Controlling Your Indian Subsidiary: Reporting, Audit and Costs (2026)

In most group reports the Indian subsidiary is the smallest line with the biggest question mark. The numbers arrive late, the explanations stay thin, and between the parent's controlling team and the office in India sit a time difference, an unfamiliar legal system and a local accountant who reports to Indian authorities in Indian formats. This guide answers the questions foreign parents ask us most: what the subsidiary really costs to run, what reporting to demand, how the mandatory audit works, why the entity looks unprofitable, and which warning signs justify a closer look.

Why Indian subsidiaries feel opaque

Usually it is not bad faith but structure. The Indian company satisfies its Indian obligations: Registrar of Companies, the tax department, the Reserve Bank. Nobody obliged it to deliver the same information in a format the parent's finance team can read. The local accountant works to the Indian compliance calendar, the parent receives a spreadsheet at quarter end with no mapping to group accounts, and every follow up question takes a week.

The second structural problem: in many subsidiaries one person holds bookkeeping, bank authority and the government relationships at once. That is cheap, and it means the parent has exactly one source of information with no cross check. Transparency does not come from asking more questions; it comes from separated roles and a reporting rhythm that is not negotiable.

What an Indian subsidiary really costs

Incorporation is the smallest line. Our published fee for setting up an Indian subsidiary for a foreign parent is USD 1,200 to USD 1,700, with government fees added at cost, depending on structure and the number of directors; details sit on the pricing page.

Running costs decide the economics, and they come in four blocks. First, the statutory base: bookkeeping, ROC annual filings, the mandatory audit and tax returns. Second, payroll with social contributions and withholding. Third, the FEMA layer, the filings that exist precisely because the shareholder is foreign: FC-GPR when capital comes in, the annual FLA return, and transfer pricing documentation from the first intercompany invoice. Fourth, rent, the registered office and the small items that are not small in total. A parent that budgets only the first block gets surprised in year two.

The reporting a parent should demand

One monthly pack, always on the same day, always in the same format, in English: profit and loss against budget, bank balances reconciled to statements, receivables and payables with ageing, a tax and compliance calendar with traffic light status, and a short commentary on variances. Quarterly, add the statutory registers and proof that the period's filings went in on time.

The point is not perfection but rhythm. A subsidiary that delivers on time three months in a row has its processes under control. One that explains every month why this month was different does not.

The mandatory audit, and how to use it

Unlike most European regimes, India has no size threshold for the statutory audit. Every Indian company is audited each year by a chartered accountant, whatever its size or turnover. The board appoints the first auditor within 30 days of incorporation. The shareholders then appoint the auditor for a five year term.

The audited statements go to the Registrar with the annual filings. For the parent, the most useful output is the management letter: the auditor's list of weaknesses in controls, records and compliance. Ask for it every year, agree an owner and a date for each finding, and check that last year's points are closed.

Krystal7 Consultants runs the ongoing compliance of Indian subsidiaries for foreign parents: monthly English reporting in a fixed format, the full statutory calendar, FEMA filings and transfer pricing documentation, with supporting records prepared for the separately appointed signatory. Talk to the team.