India will let you incorporate a company in about two weeks. It will then spend the next two years testing whether you understood what you signed up for.
Four structures compared
| Liaison Office | Branch Office | Wholly Owned Subsidiary | Joint Venture | |
|---|---|---|---|---|
| Permitted activity | Representation and information gathering only, no revenue | Defined commercial activities on the parent’s behalf | Full commercial operation | Full commercial operation, shared with a local partner |
| RBI route | Prior RBI approval required | Prior RBI approval required | Automatic route in most sectors | Depends on sector and FDI policy |
| Tax exposure | Minimal, since no revenue is earned | Taxed on India-sourced income attributable to the branch | Taxed as a resident Indian company on worldwide income | Taxed as a resident Indian company |
| Repatriation | Not applicable — no earnings to repatriate | Permitted, subject to tax and RBI reporting | Dividend repatriation, subject to withholding tax | Dividend repatriation, shared per shareholding |
| Exit difficulty | Straightforward closure process | Moderate — requires RBI intimation | More involved — requires member/creditor process | Most involved — requires partner agreement on exit terms |
| Typical use case | Market research, representing the parent | Limited-scope consulting, trading, import/export | Manufacturing, technology, full-scale operations | Sector requiring local partner or knowledge |
A wholly owned subsidiary is the default choice for a business that intends to actually operate, hire and invoice in India, and it is what most of this checklist focuses on.
The incorporation sequence
- Digital Signature Certificate (DSC) for proposed directors — needed before any digital filing can be made.
- Director Identification Number (DIN) for directors who have not previously held one.
- Name reservation, checked against existing company names and trademarks before filing.
- SPICe+ filing — the integrated incorporation form covering company incorporation, PAN, TAN and, where opted, EPFO, ESIC and GST registration in a single submission.
- PAN and TAN issuance, required before a bank account can be opened.
- Bank account opening, generally the slowest step given foreign-shareholder KYC requirements.
- FC-GPR filing, reporting foreign investment to the RBI within 30 days of share allotment.
Registrations most foreign entrants miss
Incorporation gets the visible milestone; these are the registrations that quietly determine whether the entity is actually compliant once it starts operating.
- GST registration, mandatory once turnover crosses the threshold, or immediately for inter-state supply or import of services.
- Import Export Code (IEC), required before the entity can import or export goods.
- Professional Tax, registered and paid separately in every state the entity employs staff in.
- Shops & Establishment registration, a state-level licence required before an office can legally operate — frequently missed because it sits outside the central incorporation process.
- PF and ESI thresholds, triggered by headcount and wage levels that new entrants often cross without realising a registration obligation has been activated.
The resident director requirement
Every Indian company must have at least one director who was resident in India for a minimum of 182 days in the previous financial year. Foreign entrants typically satisfy this in one of two ways: appointing a trusted local executive to the board, or engaging a professional resident director on an interim basis while the business’s own leadership relocates or is hired locally. Either route needs to be resolved before incorporation, since the requirement applies from the company’s formation, not from some later point once operations begin.
FEMA and the RBI reporting calendar
- FC-GPR — reports foreign investment against share allotment, due within 30 days of allotment.
- FLA return — the annual Foreign Liabilities and Assets filing, due 15 July each year, and the single most commonly missed filing in a subsidiary’s first year because it falls outside the standard tax calendar.
- ODI reporting — relevant if the Indian entity itself later makes an outbound investment.
The FLA return does not appear on a tax filing calendar, an auditor’s checklist, or an incorporation agent’s scope of work. It appears on the RBI’s calendar, which is precisely why it gets missed.
Late filing does not usually void anything outright, but it does trigger a compounding process with the RBI to regularise the lapse — a cost and a delay that is entirely avoidable with a compliance calendar that includes RBI filings alongside tax deadlines from day one.
Transfer pricing from day one
The first intercompany invoice a subsidiary raises — for services rendered to the parent, for goods supplied, for a management fee — is the moment transfer pricing rules apply, not some later point once transaction volume grows. Any international transaction with an associated enterprise requires the pricing to be at arm’s length, supported by documentation, and certified through Form 3CEB. Businesses that treat this as a later problem typically end up reconstructing a benchmarking analysis retroactively, under audit pressure, instead of setting the pricing basis correctly before the first invoice is raised.
The 12-month compliance calendar
| Month | Obligation |
|---|---|
| Within 30 days of allotment | FC-GPR filing |
| Monthly | GST returns (GSTR-1, GSTR-3B), TDS deposit |
| Quarterly | Advance tax payment, TDS return filing |
| By 15 July | FLA return (RBI) |
| Ongoing, as triggered | ROC event-based filings — director changes, share allotments |
| At year-end | Statutory audit, tax audit (if applicable), Form 3CEB (if applicable) |
| Within statutory window post-AGM | Annual ROC filings — AOC-4, MGT-7 |
Five mistakes seen repeatedly in first-year Indian subsidiaries
- Filing FC-GPR but never hearing of the FLA return, discovered only when a compounding notice arrives.
- Treating Professional Tax and Shops & Establishment as optional, because neither appears in the central incorporation paperwork.
- Raising the first intercompany invoice without a transfer pricing basis, then having to justify the pricing retroactively.
- Underestimating the resident director requirement, leaving the search for a qualifying director until after incorporation is already underway.
- Assuming the bank account will open as fast as the certificate of incorporation, and building a launch timeline that does not account for foreign-shareholder KYC taking materially longer.
Every one of these is avoidable with a compliance calendar built at the point of structuring, not assembled after the first deadline has already passed.