Overview of Foreign Subsidiary Company Registration

1. India's high growth potential and the government's proactive approach towards improving the ease of doing business create a fertile ground for foreign companies. Registering a foreign subsidiary in India opens up a spectrum of advantages which are as follows:
   1. Access to New Markets: India's vast consumer base offers a new horizon for products and services, enabling businesses to diversify and increase their revenue streams.
   2. Cost Efficiency: Establishing manufacturing facilities in India can significantly lower material and operational costs, thanks to the availability of affordable labor and resources.
   3. Innovation and Talent: Collaboration with Indian professionals introduces advanced technology and innovative thinking, enhancing the company's competitive edge.
2. Moreover, the regulatory environment in India supports foreign subsidiaries through:
   1. Legal Entity Establishment: Provides operational autonomy and customization of products or services.
   2. Limited Liability Protection: Safeguards the parent company's assets, offering a secure investment climate.
   3. Strategic Alliances: Facilitates partnerships, enhancing credibility and market penetration.

A foreign branch functions as an extension of its parent company in another country, while a subsidiary company operates as a distinct legal entity in a foreign jurisdiction. The foreign branch is wholly owned and managed by the parent company, serving as an expansion of its operations abroad. However, it has limitations in terms of sourcing human resources, usually relying on employees from its home country or through contracted agencies. On the other hand, a foreign subsidiary company is an independent entity, owned and operated separately from its parent company. It must comply with the legal and tax regulations of the country where it is registered. Importantly, the parent company enjoys legal protection from any lawsuits or liabilities faced by the subsidiary company.

1. Pre-Registration Requirements:
   1. Submit a name approval application through the MCA portal by filling SPICe+ form. The name should be unique and should not be similar to existing companies. The name can include "India" to associate with the parent company.
   2. Obtain DSC (Digital Signature Certificate) for all the proposed directors and DIN (Director Identification Number) for Indian directors.
2. Filing of Incorporation Documents:
   1. File the incorporation application through the SPICe+ form along with the drafted MoA and AoA.
   2. Pay the necessary stamp duty and Registrar of Companies (ROC) fees.
3. Post-Incorporation Requirements:
   1. After verification of the submitted documents and information, the ROC issues the Certificate of Incorporation along with a Corporate Identification Number (CIN).
   2. Opening of a bank account in the company's name, preferably with banks offering global banking solutions like HSBC.
   3. Obtain a Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), and register for GST, EPFO, ESIC, and Professional Tax as applicable.

1. Taxable Income: All incomes earned by the subsidiary company, whether within or outside India, are subject to taxation. This includes dividends received from foreign subsidiaries as well.
2. Tax Rates, Surcharge and Cess: Foreign subsidiaries in India are generally taxed at a rate of 40%. Furthermore, a surcharge of 2% is imposed on companies with income between Rs. 1 Crore and Rs. 10 Crores and companies with income exceeding Rs. 10 Crores face a surcharge of 5%. Moreover, a 4% health and education cess is added to the total tax payable.
3. Minimum Alternate Tax (MAT): Companies that choose the concessional tax payment options under Section 115BAA and 115BAB are exempt from paying Minimum Alternate Tax (MAT). Other companies are required to pay a 15% tax on book profits as per MAT provisions.