How to Register a Company in India from Canada?

Indian company law does not restrict share ownership based on nationality. A Canadian citizen or a Canadian-registered company can hold shares in an Indian company, including full ownership in most sectors.

Three key factors determine how this works in practice:

1. Remote incorporation, with limits: Most of the process, including name reservation, form filing, and Digital Signature Certificates (DSC), can be completed online. However, document authentication must be completed physically in Canada. Depending on the bank, founders or directors may also need to visit India for account opening and verification.
2. The board still needs an India-based director: Section 149(3) of the Companies Act, 2013, requires at least one director to have spent 182 days or more in India during the financial year. This is prorated (adjusted based on the period) in the company's first year. It is a mandatory requirement with no carve-out for foreign-owned companies.
3. Your capital counts as FDI the moment it enters India: Money coming in from a non-resident is governed by FEMA, 1999, and the FEM (Non-Debt Instruments) Rules, 2019. Most sectors follow the automatic route. This means you can invest first and report to the RBI afterward, without upfront government approval. However, the reporting itself is mandatory.

Several types of individuals and entities based in Canada can set up or invest in a business in India. The right option affects the documents required and how the investment is treated.

The table below shows the main options and the route available to each applicant:

Note: FDI is prohibited in lottery and gambling, chit funds, Nidhi companies, trading in Transferable Development Rights, real estate business, and manufacturing of certain tobacco products. It is also prohibited in sectors not open to private investment, such as atomic energy and railway operations, except for specifically permitted railway activities. These restrictions apply based on the business activity, regardless of the applicant category.

The basic incorporation process remains the same, using the MCA portal, forms, and statutory requirements. However, foreign founders have a few additional steps related to their documents, investment, and residency.

Here are the key areas where the process differs:

• Foreign Shareholding: Your shares are treated as foreign-held from day one. The company enters the FDI reporting process when the shares are allotted. The issue price must be at or above fair market value.
• Documents for Foreign Directors: Foreign directors still need a DIN and DSC. Their identity and address documents must also be properly authenticated. For Canadian applicants, this generally means notarization followed by apostille.
• Notarization and Apostille: Foreign documents must be properly notarized and apostilled. This is a common source of delays for foreign-founded companies.
• FDI Compliance: Foreign funds must move through permitted banking channels. After the shares are allotted, Form FC-GPR must be filed with the RBI within the required timeframe.
• Indian Registered Office: Every company needs a registered office in India. You must provide valid address proof and the owner's consent. A compliant virtual office space can be used if you do not have physical premises yet.
• Business Activity and Trademark Checks: Before filing, check your proposed business activity against the NIC code list . You should also run a trademark search to protect your brand. These checks can help avoid a rejected name reservation or a trademark conflict later.

The right entity depends on your ownership structure, business activity, funding plans, and how you plan to operate in India.

• Private Limited Company: A common choice for startups, operating businesses, and companies planning to raise funds or expand in India. Private Limited Company registration is also the standard route for setting up a wholly owned subsidiary.
• LLP: Suitable for professional and service businesses that want flexibility and lighter compliance. An LLP is less suitable for a Canadian parent because FDI is allowed only in sectors with 100% automatic-route FDI and no performance-linked conditions. An LLP also has no share capital, so it cannot support equity or ESOP structures like a company.
• Wholly Owned Subsidiary: This is a private limited company where the Canadian parent holds all the shares. It is the standard choice for a Canadian company building a permanent operation in India. It allows full ownership, hiring, contracting, invoicing, and future fundraising. The investment is typically eligible for the automatic FDI route.
• Branch Office: Suitable for activities permitted under FEMA and RBI rules, such as export or import of goods, professional or consultancy services, research, and technical or financial collaboration. A branch office cannot carry out manufacturing activities directly, though it may subcontract manufacturing to Indian manufacturers. RBI approval and other conditions may apply.
• Liaison Office: Suitable for market research, promoting business relationships, and communication between the Canadian parent and Indian parties. It cannot conduct commercial activities or earn income in India. RBI approval and a requirement to operate from remittances received from the parent apply.
• Project Office: A temporary structure for executing a specific project in India. It is generally set up for projects awarded to the foreign company by an Indian entity and is subject to FEMA and RBI conditions.

Note: If you only need to hire one or two people in India, an Employer of Record (EOR) can employ them on your behalf. You do not need to incorporate a company for this. It can be faster and cheaper at the start. However, an EOR cannot own Indian operations, hold local contracts or IP, or invoice Indian customers directly. Once you need these capabilities, a wholly owned subsidiary is more suitable.

A Canadian founder needs identity and address proof for an individual shareholder or director. A Canadian company investing in India must also provide its corporate and constitutional documents. These documents may need to be notarized and apostilled before they are accepted in India.

For an individual shareholder or director, prepare:

• A valid passport as identity proof.
• Recent Canadian address proof, such as a bank statement, utility bill, or driver's licence.
• Notarized and apostilled copies of these documents, where required.

If the shareholder is a Canadian company, also prepare:

• Certificate of Incorporation (CoI) for the Canadian company.
• Articles of Incorporation or equivalent constitutional documents.
• A board resolution approving the Indian investment.
• Authorization naming the person who will sign and submit the investment documents.

Since January 11, 2024, Canada has been a member of the Hague Apostille Convention. Canadian documents intended for use in India can now be notarized and apostilled through the relevant Canadian authority.

An Indian High Commission or Consulate visit is no longer required for consular legalization. This has simplified the document authentication process for Canadian founders setting up an Indian company.

You can get the apostille through either of these channels:

• Global Affairs Canada: For documents notarized federally or in most provinces.
• The relevant provincial authority: For documents that fall under a province's jurisdiction, such as Quebec's Ministère de la Justice.

Some consultants and founders still follow the older process. If you are told that a personal document needs embassy legalization, confirm whether an apostille is sufficient instead.

Practical tip: Apostille the original notarized document, not a photocopy. Submitting a copy can lead to rejection and may require you to repeat the process.

Setting up an Indian subsidiary from Canada involves several key stages, from checking FDI eligibility to completing ongoing compliance. Here's each step broken down, with what to do at each stage:

Step 1: Check FDI Eligibility

Before anything else, confirm whether your proposed business activity is actually open to foreign investment, and on what terms.

• Check the sectoral cap and calculate how much foreign ownership is permitted for your specific activity.
• Confirm the entry route, whether it falls under the automatic route or needs prior government approval.
• Review any sector-specific conditions attached to that activity.
• If your sector allows 100% FDI through the automatic route, you can invest without prior government approval. This is common for IT/software, business consultancy, and construction-development projects, subject to standard FEMA and RBI requirements.

Note: FDI is fully prohibited in lottery and gambling, chit funds, Nidhi companies, real estate business, trading in Transferable Development Rights, and tobacco products such as cigars and cigarettes. It is also prohibited in sectors not open to the private sector, including atomic energy. Real estate construction and development are treated separately.

Step 2: Decide the Ownership Structure

Once your sector is confirmed as eligible, decide how the Canadian parent will hold its shares in the new Indian entity.

• The Canadian parent typically holds all the shares in a wholly owned subsidiary.
• One share is usually held by a nominee, since an Indian private company requires at least two subscribers.
• Document and report the beneficial-ownership arrangement properly under Section 89 of the Companies Act.
• Disclose the Significant Beneficial Owner, the individual who ultimately controls the Canadian parent, under Section 90 through Form BEN-2 .

Step 3: Authenticate the Canadian Parent's Documents

With the ownership structure decided, get the Canadian parent's paperwork ready and properly authenticated before it can be submitted in India.

• Gather the parent's incorporation and constitutional documents.
• Prepare details of its authorized representatives, beneficial owners, and proposed shareholders or directors.
• Notarize these documents in Canada, then apostille them through Global Affairs Canada or the relevant provincial authority.

Step 4: Appoint Your Directors

Before filing for incorporation, finalize a board that actually satisfies India's residency requirement.

• Confirm at least one director will spend 182 days or more in India during the financial year (prorated for the first year).
• Arrange a resident director early if your founding team is entirely Canada-based. This can be a co-founder, trusted contact, or professional resident director service.

Step 5: Incorporate Through SPICe+

With directors and documents ready, file the actual incorporation application through the MCA's online portal.

• File SPICe+, which covers company name and registered office, MOA and AOA, directors and subscribers, DIN applications, and PAN/TAN in one filing.
• Run your proposed name through the Company Name Search Tool beforehand to catch conflicts early.
• Once the CoI is issued, the Indian entity becomes fully separate from the Canadian parent.

File Form INC-20A afterward as proof of commencement of business.

Step 6: Open the Indian Subsidiary's Bank Account

Once incorporated, the subsidiary needs its own dedicated banking relationship, separate from the Canadian parent.

• Open a bank account in the Indian subsidiary's own name.
• Use this account for the parent's investment, business expenses, employee salaries, and customer receipts.
• Never route the Indian entity's transactions through the Canadian parent's own account.

Step 7: Complete FDI and RBI Reporting

Once the bank account is active, the parent's investment needs to be reported to the RBI within specific deadlines.

• Route the parent's share subscription through permitted banking channels.
• Keep the remittance and KYC documentation from this transfer.
• File Form FC-GPR through the RBI's FIRMS portal within 30 days of share issuance.
• File the annual FLA return by July 15, where applicable.

Step 8: Secure Tax and Operational Registrations

With FDI reporting underway, register for the taxes and licenses your specific business activity requires.

• Register for GST if applicable to your business.
• Complete Shops and Establishment registration for your operating location.
• Register for EPF and ESI once you have employees.
• Obtain an Importer Exporter Code (IEC) if trading internationally.
• Secure any sector-specific or local licenses your activity requires.

Step 9: Set Up Payroll and Employment Compliance

Once you start hiring, the Indian subsidiary becomes the legal employer under Indian law, with its own compliance obligations.

• Set up salary processing and TDS deduction.
• Register for EPF, ESI, and Professional Tax as applicable.
• Maintain the required statutory registers.
• For Canadian employees temporarily posted to India, apply for a Certificate of Coverage from the Canada Revenue Agency (CRA) under the India-Canada Social Security Agreement. To apply, complete Form CPT169 and submit it to the CRA. The certificate can keep eligible employees under CPP coverage instead of India's EPF system for up to 60 months.

Note: Exemption applies only to staff actually posted from Canada, not employees hired locally in India, who remain subject to standard EPF/ESI requirements.

Step 10: Maintain Ongoing Compliance

Once the subsidiary is operating, a separate, recurring Indian compliance calendar keeps the company in good standing.

• File MCA annual filings and complete the statutory audit.
• File income-tax returns , GST returns, and TDS returns .
• Complete ongoing FEMA and RBI reporting, including the annual FLA return.
• Maintain transfer-pricing documentation for transactions with the Canadian parent.
• Complete board and shareholder compliance requirements.
• File beneficial-ownership disclosures as required.

The full process from document authentication to an operating Indian entity typically takes 3 to 5 weeks . Bank account opening can take longer due to additional KYC checks for foreign-owned companies . In some cases, the company's owners and directors may also need to visit India for verification.

Starting an Indian entity typically costs CAD 1,500–CAD 4,500 in one-time setup expenses, including incorporation, document authentication, DSCs, and professional fees. Ongoing compliance is charged separately each year.

Here is a breakdown of the key costs:

Share valuation is a key cost foreign founders may overlook. Shares issued to a non-resident must meet the fair market value requirement and be certified by a Chartered Accountant or SEBI-registered Merchant Banker. The valuation certificate is required with Form FC-GPR .

Note: Incorporation and document authentication are mainly one-time costs, while registered-office and compliance expenses recur annually. CA or CS professional fees may range from ₹25,000–₹1,00,000+ , depending on the work involved. Actual costs vary by state, number of foreign shareholders, business activity, and professional support.

Funding an Indian company from Canada involves specific FEMA reporting and documentation requirements. The process starts with transferring the funds and ends with completing the required filings.

Follow these steps to complete the funding process:

1. Register the Indian company on the RBI FIRMS portal before filing share-related reports.
2. Transfer the funds through permitted banking channels into the Indian company's account. The bank issues a Foreign Inward Remittance Certificate (FIRC) and KYC report for the Canadian remitter. Keep both for FDI reporting.
3. Allot shares to the Canadian parent within 60 days of receiving the funds. The shares must be priced at or above fair market value.
4. File Form FC-GPR within 30 days of the share allotment, along with the valuation certificate and supporting documents.
5. If shares are later transferred between a resident and non-resident, file Form FC-TRS within 60 days of the transaction.
6. File the annual FLA return by July 15, where applicable.
7. Complete regular MCA filings, including AOC-4 and MGT-7.

FDI Funding and Filing Deadlines for an Indian Company

The key filings and their deadlines are summarised below:

Missed deadlines can lead to additional costs. A late FC-GPR filing attracts a late submission fee of ₹7,500 plus 0.025% of the amount involved for each year of delay, subject to the applicable cap.

If you convert CAD to INR during the remittance, record the exchange rate and conversion date. These details should match the figures reported for the FDI transaction.

An Indian subsidiary and its Canadian parent have separate tax obligations. Taxes may be payable in both India and Canada, depending on the income and applicable tax rules.

1. Tax in India

An Indian subsidiary can use the concessional tax regime at 22% , which is roughly 25% after surcharge and cess . A Canadian company's branch office generally faces around 35% plus surcharge and cess , making a subsidiary more suitable for many long-term operations.

Payments to the Canadian parent are subject to withholding tax under the India-Canada DTAA:

• Dividends: 15%, or 10% if the Canadian recipient holds at least 10% voting power.
• Interest: 15%, with certain government-to-government interest potentially exempt.
• Royalties: 10%–20%, depending on the type of royalty.

To claim treaty rates, the Canadian parent generally needs a Tax Residency Certificate, Form 10F, and a declaration that it has no permanent establishment in India. The Indian company may also need Forms 15CA/15CB before making the payment.

Other key areas include Section 195 withholding and transfer pricing with Form 3CEB for related-party transactions. There is also a permanent establishment risk if Canadian staff regularly negotiate or conclude contracts in India.

2. Tax in Canada

The Canadian parent may also have tax implications:

• Dividends: Dividends from an Indian subsidiary's active business income can generally qualify for a 100% dividends-received deduction in Canada. This is subject to applicable exempt-surplus rules and record-keeping.
• FAPI: Passive income, such as certain interest, royalties, and investment income, may be taxed in Canada on an accrual basis before a dividend is paid.
• Capital gains: Gains from selling the Indian subsidiary's shares may be subject to Canada's 50% capital gains inclusion rate. The treatment depends on the applicable surplus account and circumstances.
• Pillar 2: Pillar 2 generally applies to corporate groups with €750 million or more in consolidated global revenue. Most small Canadian businesses with one Indian subsidiary will not be affected.

Foreign-affiliate, exempt-surplus, and FAPI rules can be complex. A Canadian tax advisor can help with the structure and reporting.

For Canadian founders, India offers full ownership, remote incorporation, access to a large market, and lower operating costs. Key benefits include:

• Growing India-Canada trade: Two-way trade reached roughly USD 23 billion in 2024. Both countries are targeting USD 50 billion by 2030 through the proposed India-Canada CEPA, which is currently under negotiation.
• Access to a large digital market: An Indian company provides a local presence. It also makes it easier to sell, hire staff, and build supplier and customer relationships.
• Skilled workforce: India has large talent pools in technology, engineering, finance, marketing, and customer support. Employment costs are generally lower than in Canada.
• Competitive corporate tax: Eligible domestic companies can opt for the 22% tax regime, which works out to roughly 25% after surcharge and cess.
• Familiar legal system: India's common-law system can be more familiar to Canadian founders than the legal systems of some other overseas markets.
• Lower operating costs: Office space, staffing, and business services generally cost less than in Canada. This can make it easier to test and scale an Indian operation.
• Social security benefits for posted staff: Eligible Canadian employees posted to India can remain covered under Canada's CPP system for up to 60 months. This can help them avoid India's EPF contributions during the posting, provided they obtain a Certificate of Coverage from the Canada Revenue Agency (CRA).

To qualify, the CRA's conditions generally require:

• The employer operates in Canada.
• The employer remits CPP contributions and files a T4 for the employee.
• The employee's work is subject to CPP before being sent to India.
• The employee is required by the employer to work in India.
• The employment in India is temporary and does not exceed 60 months.

Locally hired Indian employees remain subject to applicable EPF and ESI rules.

Cross-border business setup can create avoidable delays, compliance issues, and extra costs. These are some of the common pitfalls Canada-based founders should watch for:

• Using the old embassy legalization process: Since accession to Canada's Hague Apostille Convention in January 2024, embassy legalization is generally no longer required. Using the old process can add unnecessary delays.
• Submitting incorrect documents: Outdated address proof, incorrect copies, or mismatched names can lead to rejection. Check all documents carefully before filing.
• Choosing the wrong entity: An LLP may not suit a business planning to raise equity investment. A liaison office also cannot conduct regular commercial operations.
• Overlooking FDI rules: Your industry label does not always determine FDI eligibility. Check the specific business activity and applicable entry route before investing.
• Missing the resident director requirement: Two Canada-based founders do not meet the requirement by themselves. At least one director must meet the 182-day India residency requirement.
• Misunderstanding the Social Security Agreement: The 60-month exemption applies to employees posted from Canada. It does not cover staff hired locally by the Indian subsidiary, who remain subject to applicable EPF/ESI rules.
• Missing tax obligations in both countries: The Indian subsidiary must meet its Indian tax and filing requirements, even when the DTAA reduces withholding. The Canadian parent may also need to file Form T1134 or T1135, depending on its foreign holdings and circumstances.

Setting up an Indian company from Canada involves MCA filings, foreign investment rules, and cross-border document requirements. RegisterKaro brings these processes together under one team for smoother incorporation and ongoing compliance.

Here’s how we can support you throughout the process:

• FDI and FEMA support: Assistance with foreign investment documents and RBI filings, including Form FC-GPR and the annual FLA return.
• Canadian document support: Guidance on notarizing, apostilling, and preparing Canadian documents for Indian incorporation.
• End-to-end support: One team manages the process from parent-company documents to incorporation and operational setup.
• MCA filing support: Assistance with name approval, SPICe+, MOA/AOA, DIN, and DSC applications.
• Ongoing compliance: Continued support for MCA, tax, and FEMA compliance after incorporation.