Wholly-Owned Subsidiary (WOS) in India
What a Wholly-Owned Subsidiary Actually Is
A wholly-owned subsidiary is an Indian company incorporated under the Companies Act, 2013, in which a foreign parent holds 100% of the equity share capital. It is the most common structure chosen by foreign companies entering India, and for most businesses it is the right one.
The critical point that gets lost in most explanations: your WOS is an Indian company, not a foreign one. It is taxed as a domestic company, it can undertake any commercial activity permitted under the FDI policy, it can own property and intellectual property, it can hire employees directly, and it can be sold or listed later. A branch office cannot do most of these things.
Three separate legal frameworks apply to your WOS simultaneously, and this is where foreign parents most often get into trouble:
- Companies Act, 2013 — incorporation, directors, board meetings, annual filings
- FEMA, 1999 and the Non-Debt Instrument Rules, 2019 — the inbound investment, sectoral caps, share pricing, RBI reporting
- Income Tax Act, 1961 — corporate tax, transfer pricing on every transaction with your parent, withholding on repatriation
Incorporation is the easy part. The FEMA and transfer pricing obligations that begin the day your parent remits capital are where the real exposure sits.
Before Anything Else: Two Questions That Decide Your Entire Timeline
1. Is your sector on the automatic route?
Most sectors permit 100% FDI without prior government approval. You incorporate, receive funds, and report to RBI afterwards. But some sectors are capped or require prior approval, and a handful are closed to FDI entirely — including lottery and gambling, chit funds, Nidhi companies, real estate trading (as distinct from construction and development), and tobacco manufacturing.
If your sector needs government approval, the application goes through the Foreign Investment Facilitation Portal and typically takes 8–12 weeks before incorporation can sensibly begin.
2. Does Press Note 3 apply to you?
This is the question that catches people out. Any investment where the investor — or the beneficial owner behind the investor — is from a country sharing a land border with India requires prior government approval, regardless of sector and regardless of percentage.
That covers China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan and Afghanistan. It also catches structures people assume are safe: a Singapore holding company with Chinese ultimate beneficial ownership is covered. A Hong Kong entity is covered.
If Press Note 3 applies, nothing about the standard timeline holds. We will tell you this in the first conversation rather than three weeks into a document collection exercise.
We run both checks before you pay us anything.
Is a WOS Actually Right for You?
Sometimes it isn’t. Here is the honest comparison.
|
Wholly-Owned Subsidiary |
Branch Office |
Liaison Office |
LLP with FDI |
|
|
Legal status |
Separate Indian entity |
Extension of parent |
Extension of parent |
Separate Indian entity |
|
Parent liability |
Limited to capital |
Unlimited |
Unlimited |
Limited to contribution |
|
Permitted activities |
Any, subject to FDI policy |
Restricted list; no manufacturing |
Non-commercial only |
Any, subject to FDI policy |
|
Can earn revenue in India |
Yes |
Yes |
No |
Yes |
|
Corporate tax |
~25.17% (domestic rate) |
~35% + surcharge (foreign rate) |
N/A |
~30% + surcharge |
|
Prior RBI approval |
No (automatic route) |
Yes — mandatory |
Yes — mandatory |
No (automatic route) |
|
Setup time |
15–25 working days |
45–60 days |
30–45 days |
15–25 working days |
|
Can hire staff directly |
Yes |
Limited |
Very limited |
Yes |
|
Exit route |
Share sale, merger, IPO |
Closure only |
Closure only |
Partner transfer |
Choose a WOS if you intend to sell, manufacture, deliver services, or hire in India, and you want limited liability and the domestic tax rate.
Choose a Liaison Office instead if you only want to test the market, research customers, and coordinate with distributors, with no Indian revenue for the next two or three years.
Choose a Branch Office instead if your parent has a specific commercial reason to contract in its own name and accepts the higher tax rate.
Choose a Joint Venture instead if your sector caps foreign ownership, or you need an Indian partner’s licences, distribution or regulatory relationships.
Choose a Project Office instead if you have won a single time-bound contract in India and have no plans beyond it.
We will tell you when the answer is not a WOS. It usually isn’t the most expensive option for us, and saying so is the point.
What You Need Before You Can Incorporate
Two directors minimum. At least one must be a resident director — someone who has stayed in India for at least 182 days in the preceding financial year (Section 149(3), Companies Act 2013). They do not need to be an Indian citizen. If your parent has nobody who qualifies, this becomes a blocking issue on day one. We provide resident director services for exactly this situation.
Two shareholders minimum. Both can be foreign. In practice the parent holds 99.99% and a second entity or nominee holds 0.01%, which is what preserves the “wholly-owned” character in substance. See our nominee shareholder services if you need the second holder.
A registered office address in India from the date of incorporation, with ownership or lease documentation, a No Objection Certificate from the owner, and a utility bill under two months old. We offer a registered office address in Delhiif your premises aren’t ready.
Class 3 Digital Signature Certificates for every director and subscriber, issued by an Indian licensed Certifying Authority. Certificates from foreign certifying authorities are not accepted on the MCA portal — this surprises almost every first-time applicant.
No minimum capital is prescribed by statute. But set your authorised capital against a realistic two-to-three year plan; increasing it later costs additional stamp duty and filing fees.
Documents Required
From the foreign parent company — all apostilled or consularised
- Certificate of Incorporation
- Memorandum and Articles of Association (or equivalent constitutional documents)
- Board resolution authorising the India investment, subscription to shares, and appointment of the first directors
- Latest audited financial statements
- Power of Attorney in favour of an authorised representative in India, if directors cannot sign in person
- Beneficial ownership declaration and UBO details
From each foreign director and subscriber — apostilled or consularised
- Passport, notarised and apostilled — all pages
- Address proof from the home country, not older than two months
- Passport-size photograph, white background
- Class 3 DSC from an Indian Certifying Authority
- Form DIR-2, consent to act as director
From the Indian resident director
- PAN card (mandatory)
- Aadhaar card
- Address proof
- Photograph, DSC, DIR-2
For the registered office
- Lease deed or ownership proof
- NOC from the property owner
- Utility bill not older than two months
Forms filed with the MCA
|
Form |
Purpose |
|
SPICe+ Part A |
Name reservation |
|
SPICe+ Part B (INC-32) |
Incorporation application |
|
e-MoA (INC-33) |
Memorandum of Association |
|
e-AoA (INC-34) |
Articles of Association |
|
AGILE-PRO-S |
GST, EPFO, ESIC, professional tax, bank account |
|
INC-9 |
Declaration by first directors and subscribers |
The apostille bottleneck — read this before you plan anything
This is the single largest cause of delay in the entire process, and the one foreign parents consistently underestimate.
If your country is a signatory to the Hague Apostille Convention, your documents need notarisation followed by an apostille from your designated competent authority. Budget two to four weeks, longer in some jurisdictions.
If your country is not a signatory, documents must instead be attested by the Indian Embassy or Consulate — consularisation — which typically takes longer still.
Any document not in English needs a certified English translation attached.
Documents that are notarised but not apostilled will be rejected by the ROC. We provide the exact document list, in the exact required format, before you begin — so you apostille once rather than twice.
The Process, Step by Step
Step 1 — Structure and route assessment (2–3 days) Sector FDI check, Press Note 3 screening, confirmation that a WOS is the right vehicle. You receive a written note suitable for your board.
Step 2 — Document checklist and apostille coordination (1–4 weeks — the variable) We issue a document list specific to your jurisdiction and review every document’s format before you apostille it.
Step 3 — Digital Signature Certificates (1–3 working days) Class 3 DSCs for all directors and subscribers through an Indian Certifying Authority.
Step 4 — Name reservation (1–3 working days) Two proposed names through SPICe+ Part A, screened in advance against existing companies, LLPs and registered trademarks. Approved names are reserved for 20 days.
Step 5 — Incorporation filing (3–7 working days for ROC approval) SPICe+ Part B with e-MoA, e-AoA, AGILE-PRO-S and INC-9 filed as a single integrated application covering PAN, TAN, GST, EPFO and ESIC.
Step 6 — Certificate of Incorporation CIN, PAN and TAN issued together. Your company legally exists.
Step 7 — Bank account (3–7 working days) Current account opening. Expect enhanced KYC on 100% foreign-owned entities; some banks are materially faster than others and we will tell you which.
Step 8 — Capital inflow and FIRC Parent remits subscription money through banking channels. The AD bank issues the Foreign Inward Remittance Certificate.
Step 9 — Share allotment and FC-GPR filing (within 30 days of allotment — hard deadline) Board allots shares, share certificates issue, Form PAS-3 filed, and FC-GPR filed on the RBI FIRMS portal through the Single Master Form. Requires the FIRC, investor KYC, a valuation certificate, and the board resolution.
Step 10 — INC-20A, commencement of business (within 180 days) Declaration that subscription money has been received. Without it, the company cannot legally commence business or borrow.
Realistic total: 15–25 working days if documents are already apostilled. 4–8 weeks from a standing start.
What Happens After Incorporation — The Part Nobody Warns You About
Most providers hand you a Certificate of Incorporation and disappear. That certificate is the beginning of a permanent compliance calendar, and the penalties for missing items on it are not trivial.
First 180 days
|
Obligation |
Deadline |
|
Appoint first statutory auditor |
Within 30 days of incorporation |
|
File FC-GPR with RBI |
Within 30 days of share allotment |
|
File INC-20A, commencement of business |
Within 180 days |
|
First board meeting |
Within 30 days of incorporation |
Every year, permanently
- Annual ROC filings — AOC-4 (financial statements) and MGT-7 (annual return)
- Statutory audit by a practising Chartered Accountant
- FLA return to RBI by 15 July each year, reporting foreign liabilities and assets as at 31 March
- Income tax return (ITR-6), plus advance tax quarterly
- Transfer pricing — Form 3CEB on every transaction with your parent, including management fees, IT support recharges, IP licensing and intercompany loans
- GST returns monthly or quarterly
- TDS returns quarterly
- Director KYC annually for every director
- Minimum four board meetings and one AGM, with statutory registers maintained throughout
On transfer pricing specifically
If your Indian subsidiary receives any service from your parent — engineering support, shared software, management time, brand usage — that is an international related-party transaction and must be priced at arm’s length with contemporaneous documentation.
Companies that ignore this in year one because the amounts look small face retroactive adjustments and penalties later. Set the intercompany agreements up at incorporation. It costs a fraction of fixing it during an assessment.
This is what we do. Incorporation is a three-week project. Compliance is the relationship. We handle bookkeeping, payroll, monthly MIS reporting and virtual CFO support for foreign subsidiaries whose parent boards need visibility from ten time zones away.
Getting Money Out
A subsidiary that cannot repatriate profit is a trap. The routes:
Dividends. No Dividend Distribution Tax since 2020. Withholding at 20% under domestic law, frequently reduced to 10–15% under the applicable Double Taxation Avoidance Agreement. To claim treaty rates your parent needs a Tax Residency Certificate from its home jurisdiction and must file Form 10F. Every outward remittance requires Forms 15CA and 15CB.
Management fees and royalties. Deductible for the subsidiary, subject to withholding, and must survive transfer pricing scrutiny. Documentation matters more than the rate.
Interest and principal on parent loans, under the External Commercial Borrowing framework, with its own minimum maturity, cost ceiling and end-use restrictions.
India has DTAAs with over 90 countries. The treaty position should inform how you structure the entity at incorporation — not be discovered when you first want to move money.
Six Mistakes We See Repeatedly
- Apostilling the wrong documents, or notarising without apostilling. Rejected at the ROC, and the whole cycle repeats.
- Not identifying a resident director early. Discovered at filing stage, it stops everything.
- Missing the 30-day FC-GPR window. Incorporation goes smoothly, then the RBI filing slips while everyone is opening bank accounts.
- Setting authorised capital too low. Increasing it later costs stamp duty and fees that would have been nil at incorporation.
- Treating transfer pricing as a year-three problem. It is a day-one problem.
- Assuming Press Note 3 doesn’t apply because the immediate investor is not from a border country. Beneficial ownership is what counts, not the entity on the share certificate.
Why Delhi Legal Company
Corporate law, FEMA and tax under one roof. The most common failure in India entry is the coordination gap between a law firm doing incorporation, a CA doing tax, and a third party doing FEMA. Nobody owns the FC-GPR deadline. We do.
We stay after incorporation. Bookkeeping, payroll, GST, TDS, annual ROC filings and monthly MIS reporting for your parent’s board. Your India entity does not need to become someone at head office’s second job.
Resident director, registered office and nominee shareholder available in-house. The three requirements that most often block foreign parents at day one.
Delhi-based, working across time zones. Connaught Place, central New Delhi, serving parent companies in the US, UK, EU, Japan, Singapore and the Gulf.
Start With a Conversation, Not a Quote
Tell us your sector, your parent’s jurisdiction, and what you intend to do in India. In thirty minutes we will tell you whether a WOS is the right structure, whether your investment is on the automatic route, whether Press Note 3 applies, and what your realistic timeline looks like.
No charge, and no obligation to proceed.
[Book a Free Consultation] [WhatsApp Us] [Call +91 95993 32456]
4th Floor, E Block, Innov8 Workspaces, Harsha Bhawan, 13/29, Connaught Place, New Delhi – 110001 info@delhilegalcompany.com
Frequently Asked Questions
1. How long does it take to register a wholly-owned subsidiary in India?
15 to 25 working days if all parent company documents are already apostilled and a resident director is in place. From a standing start, 4 to 8 weeks — the apostille process in your home country is the variable, and in some jurisdictions it alone takes three to four weeks.
2. Can a foreign company own 100% of an Indian subsidiary?
Yes, in sectors on the automatic route, with no Indian partner required. Two shareholders are needed, but both can be foreign — typically the parent and one affiliate. At least one director must be an Indian resident, though they need not be an Indian citizen.
3. What is the minimum capital required?
None is prescribed by statute. Set authorised capital against a realistic two-to-three year plan, since increasing it later attracts additional stamp duty and filing fees.
4. Do I need an Indian resident director?
Yes. Section 149(3) of the Companies Act, 2013 requires at least one director who has stayed in India for 182 days or more in the preceding financial year. Citizenship is irrelevant — a foreign national resident in India qualifies. We provide resident director services where the parent has nobody eligible.
5. What is FC-GPR and when must it be filed?
FC-GPR reports the issue of shares to a non-resident to the Reserve Bank of India, filed through the Single Master Form on the FIRMS portal within 30 days of share allotment. It requires the FIRC from your AD bank, investor KYC, a valuation certificate, and the board resolution. Late filing attracts a Late Submission Fee; long delays require a compounding application.
6. What is the corporate tax rate for an Indian subsidiary?
An Indian subsidiary is taxed as a domestic company and can opt for the concessional rate under Section 115BAA — 22%, approximately 25.17% effective after surcharge and cess. A branch office of a foreign company is taxed at the foreign company rate, roughly 35% before surcharge. This gap is a primary reason foreign parents choose a WOS over a branch.
7. What is the difference between a WOS and a branch office?
A branch office is not a separate legal entity — it is your parent company operating in India, and your parent carries unlimited liability for everything it does. A WOS is a separate Indian company; your parent’s exposure is capped at its shareholding. Branch offices need prior RBI approval, are restricted in permitted activities, cannot manufacture, and pay the higher tax rate.
8. Does Press Note 3 affect my investment?
It applies if the investor, or the beneficial owner behind the investor, is from a country sharing a land border with India — China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan or Afghanistan. Where it applies, prior government approval is required regardless of sector or stake size. Intermediate holding companies in third countries do not avoid it; beneficial ownership is what is tested.
9. Which documents need to be apostilled?
The parent’s Certificate of Incorporation, its MoA and AoA, the board resolution authorising the India investment, audited financials, and each foreign director’s passport and address proof. Countries outside the Hague Convention require consularisation by the Indian Embassy instead. Documents not in English need certified translations.
10. What ongoing compliance applies after incorporation?
Annual ROC filings (AOC-4 and MGT-7), statutory audit, income tax return, the FLA return to RBI by 15 July, Form 3CEB for transfer pricing, GST returns, quarterly TDS returns, annual director KYC, four board meetings and one AGM. First-year items include appointing the statutory auditor within 30 days and filing INC-20A within 180 days.
11. Can my subsidiary pay dividends to the parent?
Yes. Dividend Distribution Tax was abolished in 2020. Withholding is 20% under domestic law, often reduced to 10–15% under the applicable DTAA where your parent provides a Tax Residency Certificate and Form 10F. Forms 15CA and 15CB are required for each outward remittance.
12. Do I need to worry about transfer pricing from day one?
Yes. Any transaction with your parent — management fees, shared services, software, IP licensing, loans — is an international related-party transaction requiring arm’s-length pricing and contemporaneous documentation, with Form 3CEB filed alongside the tax return. Retroactive compliance is materially more expensive than doing it at incorporation.