Ask a foreign parent who handles their India compliance and the answer is usually a name. Ask what that name actually covers and the answer gets vague. The gaps are rarely visible until a deadline passes.
An India subsidiary typically needs six distinct functions covered: incorporation and registrations, bookkeeping, payroll, tax filings, company secretarial work, and statutory audit. Several can sit with one provider. Statutory audit cannot — Indian law requires it to be independent of whoever maintains the books.
Not sure what your current providers actually cover? WhatsApp us and we will map your coverage against what an India entity needs.
Quick Summary — The Six Functions
| Function | What it covers | Can share a provider? |
| Incorporation and registrations | Company formation, PAN, TAN, GST, EPFO, ESIC, Shops Act | Yes, often one-off |
| Bookkeeping | Ledgers, reconciliations, financial statements, MIS | Yes |
| Payroll | Payslips, statutory deductions, ECR and challans | Yes, or a specialist platform |
| Tax filings | GST, TDS, income tax return, advance tax | Yes, best with bookkeeping |
| Company secretarial | Board meetings, registers, ROC filings, DIN and KYC | Yes |
| Statutory audit | Independent audit and signed report | No — must be independent |
💡 TaxKitab Tip The function most often left unowned is the compliance calendar itself. Every provider handles their own filings competently and nobody holds the master list. That is how an entity ends up filing GST perfectly for a year while missing a ROC deadline nobody was watching. Name one person — internal or external — who holds the full calendar for the entity and confirms each deadline was met, not just each task assigned. It is a small role and it prevents the expensive kind of failure. — From our GST Filing Mistakes Guide (Book 1). Available at taxkitab.com/books (Rs 179)
Incorporation and Registrations
Company formation, then the registrations that follow: PAN and TAN for tax, GST where applicable, EPFO and ESIC as an employer, Professional Tax in the relevant state, and Shops and Establishments registration for the workplace.
This is largely one-off work, and many groups handle it through an internal legal resource or a corporate services provider. The gap to watch is the handover afterwards. Registration certificates, portal credentials and login details need to reach whoever runs the recurring compliance, and frequently they do not.
Bookkeeping
Ledgers, bank and credit card reconciliations, accounts payable and receivable, month-end close, financial statements and management reporting to the parent.
This is the foundation everything else sits on. GST returns, TDS returns and the income tax return are all produced from these records, and the statutory audit examines them.
For a foreign parent there is an additional layer: the India books are maintained under Indian accounting standards, while the parent consolidates under its own framework. Someone has to bridge the two, either through a reporting pack or through the group’s consolidation process. Decide early who does that.
Payroll
Payslips, salary TDS, EPF and ESIC deductions and deposits, ECR filing, Professional Tax, and year-end Form 16 issuance.
A specialist payroll platform handles this well and many India entities use one. The coordination point is that payroll output has to reach the ledgers each month and the statutory deposits have to be confirmed as made. Assign that explicitly rather than assuming the platform or the accountant is doing it.
Tax Filings
GST returns monthly or quarterly depending on your scheme, with GSTR-2B reconciled against the purchase ledger each month. TDS returns quarterly. Advance tax instalments through the year. The annual income tax return.
This works best sitting with bookkeeping, for the reason set out above — the filings are generated from the books rather than checked against them.
Company Secretarial
Board meetings and minutes, statutory registers, the annual return and financial statement filings with the Registrar of Companies, director identification numbers and annual director KYC.
Two points catch foreign directors specifically. A director based outside India needs a Digital Signature Certificate to sign filings, and obtaining one takes longer than expected — home-country identity documents, sometimes notarised or apostilled. And this work continues whether or not the company trades. There is no revenue threshold below which ROC compliance pauses.
Statutory Audit — the One That Must Be Separate
Every company incorporated in India is audited annually, regardless of size or turnover. Parents from jurisdictions with small-company audit exemptions consistently expect otherwise. India has no such exemption.
The auditor must be independent of the firm that maintains the books. Section 144 of the Companies Act, 2013 prohibits a company’s auditor from providing bookkeeping and accounting services, and the prohibition extends to the company’s holding and subsidiary companies. It applies whether services are rendered directly or indirectly — including through partners of the audit firm, through associated entities, and through any entity in which the audit firm or its partners have significant influence or control, or whose brand they use.
In practice the structure that works is straightforward. Your accounting firm maintains the books, prepares the financials and coordinates the audit process. An independent practising Chartered Accountant is appointed as statutory auditor and signs the report. Your accounting firm should be able to tell you clearly which side of that line it sits on.
The Gaps to Check For
Start with the master compliance calendar, because somebody has to hold it and usually nobody does. Then work through the monthly reconciliations: GSTR-2B against the purchase ledger, and payroll output into the accounts. Portal credentials and the directors’ Digital Signature Certificates need a named custodian, particularly where a director sits outside India. Notices need an owner with a response time attached, since Indian deadlines are short. Somebody has to bridge Indian financials into the parent’s reporting framework. And finally, one person should confirm that filings were actually made, rather than merely assigned.
Every one of these has an obvious owner in principle and no owner in practice more often than you would expect.
Frequently Asked Questions
Can one firm do everything except audit?
Yes. Incorporation, bookkeeping, payroll, tax and secretarial work can all sit with one provider. Only statutory audit must be independent.
We have an internal person handling registrations. Is that enough?
For the one-off registrations, often yes. Confirm they are also tracking recurring filings, and that credentials have been handed to whoever runs monthly compliance.
Does a dormant India entity still need all six?
It needs bookkeeping, ROC filings, income tax return and statutory audit at minimum. Payroll and GST depend on whether you have employees and registration.
Who keeps the directors’ Digital Signature Certificates?
Usually whoever files with the Registrar of Companies. Know where they are and when they expire, particularly for non-resident directors, because reissuing one takes weeks.
Can our parent company’s auditor audit the India subsidiary?
Possibly, but check it against Section 144 and your own facts, including whether any firm in the chain provides bookkeeping to the group. Take advice rather than assuming.
References
- Companies Act, 2013 — Sections 139 to 144, audit and auditor independence
- Companies Act, 2013 — annual return and financial statement filing requirements
- CGST Act, 2017 — return and input tax credit provisions
- Employees’ Provident Funds Act, 1952 and Employees’ State Insurance Act, 1948
⚠️ Which functions apply depends on your entity type, headcount, state and turnover. Confirm your specific requirements with your advisor rather than working from a general list.
For how these functions interact once they are assigned, see Should Your India Books and Taxation Sit With the Same Firm. The recurring calendar itself is set out in A UK Company With an India Subsidiary, and if you are still choosing a structure, EOR vs Subsidiary in India covers that decision.
Related Reading
- Payroll in India for a Foreign Company: PF, ESIC, PT, TDS
- Should Your India Books and Taxation Sit With the Same Firm?
- We Have Contractors in India and We’re Incorporating
Need help with this? TaxKitab handles Global Payroll for businesses across India and overseas. Talk to us.
Call or WhatsApp: +91 7448200422 Email: info@taxkitab.com Website: taxkitab.com See our Managed Compliance** service or Contact us. For a complete guide to GST filing errors, see our GST Book 1 (₹179).**
