If you run a software business abroad, software company registration in India is the formal step between hiring freelancers and owning a real engineering operation. India is where global companies build development centers, and the subsidiary route gives you the entity, the payroll, and the IP chain to do it properly. This guide covers the structure, the steps, the licences an IT company actually needs, the costs, and the transfer pricing model that keeps the parent's finance team comfortable.
Why Foreign Software Companies Set Up an Indian Entity
The trigger is almost always people. Once you have more than a handful of Indian engineers, contractor arrangements start creating problems: IP assignment gaps, payroll compliance risk for the contractors themselves, and a structure no acquirer wants to see in due diligence. An Indian private limited subsidiary solves all three. It employs the team directly, owns or licenses the IP cleanly, and invoices the parent under a services agreement. 100 percent FDI is permitted in the IT sector under the automatic route, so no prior approval is involved.
The alternative structures rarely win for software. A branch office is taxed at the 35 percent foreign company rate and needs RBI approval. An employer of record gets you started fast but caps out quickly on IP ownership and cost. The full structural comparison sits in our foreign subsidiary registration guide.
Software Company Registration in India: Step by Step
- Confirm the structure: a wholly owned private limited subsidiary, parent holding all shares except one nominee share.
- Pass the parent board resolution authorising the investment and notarise and apostille the parent documents at home.
- Obtain digital signatures and DINs for the proposed directors, including one director who meets the 182 day India residency test.
- Reserve the company name and file SPICe Plus with the MCA, which bundles incorporation, PAN, TAN, EPFO and ESIC.
- Open the bank account and remit share capital from the parent.
- Allot shares within 60 days of receipt and file FC-GPR with the RBI within 30 days of allotment.
- Register for GST and file the LUT so your export invoices to the parent are zero rated.
- Sign the intercompany services agreement and start payroll.
Incorporation runs 3 to 6 weeks all in, with the apostille chain at home as the pacing item. The process is 100 percent online; no India trip is required.
Licences and Registrations an IT Company Actually Needs
Software is one of the lightest sectors to license. What you genuinely need: GST registration with a Letter of Undertaking, so exports of services bill at zero rate instead of 18 percent, covered in detail in our guide to GST on export of services. Shops and Establishment registration for the office. Professional tax registration in applicable states. STPI registration is optional and mainly relevant if you want the softex filing route for export documentation. There is no sector regulator to clear, which is why software subsidiaries move from decision to revenue ready faster than any other sector in this series.
What Does Software Company Registration in India Cost?
A realistic landed cost for software company registration in India is ₹70,000 to ₹1,70,000 all in: government and stamp fees, digital signatures, and professional fees for a foreign parent incorporation. Ongoing, a compliance retainer of ₹25,000 to ₹60,000 monthly covers books, GST, TDS, payroll and ROC filings for a typical dev center.
| Component | Typical range |
|---|---|
| Government incorporation and stamp fees | ₹5,000 to ₹15,000 |
| Digital signatures for two directors | ₹4,000 to ₹6,000 |
| Professional fees, foreign parent incorporation | ₹60,000 to ₹1,50,000 |
| All in setup, most parents | ₹70,000 to ₹1,70,000 |
| Monthly compliance retainer once live | ₹25,000 to ₹60,000 |
Transfer Pricing: the Model Behind Every Dev Center
The standard shape is cost plus: the Indian subsidiary bills the parent its operating costs plus an arm's length markup, documented with a benchmarking study and certified annually on Form 3CEB. This is not optional paperwork; every intercompany invoice is a related party transaction under Indian transfer pricing rules from day one. Get the services agreement and the markup right at incorporation and audits stay boring. As the team grows, payroll with TDS and provident fund joins the monthly cycle, and equity plans for Indian staff need ESOP structuring that respects both Indian law and the parent cap table.
The Compliance Calendar for an Indian Tech Subsidiary
Statutory audit applies from year one regardless of size. The FEMA layer runs alongside: FC-GPR on the incorporation capital, the FLA return each July, and reporting on any later funding round. Company law filings, GST returns, quarterly TDS and payroll deposits complete the rhythm. One team owning all of it is the difference between a calendar and a scramble; that is the engagement shape we run at Krystal7 for software parents from the US, UK, EU and Singapore, and the corridor detail for American founders sits in our US to India subsidiary guide.
Frequently Asked Questions
Can a foreign company own 100 percent of an Indian software subsidiary?
Do we need STPI registration to run a dev center?
How is the Indian entity taxed on cost plus revenue?
How fast can we go from decision to a hired team?
Facing this in your own entity?
Guides explain the rules. A conversation solves your specific case. Talk to a Krystal7 advisor about your India entry, FEMA, or compliance position.
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