under regulation 3.1. The two month share certificate deadline in section 56(4)(a) will also have passed. Section 56(6) sets a penalty of INR 50,000 on the company and on each officer in default.

If the project is off, apply for strike off under section 248(2) or wind the company up. Our guide to [closing an Indian subsidiary](/insights/close-indian-subsidiary-strike-off-or-winding-up) compares the two. Never book the late money as a loan, route it through a third party or backdate board minutes.

## What is the penalty for missing INC-20A?

Section 10A(2) sets the penalty. The company pays INR 50,000. Every officer in default pays INR 1,000 for each day the default continues, capped at INR 1,00,000. The ROC imposes it under section 454. The same penalty applies if the company starts business or borrows before INC-20A.

Under section 2(60), where a company has no key managerial personnel, the officers in default are the directors the board has specified. If it has specified none, all directors are. A new subsidiary rarely has a managing director or company secretary, so every director is exposed, including one abroad. The INR 1,00,000 cap arrives after 100 days.

Section 446B halves the penalty for a one person company, a small company, a start up company and a producer company. The cap is INR 2,00,000 for the company and INR 1,00,000 for an officer. The proviso to section 2(85) excludes a subsidiary from the small company definition. The Explanation to section 2(46) counts a foreign parent as a company for that test. So section 446B helps a foreign owned subsidiary only if DPIIT recognises it as a start up.

The ROC must give a hearing under section 454(4). The company can appeal to the Regional Director within 60 days under section 454(6). If the penalty stays unpaid 90 days after the order, section 454(8) applies. The company then faces a fine of INR 25,000 to INR 5,00,000, and the officer in default faces prosecution.

Two expected reliefs do not apply. The 30 day rectification waiver in the proviso to section 454(3) covers only sections 92(4) and 137. Compounding under section 441 covers offences punishable with fine only, not the civil penalty in section 10A(2).

| Default | Provision | Company (INR) | Each officer in default (INR) |
|---|---|---|---|
| INC-20A not filed within 180 days | Section 10A(2) | 50,000 | 1,000 a day, up to 1,00,000 |
| Business or borrowing before INC-20A | Section 10A(2) | 50,000 | 1,000 a day, up to 1,00,000 |
| Same default by a DPIIT recognised start up | Section 446B | Up to one half, capped at 2,00,000 | Up to one half, capped at 1,00,000 |
| Share certificates not delivered within 2 months | Section 56(6) | 50,000 | 50,000 |
| Adjudicated penalty unpaid after 90 days | Section 454(8) | Fine of 25,000 to 5,00,000 | Prosecution |
| No INC-20A and no business | Sections 10A(3) and 248(1)(d) | Strike off | Name of a struck off company |
| FC-GPR late, within three years | Circular No. 16 of 30 Sep 2022 | 7,500 plus 0.025% of the amount for each year of delay, capped at 100% of the amount | Not applicable |
| Shares not issued in 60 days and money not refunded | FEMA section 13(1) | Up to three times the sum involved, or up to 2,00,000 where not quantifiable | Not applicable |

The Companies (Registration Offices and Fees) Rules, 2014 set the normal fee by nominal share capital. The late filing fee is a multiple of it. Run the [MCA fee calculator](https://www.mca.gov.in/content/mca/global/en/mca/fo-llp-services/enquire-fees.html) before you pay, because the portal applies the current tables.

| Nominal share capital (INR) | Normal fee (INR) |
|---|---|
| Less than 1,00,000 | 200 |
| 1,00,000 to 4,99,999 | 300 |
| 5,00,000 to 24,99,999 | 400 |
| 25,00,000 to 99,99,999 | 500 |
| 1,00,00,000 or more | 600 |

| Delay after day 180 | Additional fee |
|---|---|
| Up to 30 days | 2 times the normal fee |
| 31 to 60 days | 4 times |
| 61 to 90 days | 6 times |
| 91 to 180 days | 10 times |
| More than 180 days | 12 times |

## Can the ROC strike off a company for missing INC-20A?

Yes. Section 10A(3) lets the ROC start removal under Chapter XVIII when two facts meet. No INC-20A was filed within 180 days, and the ROC has reasonable cause to believe the company is not carrying on business. Section 248(1)(d) lists the same ground: the subscribers "have not paid the subscription" and no section 10A declaration was filed within 180 days.

Section 248(1) adds two related grounds. Clause (a) covers a company that has not started business within one year of incorporation. Clause (e) covers a physical verification under section 12(9) that shows no business.

The ROC sends a notice to the company and all its directors in Form STK-1 and allows 30 days for representations. It may then strike off the name and publish a notice in the Official Gazette under section 248(5). Under section 250, a dissolved company ceases to operate except to realise its dues and pay its liabilities. Restoration needs an application to the National Company Law Tribunal (NCLT) under section 252.

If an STK-1 notice arrives, file INC-20A inside the 30 days, even late, with the additional fee. Reply with the SRN, the bank statement and evidence that the company is starting business.

## Who signs and certifies INC-20A when the directors live abroad?

A director signs INC-20A with a DSC, after the board authorises the signature. A director living abroad can sign with a valid Indian DSC and a DIN. A Chartered Accountant, Company Secretary or Cost Accountant in practice then verifies the form with their own DSC and membership number.

Foreign national directors obtain a DSC from an Indian certifying authority, usually with apostilled documents and a video verification. We start this at incorporation, because a missing DSC can hold up INC-20A after the money lands. Our article on [appointing a foreign national director](/insights/foreign-national-director-indian-company-din) covers the DIN and DSC steps.

Section 149(3) requires at least one director who stays in India for 182 days or more in a financial year. In the year of incorporation, the test applies proportionately. That resident director often signs INC-20A and FC-GPR.

Ask the practising professional to check the bank statement and FIRC against the subscriber sheet.

## What changed in 2026

Section 10A and rule 23A did not change during 2026 as far as we found. The changes sit around them.

| Date | Change | Instrument | Effect on INC-20A and FC-GPR |
|---|---|---|---|
| 24 Feb 2026 | Companies Compliance Facilitation Scheme, 2026 (CCFS-2026) opened for 15 Apr to 15 Jul 2026 | MCA General Circular No. 01/2026 | Aimed at annual filings such as AOC-4 and MGT-7; closed 15 Sep 2026, so no relief for INC-20A now |
| 10 Mar 2026 | Automatic route kept for non controlling land border beneficial ownership up to 10 percent | Cabinet decision, PIB release | Fewer parents need government approval before subscribing |
| 23 Mar 2026 | Corporate Laws (Amendment) Bill, 2026 introduced in the Lok Sabha and sent to a Joint Committee | Bill in the Gazette | Not law on 27 Sep 2026; check the Act as passed before relying on any change |
| 21 Apr 2026 | DIR-3 KYC fees changed | G.S.R. 300(E) | INC-20A fees unchanged |
| 15 Jun 2026 | Master Direction on Foreign Investment in India updated | RBI | Paragraph 8.5 keeps subscriber shares at face value |
| 19 Jun 2026 | Additional fee relaxation after the 5 Jun 2026 data centre fire | MCA General Circular No. 02/2026 | Covers DPT-3 only |
| 8 Jul and 31 Aug 2026 | CCFS-2026 extended to 31 Aug, then to 15 Sep 2026 | General Circulars No. 03/2026 and 04/2026 | Scheme closed on 15 Sep 2026 |
| 23 Sep 2026 | Master Direction on Reporting under FEMA updated | RBI | FC-GPR still due within 30 days of issue |

Summaries of the 2026 Bill discuss higher small company thresholds, which would not help a foreign subsidiary under the section 2(85) proviso.

## Worked example

A German GmbH sets up an Indian Private Limited company with paid up capital of INR 10,00,000 in shares of INR 10 each. The GmbH subscribes for 99,999 shares (INR 9,99,990), and a nominee abroad for 1 share (INR 10). The company has two directors and no key managerial personnel.

The company is incorporated on 1 Jul 2026. The bank account opens on 25 Jul 2026. Both remittances land on 12 Aug 2026, which is day 42.

| Date | Day | Event | Deadline it meets |
|---|---|---|---|
| 1 Jul 2026 | 0 | Certificate of incorporation, CIN, PAN, TAN | Not applicable |
| 20 Jul 2026 | 19 | First board meeting; first auditor appointed; MGT-4 and MGT-5 received | 31 Jul 2026 (sections 173(1), 139(6), 89) |
| 25 Jul 2026 | 24 | Bank account opens; FIRMS business user request sent | Not applicable |
| 12 Aug 2026 | 42 | INR 9,99,990 from the GmbH and INR 10 from the nominee credited | Starts the 60 day FEMA clock (issue by 11 Oct 2026) |
| 14 Aug 2026 | 44 | Board records receipt, confirms shares fully paid, authorises INC-20A and FC-GPR | 11 Oct 2026 (regulation 3.1) |
| 14 Aug 2026 | 44 | Share certificates (SH-1) issued; stamp duty of INR 50 paid | 31 Aug 2026 (section 56(4)(a)) |
| 18 Aug 2026 | 48 | INC-20A filed with bank statement and FIRC | 28 Dec 2026 (section 10A), with 132 days to spare |
| 21 Aug 2026 | 51 | KYC report on the GmbH received from the AD bank | Not applicable |
| 25 Aug 2026 | 55 | FC-GPR filed on FIRMS with date of issue 14 Aug 2026 | 13 Sep 2026 (regulation 4(1)) |
| Within 30 days of 20 Jul 2026 | Not applicable | MGT-6 filed with the ROC | 19 Aug 2026 (section 89(6)) |

Stamp duty on the issue is 0.005 percent of INR 10,00,000, or INR 50. The rate comes from the Indian Stamp Act, 1899 as amended from 1 Jul 2020. The INC-20A normal fee is INR 400, the band for INR 5,00,000 to INR 24,99,999.

On the stricter reading, the AD bank takes 1 Jul 2026 as the date of issue. FC-GPR was then due on 31 Jul 2026 and is 25 days late. Circular No. 16 rounds the delay up to one month and expresses it in years to two decimals, which gives 0.08. The fee is INR 7,500 plus 0.025 percent of INR 10,00,000 times 0.08, which is INR 7,520. Rounded up to the nearest hundred, it is INR 7,600.

Now suppose the money lands only on 8 Feb 2027. INC-20A goes in on 15 Feb 2027, 49 days after the 28 Dec 2026 deadline.

| Item | Working | Amount (INR) |
|---|---|---|
| Penalty on the company | Section 10A(2), fixed | 50,000 |
| Penalty on director 1 | 49 days x INR 1,000, below the INR 1,00,000 cap | 49,000 |
| Penalty on director 2 | 49 days x INR 1,000, below the INR 1,00,000 cap | 49,000 |
| Maximum exposure under section 10A(2) | Sum of the three | 1,48,000 |
| INC-20A normal fee | Band for INR 5,00,000 to INR 24,99,999 | 400 |
| Additional fee | 31 to 60 days of delay, 4 times the normal fee | 1,600 |
| Total government fee for the form | Normal plus additional | 2,000 |

The missed 31 Aug 2026 share certificate date adds INR 50,000 each under section 56(6). Under FEMA, the company must issue the shares by 9 Apr 2027. The ROC sets the final section 10A amount after a hearing; the figures above are the statutory maximum.

## Common mistakes

1. **Waiting for day 180.** The company cannot trade or borrow meanwhile. Fix: file INC-20A within a week of the money landing.
2. **Paying from the wrong account.** A group treasury company pays for the parent's shares. Fix: have each subscriber remit from its own account.
3. **Short credits.** Bank charges leave the credit below the subscription. Fix: send with the OUR charge code and a small buffer.
4. **Forgetting the nominee.** The nominee's INR 10 never arrives. Fix: plan the nominee's remittance with the parent's.
5. **Borrowing before INC-20A.** The parent sends working capital as a loan. Fix: fund through the subscription or a later share issue.
6. **Invoicing before INC-20A.** The subsidiary bills its first customer or the parent. Fix: start the service agreement after the INC-20A filing date.
7. **Treating FC-GPR as the gate for INC-20A.** Teams wait for the overseas KYC report. Fix: file INC-20A on the bank statement.
8. **Choosing the FC-GPR date alone.** The AD bank later rejects the date of issue. Fix: agree the date with the AD bank first.
9. **Missing the share certificate deadline.** No certificates within two months. Fix: issue SH-1 certificates at the board meeting that records the receipt.
10. **Ignoring an STK-1 notice.** The notice goes to an old email. Fix: keep MCA contact details current and reply within 30 days.
11. **Assuming the half penalty applies.** Teams expect section 446B relief. Fix: treat a foreign subsidiary as outside the small company definition.

To have us check your first 180 days, send the certificate of incorporation through our [contact page](/contact).

## Checklist

1. Record the incorporation date and calendar the 180th day, the two month share certificate date and the 30 day board meeting date.
2. Apply for the bank account in the first week, with the bank's draft resolution and apostilled KYC for each foreign director and beneficial owner.
3. Obtain a DSC and DIN for each director who will sign.
4. Send the parent and the nominee a remittance instruction with the INR amount, account details, purpose text and OUR charge code.
5. Confirm each credit on the bank statement and request the FIRC.
6. Hold a board meeting to record the receipt and authorise the filings.
7. Issue SH-1 share certificates with stamp duty paid within two months of incorporation.
8. File INC-20A on MCA V3 with the bank statement, the FIRC and any sectoral approval, verified by a practising professional.
9. Register on FIRMS and agree the date of issue with the AD bank.
10. File FC-GPR within 30 days of the date of issue.
11. File MGT-6 within 30 days of receiving the section 89 declarations, and BEN-2 where a BEN-1 arrives.
12. Start trading and borrowing only after the INC-20A SRN is generated.

Our [foreign subsidiary team](/services/foreign-subsidiary.html) runs this checklist, and the annual calendar is in our [foreign subsidiary compliance guide](/insights/foreign-subsidiary-compliance-india-the-complete-2026-guide).

## Frequently Asked Questions

### Is INC-20A required for a company without share capital?
No. Section 10A(1) applies only to a company "having a share capital" incorporated after 2 Nov 2018. A company limited by guarantee without share capital, such as some Section 8 companies, does not file INC-20A. A Section 8 company with share capital does file it, and so does a one person company.

### Does INC-20A cover shares allotted after incorporation?
No. INC-20A covers only the subscribers to the memorandum. The company reports shares allotted later, by a rights issue or a private placement, in Form PAS-3. Where the allottee is a person resident outside India, it also files a fresh FC-GPR within 30 days of that allotment.

### Can a director who lives abroad sign INC-20A?
Yes. Any director with a valid DIN and an Indian DSC can sign INC-20A from outside India, once the board authorises the signature. Foreign nationals obtain a DSC from an Indian certifying authority, usually with apostilled identity documents and a video verification.

### Who must certify INC-20A?
Rule 23A of the Companies (Incorporation) Rules, 2014 requires a Company Secretary, Chartered Accountant or Cost Accountant in practice to verify INC-20A. The professional signs with a DSC and gives a membership number. We ask the professional to check the bank statement against the subscriber sheet before signing.

### Is INC-20A approved by the ROC?
Section 10A asks the company to file a declaration with the Registrar and sets no approval step. The service request number (SRN) and the payment receipt are the proof of filing. The ROC can still examine the filing and start adjudication under section 454 if the form was late or the declaration was wrong.

### Can we file INC-20A before FC-GPR?
Yes. INC-20A needs proof that each subscriber has paid, not the FC-GPR acknowledgement. We file INC-20A as soon as the board records the receipt. FC-GPR follows on FIRMS within 30 days of the date of issue, once the KYC report from the overseas bank arrives.

### Do subscriber shares issued to a foreign parent need a valuation report?
Paragraph 8.5 of the RBI Master Direction on Foreign Investment in India says shares taken by subscription to the memorandum are at face value, subject to entry route and sectoral caps. We read this as removing the need for a valuation report. FC-GPR still asks for the price, so we attach a note on the face value basis.

### What if bank charges reduce the credit below the subscription amount?
The subscriber has not paid the full value until the shortfall arrives, so the director cannot yet sign a true INC-20A. Ask the subscriber to send the difference from the same account. For the first remittance, use the OUR charge code so the sender bears the intermediary charges.

### Can the foreign parent pay for the nominee's share?
We advise against it. INC-20A declares that every subscriber has paid, and FC-GPR needs a KYC report on each foreign remitter. A payment by the parent for the nominee's share weakens both. The nominee should remit from its own account, even when the amount is INR 10.

### Does the 180 day period stop while the bank account is pending?
No. Section 10A(1)(a) counts 180 days from the date of incorporation, and no provision pauses it for bank delays. Start the bank account in the first week after incorporation. If the bank is slow, move to a second bank rather than wait.

### Can the subsidiary borrow from its foreign parent before INC-20A?
No. Section 10A(1) bars a company from exercising borrowing powers until INC-20A is filed. A loan from the parent would also be an external commercial borrowing, with its own RBI reporting. Fund the start up costs through the subscription, and borrow only after the INC-20A SRN is generated.

### Can the company register for GST before INC-20A?
Yes. GST registration is a registration, not trading, and SPICe+ can apply for it at incorporation. The company should not issue a tax invoice or make a taxable supply until INC-20A is on record, because that would be commencing business under section 10A(1).

### Is the INC-20A date the commencement of business for income tax?
Not automatically. INC-20A is a company law declaration, and for tax the start of business is a question of fact. The ITR-6 form notified on 30 Mar 2026 asks for the date of commencement of business as a separate field. Record the actual start date in the board minutes for the tax file.

### Can the INC-20A penalty be compounded?
No. Compounding under section 441 of the Companies Act, 2013 covers offences punishable with fine only. Section 10A(2) sets a civil penalty, which the ROC adjudicates under section 454. The company can appeal an adjudication order to the Regional Director within 60 days under section 454(6).

### Does the half penalty for small companies help a foreign subsidiary?
Rarely. Section 446B halves penalties for small companies, one person companies, start up companies and producer companies. The proviso to section 2(85) excludes subsidiary companies from the small company definition, including a subsidiary of a foreign company. Only DPIIT start up recognition brings a foreign subsidiary within section 446B.

### Can a struck off subsidiary be restored?
Yes, through the National Company Law Tribunal under section 252 of the Companies Act, 2013. The company, a member or a creditor can apply. Restoration takes a tribunal hearing and brings up every filing missed in the meantime. It costs far more than filing INC-20A on time.

### Do foreign subsidiaries need to issue shares in demat form?
Yes, once their deadline arrives. Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014 requires a private company that is not a small company to issue securities only in demat form, and a subsidiary is never a small company. On our reading of rule 9B(2), a company incorporated in 2026 is first tested on 31 Mar 2027 and must comply within 18 months, by 30 Sep 2028.

### Does a branch or liaison office of a foreign company file INC-20A?
No. INC-20A applies to companies incorporated under the Companies Act, 2013. A branch, liaison or project office is a place of business of a foreign company, registered under Chapter XXII of the Act. It has its own RBI and ROC reporting, but no commencement of business declaration.

## Sources

- Companies Act, 2013, section 10A (Commencement of business, etc.), text hosted by the Income Tax Department, https://www.incometaxindia.gov.in/w/section-10a-50
- Companies Act, 2013, section 12 (Registered office of company), https://www.incometaxindia.gov.in/w/section-12-144
- Companies Act, 2013, section 56 (Transfer and transmission of securities), https://www.incometaxindia.gov.in/w/section-56-108
- Companies Act, 2013, section 248(1), clauses (a), (d) and (e), https://www.incometaxindia.gov.in/w/section-248-69
- Companies Act, 2013, section 403 (Fee for filing, etc.), https://www.incometaxindia.gov.in/w/section-403-2
- Companies Act, 2013, section 446B (Lesser penalties for certain companies), https://www.incometaxindia.gov.in/w/section-446b
- Companies Act, 2013, section 454 (Adjudication of penalties), https://www.incometaxindia.gov.in/w/section-454-2
- Companies Act, 2013, section 2, clauses (46), (60) and (85), https://www.incometaxindia.gov.in/w/section-2-148
- Gazette of India, Companies (Amendment) Act, 2019 (No. 22 of 2019), 31 Jul 2019, sections 1(2), 3 and 36, copy hosted by Invest India, https://static.investindia.gov.in/s3fs-public/2019-10/AMENDMENTACT_01082019.pdf
- India Code, Companies Act, 2013 and its rules, including the Companies (Incorporation) Rules, 2014 (rule 23A) and the Companies (Registration Offices and Fees) Rules, 2014, https://www.indiacode.nic.in/handle/123456789/2114
- India Code, Companies Act, 2013, full text, https://www.indiacode.nic.in/bitstream/123456789/2114/5/A2013-18.pdf
- Ministry of Corporate Affairs, Form INC-20A page on MCA V3, https://www.mca.gov.in/content/mca/global/en/mca/e-filing/Informational-and-Investor-services/INC-20A.html
- Ministry of Corporate Affairs, Instruction Kit for eForm INC-20A, https://www.mca.gov.in/content/dam/mca-aem-forms/instructionkits/Instruction%20Kit_INC-20A.pdf
- Ministry of Corporate Affairs, MCA fee calculator, https://www.mca.gov.in/content/mca/global/en/mca/fo-llp-services/enquire-fees.html
- Ministry of Corporate Affairs, Circulars index, including General Circulars No. 01/2026 (24 Feb 2026), 02/2026 (19 Jun 2026), 03/2026 (8 Jul 2026) and 04/2026 (31 Aug 2026), https://www.mca.gov.in/content/mca/global/en/acts-rules/ebooks/circulars.html
- Ministry of Corporate Affairs, ROC adjudication orders, https://www.mca.gov.in/content/mca/global/en/data-and-reports/rd-roc-info/roc-adjudication-orders.html
- Reserve Bank of India, Master Direction on Foreign Investment in India, updated up to 15 Jun 2026, paragraph 8.5, https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=11200
- Reserve Bank of India, Master Direction on Reporting under FEMA, updated 23 Sep 2026, https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10202
- Reserve Bank of India, FIRMS user manual for the Single Master Form (FC-GPR nature of issue, business user registration), https://www.rbi.org.in/scripts/femaview.aspx?femaid=65
- Reserve Bank of India, A.P. (DIR Series) Circular No. 16, Late Submission Fee, 30 Sep 2022, https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12393&Mode=0
- Reserve Bank of India, FEMA 395/2019-RB, regulations 3.1 and 4(1), as amended to 13 Jun 2026, https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=11200
- Directorate of Enforcement, Foreign Exchange Management Act, 1999, section 13, https://www.enforcementdirectorate.gov.in/media/fema/c24cce9a-6765-4b22-a41a-cde7ec7af79c_FEMA_ACT_1999.pdf
- Press Information Bureau, Cabinet approves changes in guidelines on investments from countries sharing land border with India, 10 Mar 2026, https://www.pib.gov.in/PressReleasePage.aspx?PRID=2237806
- Gazette of India, Corporate Laws (Amendment) Bill, 2026, 23 Mar 2026, https://egazette.gov.in/WriteReadData/2026/271201.pdf
- Income Tax Department, Notification No. 49/2026 (G.S.R. 230(E), 30 Mar 2026) substituting Form ITR-6, field A6 on the date of commencement of business, https://www.incometaxindia.gov.in/documents/d/guest/notification-no-49-2026-pdf

---
Krystal7 Consultants, business@krystal7.com, +91 94657 30130. HTML version: https://krystal7.com/insights/inc-20a-commencement-of-business-foreign-subsidiary