# Statutory Audit of a UK Subsidiary in India for the UK Parent (2026)

> Source: https://krystal7.com/insights/statutory-audit-uk-subsidiary-india
> Publisher: Krystal7 Consultants (Krystal7 Innovations Private Limited), Gurugram, India
> Author: CA Nandini
> Published: 05 Feb 2026; updated 24 Oct 2026
> Summary: A UK parent's Indian subsidiary needs its own Companies Act audit for each 31 March year, separate from Companies House filings and the group audit.

*Written by CA Nandini Hasija, Krystal7 Consultants. Last updated 23 October 2026.*

## AI Overview Summary

- A UK company's Indian subsidiary needs its own statutory audit under the Companies Act, 2013, signed by an Indian CA firm. UK exemptions such as section 479A do not reach it.
- The Indian year ends on 31 March under section 2(41). A UK parent with a 31 March year end shares the date, while a 31 December parent needs a separate December pack.
- The Indian accounts follow Indian AS or Ind AS, never FRS 102. FRS 102 amendments for periods from 1 Jan 2026 put most leases on the UK group balance sheet, which widens the bridge.
- Companies House filings cover only the UK parent. The Indian subsidiary holds its AGM by 30 September, files AOC-4 within 30 days, and files Form 3CEB or Form 48 by 31 October.
- Group audit instructions under ISA (UK) 600 (Revised) add component work for the UK group auditor. They do not replace the Indian auditor's report under section 143 of the Companies Act, 2013.

**A UK company's Indian subsidiary needs its own statutory audit every year under sections 139 to 148 of the Companies Act, 2013. A Chartered Accountant firm practising in India signs it, under section 141. The year ends on 31 March, whatever the UK accounting reference date. The accounts follow Indian AS or Ind AS, not FRS 102. The AGM falls by 30 September, AOC-4 within 30 days, and Form 3CEB by 31 October.**

This page is for UK parents, their group finance teams and the Indian finance lead. It covers the audit requirement, the year end, FRS 102 and IFRS packs, Companies House, group audit instructions, transfer pricing, the timeline and penalties. INR 1,00,000 is one lakh (100,000) and INR 1 crore is 10 million.

## Does a UK company's Indian subsidiary need a statutory audit?

Yes. Section 139 of the Companies Act, 2013 applies to every company incorporated in India, with no size or revenue threshold. An Indian Private Limited company owned by a UK parent appoints an auditor and files audited accounts every year. The UK group audit and UK audit exemptions do not change this.

UK teams often expect a small Indian subsidiary to qualify for an exemption, as small UK subsidiaries do. Two rules stop that. Section 479A of the Companies Act 2006 exempts a UK subsidiary whose UK parent gives a guarantee under section 479C. It applies to UK companies only.

Indian law has no guarantee route at all. A wholly owned subsidiary also cannot be a small company in India, because the proviso to section 2(85) excludes holding and subsidiary companies. Explanation (c) to section 2(87) says "company" includes any body corporate, so a UK parent counts.

| Point | India (the subsidiary) | UK (the parent) |
|---|---|---|
| Audit duty | Every company, sections 139 to 148, Companies Act, 2013 | Companies Act 2006, with exemptions such as sections 477 and 479A |
| Year end | 31 March, section 2(41) | Accounting reference date, sections 391 and 392 |
| Framework | Indian AS or Ind AS, Schedule III | FRS 102 or UK adopted international accounting standards, section 403 |
| Who signs | Chartered Accountant in practice in India, section 141 | Statutory auditor registered under UK rules |
| Filing | AOC-4 within 30 days of the AGM; MGT-7 within 60 days | Companies House: 9 months after the year end (private), 6 months (public) |
| Registry | Registrar of Companies, MCA V3 portal | Companies House |
| Late filing | INR 100 a day additional fee per form, plus penalties | GBP 150 to GBP 1,500 (private), doubled for a second late year |

Our guide to the [statutory audit of a foreign owned Indian subsidiary](/insights/statutory-audit-foreign-owned-indian-subsidiary) covers the common rules. This page adds what changes for a UK parent. If you are still setting up, our guide for a [UK company setting up a subsidiary in India](/insights/uk-company-setting-up-subsidiary-in-india) covers registration.

## Who can audit the Indian subsidiary of a UK parent?

Only a Chartered Accountant in practice in India can sign, or a firm or LLP whose partners practising in India are mostly Chartered Accountants. Section 141(1) sets the rule. The UK group auditor cannot sign the Indian report. Its Indian network firm can, if that firm passes sections 141 and 144.

Under [section 141(2)](https://www.incometaxindia.gov.in/w/section-141-78), only partners who are Chartered Accountants sign for a firm. Section 141(3) disqualifies a body corporate other than an LLP, and an officer or employee. It also disqualifies anyone with a business relationship with the company or its holding company. It also bars anyone who renders a section 144 service, directly or indirectly, to the company, its holding company or its subsidiary.

Section 144 lists the barred services. They include bookkeeping, internal audit, financial system design, actuarial work, investment advisory, investment banking, outsourced financial services and management services. The Explanation to section 144 counts services through any entity "whose name or trade mark or brand is used by the firm". So services that the network gives the UK parent can matter.

Rotation applies to private companies with paid up capital of INR 50 crore or more. It also applies to companies with public borrowings or deposits of INR 50 crore or more. Rule 5 of the Companies (Audit and Auditors) Rules, 2014 (the Audit Rules) sets these classes. Our note on whether the [parent's global audit firm can audit the Indian subsidiary](/insights/can-parent-global-audit-firm-audit-indian-subsidiary) covers network firms, rotation and independence in detail.

## How does a UK year end fit with India's 31 March year?

The Indian subsidiary closes on 31 March, under section 2(41). A UK parent with a 31 March accounting reference date shares the date and needs one close. A parent with a 31 December date gets a December pack from Indian books that are still mid year.

A UK company can move its accounting reference date by notice to Companies House under section 392 of the Companies Act 2006. An Indian company cannot. The first proviso to section 2(41) allows another year only for a subsidiary of a company incorporated outside India. The subsidiary must need that year for consolidation abroad. The Regional Director approves it on Form RD-1, under rule 40 of the Companies (Incorporation) Rules, 2014.

The Indian tax year under section 3 of the Income Tax Act, 2025 always runs from 1 April to 31 March. A subsidiary that won a December year for company law would still close in March for tax. We advise UK parents to keep 31 March.

| UK parent's year end | Indian statutory year | What the UK group needs | Main pressure point |
|---|---|---|---|
| 31 March | 1 Apr to 31 Mar, same date | Component reporting on the March figures, often early in the UK timetable | The UK group wants clearance before the Indian statutory audit would usually finish |
| 31 December | 1 Apr to 31 Mar | A December pack: January to March from one Indian year, April to December from the next | Two closes a year, and a GAAP bridge kept current |
| 30 June or 30 September | 1 Apr to 31 Mar | A pack at the UK date, three or six months into the Indian year | Interim cut off and accruals at a date the Indian books do not close on |
| Changed by the UK parent under section 392 | Still 31 March | A pack at the new UK date | The Indian year cannot follow without Form RD-1 approval |

A company incorporated in India on or after 1 January closes its first year on 31 March of the following year. A subsidiary incorporated on 20 Jan 2026 first closes on 31 Mar 2027. Our batch note on a [31 March year end under a December parent](/insights/year-end-31-march-vs-december-parent-consolidation) sets out the consolidation timetable.

## How do FRS 102 or IFRS group packs map to Indian accounts?

The UK group consolidates under FRS 102 or UK adopted international accounting standards. Section 403 of the Companies Act 2006 requires the IAS route for a parent with securities on a UK regulated market. Other parents choose. The Indian subsidiary's own accounts follow Indian AS or Ind AS, decided on its own figures.

Under rule 4 of the Companies (Indian Accounting Standards) Rules, 2015, an unlisted company moves to Ind AS at a net worth of INR 250 crore. It also moves if an Indian holding, subsidiary, joint venture or associate company applies Ind AS. Section 2(20) limits "company" to Indian companies, so a UK parent's IFRS reporting never pulls its subsidiary onto Ind AS.

The FRC issued amendments to FRS 102 on 27 Mar 2024. In most cases they apply to accounting periods beginning on or after 1 Jan 2026 ([FRC](https://www.frc.org.uk/news-and-events/news/2024/03/frc-revises-uk-and-ireland-accounting-standards/)). They bring leases onto the lessee's balance sheet. On the low value exemption, the FRC says "the focus is to ensure that the most significant leases are recognised on balance sheet". It also calls the new revenue model one of the most significant changes. A UK group on FRS 102 therefore moves away from Indian AS on leases from its 2026 year.

| Area | FRS 102 (UK group, periods from 1 Jan 2026) | UK adopted IFRS | Indian AS (most subsidiaries) | Ind AS (larger subsidiaries) |
|---|---|---|---|---|
| Office leases | Most leases on the balance sheet after the 2024 amendments | IFRS 16: right of use asset and lease liability | AS 19: operating lease rent expensed straight line | Ind AS 116: right of use asset and lease liability |
| Revenue on services to the parent | Revenue section updated in line with IFRS 15 | IFRS 15 five step model | AS 9: proportionate completion or completed service contract method | Ind AS 115 five step model |
| Gratuity remeasurements | Other comprehensive income | IAS 19: other comprehensive income | AS 15: profit or loss at once | Ind AS 19: other comprehensive income |
| Deferred tax | Timing differences plus approach | IAS 12: temporary differences | AS 22: timing differences; virtual certainty for losses | Ind AS 12: temporary differences |
| Presentation | UK formats in regulations under the Companies Act 2006 | IAS 1 | Schedule III, Division I | Schedule III, Division II |

Keep one GAAP bridge from the Indian trial balance to the UK pack, and update it each quarter. Indian audit adjustments made after the pack goes to the UK must flow back to the group. Our [financial reporting guide for foreign subsidiaries](/insights/financial-reporting-for-foreign-subsidiaries-in-india-the-2026-founders-guide) and our [MIS report format for a foreign parent](/insights/mis-report-indian-subsidiary-foreign-parent) show the layouts we use.

## Are Companies House filings separate from the Indian filings?

Yes. Companies House takes the UK parent's own accounts and confirmation statement. The Indian subsidiary files its accounts with the Registrar of Companies in India on Form AOC-4, and its annual return on Form MGT-7. Neither registry accepts the other's filing, and neither deadline moves the other.

The UK parent's accounts list the Indian subsidiary as a related undertaking. Section 409 of the Companies Act 2006 and the accounts regulations made under it require this. The note gives its name and the shares held. That disclosure is not an Indian filing. The Indian ROC never sees the UK group accounts, because the Indian subsidiary does not consolidate its parent.

The Indian subsidiary has no Companies House filing of its own, unless it opens a UK establishment. In that rare case, it registers at Companies House as an overseas company, which brings separate duties.

| Filing | Who files | Where | When | Law |
|---|---|---|---|---|
| UK parent's annual accounts | UK parent | Companies House | 9 months after the year end for a private company; 6 months for a public company | Companies Act 2006, section 442 |
| Indian subsidiary's audited accounts | Indian subsidiary | ROC, on Form AOC-4 or AOC-4 XBRL | 30 days after the AGM | Companies Act, 2013, section 137(1) |
| Indian annual return | Indian subsidiary | ROC, on Form MGT-7 | 60 days after the AGM | Section 92(4) |
| Indian tax audit and transfer pricing report | Accountant, accepted by the subsidiary | Income tax portal | 31 Oct 2026 for FY 2025-26 | Sections 44AB and 92E, Income Tax Act, 1961 |
| Foreign Liabilities and Assets return | Indian subsidiary | RBI FLAIR portal | 15 July | RBI FLA FAQ (updated 1 Jul 2026) |
| Group reporting pack | Indian finance team | UK group | UK timetable | Group instructions |

Our guide to [AOC-4 and MGT-7 annual filing](/insights/aoc-4-mgt-7-annual-filing-foreign-owned-company) covers the Indian forms. The [RBI FLA FAQ](https://m.rbi.org.in/CommonPerson/english/Scripts/FAQs.aspx?Id=1171) lets a company file on provisional figures and revise after the audit.

## How do UK group audit instructions work with the Indian audit?

The UK group auditor sends instructions to the Indian auditor, usually under ISA (UK) 600 (Revised). They set the scope, a component materiality and a deadline. The Indian auditor reports back to the group auditor. That clearance does not satisfy section 143, so the Indian statutory audit still runs in full.

The FRC's ISA (UK) 600 (Revised September 2022) applies to audits of periods beginning on or after 15 Dec 2023 ([FRC](https://www.frc.org.uk/library/standards-codes-policy/audit-assurance-and-ethics/auditing-standards/isa-uk-600/)). The FRC published an updated edition on 25 Sep 2025. The standard gives the group auditor more responsibility for directing and reviewing component work.

Indian law knows nothing of the group instructions. The statutory auditor follows the Standards on Auditing under section 143(9). Until the Central Government notifies standards under section 143(10), the ICAI's standards are "deemed to be the auditing standards". The Indian report goes to the Indian members, with CARO 2020 and rule 11 matters.

| Point | UK group instructions (component work) | Indian statutory audit |
|---|---|---|
| Why it exists | UK group audit under the Companies Act 2006 | Companies Act, 2013, sections 139 to 148 |
| Standard | ISA (UK) 600 (Revised) for the group auditor | Standards on Auditing, section 143(9) |
| Reporting date | UK parent's year end | 31 March |
| Framework | FRS 102 or UK adopted IFRS pack | Indian AS or Ind AS |
| Materiality | Component materiality set by the group auditor | Set by the Indian auditor for the Indian accounts |
| Output | Clearance or memo to the group auditor | Audit report to members, CARO and rule 11 reporting |
| Deadline | UK group timetable | Before the AGM, within six months of 31 March |

The cheapest set up uses one Indian firm for both jobs. For a 31 March UK parent, one field visit can cover the component work and most of the statutory audit. For a 31 December parent, plan the component work in January and the statutory audit from May.

## What does the Indian auditor report on beyond the opinion?

Three extra layers sit in most Indian audit reports. CARO 2020 adds 21 clauses unless the company is exempt. Rule 11 of the Audit Rules adds matters such as the audit trail. Section 143(3)(i) adds an opinion on internal financial controls, unless G.S.R. 583(E) of 13 Jun 2017 exempts the company.

### CARO 2020

A subsidiary cannot be a small company, so only the private company exemption in paragraph 1(2)(v) can help. It needs capital plus reserves and bank borrowings each within INR 1 crore, and revenue within INR 10 crore. G.S.R. 880(E) of 1 Dec 2025 raised the small company limits, but a subsidiary still cannot use them.

### Audit trail

Since 1 Apr 2023, accounting software must record a dated edit log of every change that nobody can disable. That rule sits in the proviso to rule 3(1) of the Companies (Accounts) Rules, 2014. A group ERP hosted in the UK must also keep a daily backup on servers in India (proviso to rule 3(5)). Our batch note on the [audit trail and edit log rule](/insights/audit-trail-edit-log-accounting-software-india) lists the evidence.

### Internal financial controls

G.S.R. 583(E) exempts a private company with latest audited turnover below INR 50 crore "or" borrowings below INR 25 crore. Loans from the UK parent count as borrowings. We rely on the exemption only when both limbs are met.

## How does transfer pricing with the UK parent affect the audit?

Most UK owned subsidiaries bill the parent on a cost plus basis, pay it management fees, or both. Each is an international transaction, so the subsidiary files a transfer pricing report. For FY 2025-26 that is Form 3CEB under section 92E. From tax year 2026-27 it is Form 48 under section 172 of the Income Tax Act, 2025.

The report and the accounts must agree. A cost plus true up belongs in the 31 March accounts, booked before the audit closes. A true up raised after the audit leaves the Indian revenue below the arm's length figure, and the tax officer can adjust it.

The transfer pricing case also sets the tax dates. For FY 2025-26, the tax audit report and Form 3CEB were due 31 Oct 2026, and the return 30 Nov 2026. CBDT Circular No. 07/2026 of 28 Sep 2026 moved only the dates for companies without a transfer pricing report.

The India UK tax treaty names associated enterprises in Article 10. Article 10(2) provides a corresponding adjustment, and Article 27 holds the mutual agreement procedure. UK transfer pricing rules apply to the UK side separately. Our guide to [transfer pricing between a UK parent and an Indian subsidiary](/insights/transfer-pricing-uk-parent-indian-subsidiary) covers methods and documents. Our [India UK DTAA guide](/insights/india-uk-dtaa-for-companies) covers the treaty.

Watch visits by UK finance staff. Article 5(2)(k)(ii) of the treaty sets a 30 day test for services to an associated enterprise. The UK parent has a service PE once its staff serve the subsidiary in India for more than 30 days in any twelve month period. Long audit support visits can count.

## What is the timeline for a 31 December and a 31 March UK parent?

The Indian dates stay the same for both parents, because the Indian year always ends on 31 March. The UK dates shift. The table shows FY 2025-26 for the Indian subsidiary, with a private UK parent at each year end.

| Step | UK parent with 31 Dec 2025 year end | UK parent with 31 Mar 2026 year end | Indian rule |
|---|---|---|---|
| UK pack from Indian books | January 2026, for calendar 2025 | April 2026, on the Indian year end figures | Group instructions |
| Indian year end close | 31 Mar 2026 | 31 Mar 2026, the same day as the UK close | Section 2(41) |
| Component work for the UK group auditor | January to February 2026, on the December pack | April to May 2026, alongside the Indian audit | ISA (UK) 600 (Revised) |
| Indian statutory audit fieldwork | May to July 2026 | April to July 2026 | Section 143 |
| FLA return to RBI | 15 Jul 2026 | 15 Jul 2026 | RBI FLA FAQ |
| Indian AGM | By 30 Sep 2026 | By 30 Sep 2026 | Section 96(1) |
| UK parent's accounts at Companies House | By 30 Sep 2026 | By 31 Dec 2026 | Companies Act 2006, section 442 |
| Indian tax audit report and Form 3CEB | 31 Oct 2026 | 31 Oct 2026 | Sections 44AB and 92E |
| Indian AOC-4 | 30 days after the AGM | 30 days after the AGM | Section 137(1) |
| Indian MGT-7 | 60 days after the AGM | 60 days after the AGM | Section 92(4) |
| Indian income tax return | 30 Nov 2026 | 30 Nov 2026 | Section 139(1), Income Tax Act, 1961 |

For a 31 December UK parent, the Indian AGM and the UK Companies House deadline both fall on 30 September in 2026. Plan both board calendars together. Our [US subsidiary audit guide](/insights/statutory-audit-us-subsidiary-india) has a month by month table for a December parent, and our [compliance calendar for 2026-27](/insights/compliance-calendar-foreign-owned-company-india-2026-27) lists the other Indian dates.

## What penalties apply in India and in the UK?

Each country penalises its own late filings. In India, a late audit pushes the AGM, AOC-4, MGT-7 and the tax reports past their dates, and each carries its own charge. In the UK, Companies House charges the UK parent a late filing penalty on its own accounts. Neither regime takes the other into account.

| Default | Country and provision | Amount |
|---|---|---|
| No auditor, or other breach of sections 139 to 146 | India, section 147(1) | Company fine INR 25,000 to INR 5,00,000; officers INR 10,000 to INR 1,00,000 |
| AGM not held on time | India, section 99 | Fine up to INR 1,00,000, plus up to INR 5,000 a day |
| AOC-4 late | India, section 137(3) | INR 10,000 plus INR 100 a day, capped at INR 2,00,000 for the company |
| MGT-7 late | India, section 92(5) | INR 10,000 plus INR 100 a day after the first, capped at INR 2,00,000 |
| ROC additional fee | India, Companies (Registration Offices and Fees) Rules, 2014 | INR 100 a day per form |
| Tax audit report late | India, section 271B (FY 2025-26); section 428(c) from tax year 2026-27 | Lower of 0.5% of turnover or INR 1,50,000; then a fee of INR 75,000 or INR 1,50,000 |
| Transfer pricing report late | India, section 271BA (FY 2025-26); section 428(d) from tax year 2026-27 | INR 1,00,000; then a fee of INR 50,000 or INR 1,00,000 |
| Accounts or returns unfiled for three years | India, section 164(2)(a) | Every director disqualified for five years, UK directors included |
| UK private company accounts late | UK, Companies House | GBP 150 (up to 1 month), GBP 375 (up to 3 months), GBP 750 (up to 6 months), GBP 1,500 (over 6 months) |
| UK public company accounts late | UK, Companies House | GBP 750, GBP 1,500, GBP 3,000, GBP 7,500 on the same bands |

The UK penalty doubles when accounts are filed late in two successive financial years ([GOV.UK](https://www.gov.uk/government/publications/late-filing-penalties-from-companies-house/late-filing-penalties), updated 16 Jan 2026). In India, MCA's CCFS-2026 relief on additional fees ran from 15 Apr 2026 to 15 Sep 2026 and has closed.

## What changed in 2026

The UK side changed in accounting, and the Indian side changed in tax. The Companies Act, 2013 audit rules did not change in 2026.

| Area | Old position | New position | Date | Instrument |
|---|---|---|---|---|
| FRS 102 leases and revenue | Operating leases off balance sheet; older revenue model | Most significant leases on balance sheet; updated revenue model | Periods beginning on or after 1 Jan 2026 | FRC amendments to FRS 102, issued 27 Mar 2024 |
| ISA (UK) 600 (Revised) | Revised September 2022 edition | Updated edition (Revised September 2022, updated September 2025) | Published 25 Sep 2025 | FRC |
| Indian tax audit | Section 44AB; Forms 3CA and 3CD | Section 63; Form 26 from tax year 2026-27 | 1 Apr 2026 | Income Tax Act, 2025; Income Tax Rules, 2026 (G.S.R. 198(E), 20 Mar 2026) |
| Indian transfer pricing report | Section 92E; Form 3CEB | Section 172; Form 48 from tax year 2026-27 | 1 Apr 2026 | Income Tax Act, 2025; rule 85 |
| Late Indian tax reports | Penalties under 271B and 271BA | Automatic fees under 428(c) and 428(d) | 1 Apr 2026 | Finance Act, 2026 |
| FY 2025-26 dates, no transfer pricing report | Audit 30 Sep 2026; return 31 Oct 2026 | Audit 21 Oct 2026; return 21 Nov 2026 | 28 Sep 2026 | CBDT Circular No. 07/2026 |
| Indian ROC late fees | Full additional fee | CCFS-2026 reduced fee, now closed | 15 Apr to 15 Sep 2026 | MCA General Circulars 01/2026, 03/2026, 04/2026 |
| Companies Act, 2013 amendments | Current Act | Corporate Laws (Amendment) Bill, 2026 (Bill No. 85 of 2026), pending | Introduced 23 Mar 2026; Joint Committee report 3 Aug 2026 | Lok Sabha, referred to a Joint Committee |

The FRS 102 change reaches the Indian subsidiary only through the pack. The Indian accounts stay on AS 19 unless the company is on Ind AS.

The Bill was not law on 23 Oct 2026. Clause 44 would let classes of companies that meet prescribed conditions skip appointing an auditor. The Joint Committee recommended limiting that to private companies. Nothing changes for a UK owned subsidiary until Parliament passes the Bill and the Central Government prescribes a class.

## Worked example

UKCo Limited, a private UK company with a 31 December year end, owns IndiaCo Private Limited in Pune. UKCo reports under FRS 102. The facts are hypothetical. For FY 2025-26, IndiaCo reports:

- revenue of INR 18 crore, from services to UKCo at cost plus;
- paid up capital of INR 2 crore and reserves of INR 1.5 crore;
- no bank borrowings;
- an office lease with four years left at 1 Jan 2026, at INR 60 lakh a year, paid at each year end.

### The Indian tests

IndiaCo's revenue of INR 18 crore exceeds the INR 10 crore CARO limit, so CARO 2020 applies. Paid up capital of INR 2 crore is below the INR 5 crore XBRL limit, so IndiaCo files plain AOC-4. Net worth of INR 3.5 crore keeps it on Indian AS. Services to UKCo are international transactions, so it files Form 3CEB.

### The dates

IndiaCo holds its AGM on 29 Sep 2026. AOC-4 is due by 29 Oct 2026 and MGT-7 by 28 Nov 2026. The tax audit report and Form 3CEB are due by 31 Oct 2026, and the return by 30 Nov 2026. UKCo's accounts for the year to 31 Dec 2025 are due at Companies House by 30 Sep 2026.

### The FRS 102 lease bridge for calendar 2026

IndiaCo's Indian AS accounts charge the rent of INR 60 lakh a year on a straight line. UKCo's 2026 group year now puts the lease on the balance sheet. Assume a 10 percent discount rate, and an asset equal to the liability at 1 Jan 2026.

1. Lease liability and right of use asset at 1 Jan 2026: INR 60,00,000 × 3.1699 (four year annuity at 10 percent) = INR 1,90,19,400.
2. Interest for 2026: INR 1,90,19,400 × 10 percent = INR 19,01,940.
3. Depreciation for 2026: INR 1,90,19,400 ÷ 4 = INR 47,54,850.
4. FRS 102 charge for 2026: INR 19,01,940 + INR 47,54,850 = INR 66,56,790.
5. Indian AS rent for the same twelve months: INR 60,00,000.
6. Extra charge in the UK pack: INR 66,56,790 less INR 60,00,000 = INR 6,56,790.

The group pack shows INR 6,56,790 more cost for 2026 than the Indian ledger. The bridge must carry this charge line every quarter, along with the right of use asset and the lease liability.

### The cost of filing late

Suppose UKCo files its accounts at Companies House on 20 Oct 2026, 20 days late. The penalty is GBP 150, or GBP 300 if UKCo also filed late the year before.

Suppose IndiaCo files AOC-4 on 28 Nov 2026, 30 days late. The additional fee is INR 100 × 30 = INR 3,000. If the ROC adjudicates under section 137(3), the company faces INR 10,000 + (INR 100 × 30) = INR 13,000.

### The visit count

UKCo's financial controller spends 18 days in Pune in April and May 2026 on the close and audit support. She returns for 15 days in September 2026. If she furnishes services to IndiaCo on those days, the total of 33 days passes the 30 day test in Article 5(2)(k)(ii). We would review the visit plan before the second trip.

## Common mistakes

1. **Assuming a UK style audit exemption.** Fix: budget an Indian audit every year, whatever the subsidiary's size.
2. **Asking the UK group auditor to sign the Indian report.** Fix: appoint an Indian CA firm that passes sections 141 and 144.
3. **Moving the UK accounting reference date and expecting India to follow.** Fix: keep 31 March in India and change only the pack date.
4. **Sending the FRS 102 pack to the Indian auditor as the statutory accounts.** Fix: keep Schedule III accounts under Indian AS or Ind AS.
5. **Ignoring the 2026 FRS 102 lease change in the bridge.** Fix: add the right of use asset, liability and charge difference to the pack.
6. **Booking the cost plus true up after the Indian audit.** Fix: book it in the 31 March accounts.
7. **Treating component clearance as the Indian audit.** Fix: plan the statutory audit, CARO and rule 11 reporting as a separate deliverable.
8. **Letting the network firm take on the UK parent's internal audit unchecked.** Fix: ask the Indian firm for a written section 144 confirmation.
9. **Counting no days for UK staff visits.** Fix: log days in India against the 30 day service PE test.
10. **Forgetting UK directors' digital signatures.** Fix: renew signatures before July (see our guide on [foreign national directors](/insights/foreign-national-director-indian-company-din)).

## Checklist

1. Appoint the Indian auditor within 30 days of incorporation, and file ADT-1 within 15 days.
2. Confirm the Indian firm's eligibility under section 141 and its independence under section 144, including services to the UK parent.
3. Keep 31 March as the Indian year, and set the UK pack dates around it.
4. Agree one calendar covering the UK group timetable, the component work, the Indian audit and the Indian AGM.
5. Test Ind AS, CARO 2020, XBRL, rotation and the internal controls exemption each year on Indian figures.
6. Update the GAAP bridge for the FRS 102 changes from periods beginning 1 Jan 2026.
7. Obtain written evidence of the audit trail and daily Indian backup from group IT before 31 March.
8. Book the cost plus true up in the 31 March accounts.
9. File the FLA return by 15 July, on provisional figures if needed.
10. Hold the Indian AGM by 30 September, and file AOC-4 within 30 days and MGT-7 within 60 days.
11. File the tax audit report and Form 3CEB by 31 October, or Form 26 and Form 48 from tax year 2026-27.
12. Track UK staff days in India against the treaty's 30 day service PE test.
13. File the UK parent's accounts at Companies House within 9 months, or 6 months for a public company.

For a UK and India audit calendar built around your year end, send the last AOC-4 and the group timetable through our [company compliance](/services/compliance-company.html) page.

## Key terms

- **Component auditor**: An auditor who performs audit work on a component, such as an Indian subsidiary, for a group audit. The group auditor directs that work under ISA (UK) 600 (Revised) or ISA 600 (Revised). The Indian statutory audit under section 143 of the Companies Act, 2013 remains a separate engagement. (https://krystal7.com/glossary#component-auditor)
- **ISA (UK) 600 (Revised)**: The Financial Reporting Council's auditing standard for audits of group financial statements, including the work of component auditors. It applies to audits of periods beginning on or after 15 Dec 2023. A UK group auditor uses it when it instructs the auditor of an Indian subsidiary. (https://krystal7.com/glossary#isa-600-revised)
- **FRS 102**: The Financial Reporting Standard applicable in the UK and Republic of Ireland, issued by the Financial Reporting Council. Many unlisted UK groups use it for consolidated accounts. An Indian subsidiary still prepares its statutory accounts under Indian AS or Ind AS and sends an FRS 102 pack. (https://krystal7.com/glossary#frs-102)
- **Accounting reference date (ARD)**: The date on which a UK company's financial year ends, set under sections 391 and 392 of the Companies Act 2006 and changeable by notice to Companies House. An Indian company has no such choice, because section 2(41) of the Companies Act, 2013 fixes 31 March. (https://krystal7.com/glossary#accounting-reference-date)
- **Section 479A audit exemption**: A rule in the Companies Act 2006 that exempts a UK subsidiary from audit when its UK parent guarantees its liabilities under section 479C. It applies only to UK companies, so a UK group's Indian subsidiary still needs an audit under Indian law. (https://krystal7.com/glossary#section-479a-audit-exemption)
- **Form 48 (old Form 3CEB)**: The accountant's report on international and specified domestic transactions under section 172 of the Income Tax Act, 2025, which replaced Form 3CEB from tax year 2026-27; Form 3CEB still covers FY 2025-26. A chartered accountant signs it, and it is due one month before the return due date, so by 31 Oct where the return is due on 30 Nov. (https://krystal7.com/glossary#form-48-old-form-3ceb)

## Frequently Asked Questions

### Does an Indian subsidiary need an audit if the UK group is already audited?

Yes. Section 139 of the Companies Act, 2013 requires every Indian company to appoint an auditor and file audited accounts. The UK group audit covers the consolidation, not the Indian company's own accounts. The Indian auditor reports to the Indian members under section 143, separately from any component work.

### Can the UK group auditor sign the Indian audit report?

No. Section 141(1) allows only a Chartered Accountant in practice in India, or a firm whose partners practising in India are mostly Chartered Accountants. The UK firm's Indian network firm can sign if it passes sections 141 and 144. Only its Chartered Accountant partners may sign for it.

### Does the section 479A exemption help the Indian subsidiary?

No. Section 479A of the Companies Act 2006 exempts a UK subsidiary from audit when its UK parent gives a guarantee under section 479C. It applies only to UK companies. Indian law has no equivalent, and section 2(85) of the Companies Act, 2013 bars a subsidiary from small company relief.

### Can the Indian subsidiary use the UK parent's accounting reference date?

Only with approval under the first proviso to section 2(41). The Regional Director decides an application on Form RD-1 under rule 40 of the Companies (Incorporation) Rules, 2014. The Indian tax year still runs from April to March under section 3 of the Income Tax Act, 2025. Most UK groups therefore keep 31 March.

### Does the Indian subsidiary file anything at Companies House?

No, unless it opens a UK establishment. The UK parent files its own accounts at Companies House. They list the Indian subsidiary as a related undertaking under section 409 of the Companies Act 2006 and the regulations made under it. The Indian subsidiary files AOC-4 and MGT-7 with the Registrar of Companies in India.

### Can the Indian subsidiary prepare its accounts under FRS 102?

No. Indian statutory accounts follow the Companies (Accounting Standards) Rules, 2021, or Ind AS under the Companies (Indian Accounting Standards) Rules, 2015, in Schedule III format. The subsidiary sends an FRS 102 pack to the UK group alongside. A quarterly bridge keeps the two consistent.

### Does the 2026 FRS 102 lease change affect the Indian accounts?

No. The FRC's amendments apply to UK accounts for periods beginning on or after 1 Jan 2026, so they change the UK group pack. An Indian company on Indian AS keeps charging operating lease rent under AS 19. Only the bridge changes, with a right of use asset, a liability and a different annual charge.

### Who sets component materiality for the Indian subsidiary?

The UK group auditor, under ISA (UK) 600 (Revised). It sets a component materiality and scope for the group audit. The Indian statutory auditor sets its own materiality for the Indian accounts under the Standards on Auditing. The two figures often differ.

### Can one Indian firm do both the component work and the statutory audit?

Yes, and it usually saves time. The same firm can follow the UK group instructions and carry out the Indian statutory audit under section 143. For a 31 March UK parent, one field visit can cover most of both. The firm still issues two separate outputs.

### Does CARO 2020 apply to a UK owned Indian subsidiary?

Usually yes. Only the private company exemption in paragraph 1(2)(v) can help a subsidiary. It needs capital plus reserves and bank borrowings each within INR 1 crore, and revenue within INR 10 crore. A subsidiary that bills its UK parent above INR 10 crore gets a CARO report.

### When is Form 3CEB due for a subsidiary of a UK parent?

For FY 2025-26, Form 3CEB was due 31 Oct 2026 with the tax audit report, and the return 30 Nov 2026. CBDT Circular No. 07/2026 did not move these transfer pricing dates. From tax year 2026-27, Form 48 under section 172 of the Income Tax Act, 2025 replaces it, due 31 Oct 2027.

### Can UK finance staff visiting India for the audit create a PE?

They can. Article 5(2)(k)(ii) of the India UK treaty sets a 30 day test for services to an associated enterprise. Staff who serve the subsidiary in India for more than 30 days in any twelve month period create a service PE. Reviewing the parent's own investment is a different activity. Log the days and the purpose of each visit.

### What is the penalty for filing AOC-4 late?

The ROC charges an additional fee of INR 100 a day, on top of the normal fee. Under section 137(3), the company also faces a penalty of INR 10,000 plus INR 100 a day, capped at INR 2,00,000. The managing director, CFO or director in charge faces up to INR 50,000.

### When are the UK parent's accounts due at Companies House?

Under section 442 of the Companies Act 2006, a private company files within nine months of the end of its accounting reference period. A public company has six months. Late filing penalties for a private company run from GBP 150 to GBP 1,500, doubled for a second late year.

## Sources

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