The short answer
A new Indian subsidiary needs incorporation, PAN and TAN, a bank account with FDI reporting, GST registration, Shops and Establishment registration, Provident Fund and ESI registration, and professional tax where the state applies it. Ongoing obligations include monthly payroll remittances and TDS, quarterly TDS returns, monthly or quarterly GST returns, annual ROC filings, a statutory audit and transfer pricing documentation. Several registrations block your first payroll, so sequence them before hiring, not alongside it.
This is a general guide, not legal or tax advice. Requirements vary by state, sector and shareholding structure — confirm your specific position with qualified Indian counsel and a chartered accountant.
Before the first employee joins
| Registration | Purpose | Blocks |
|---|---|---|
| Digital signature certificates and DIN | Enables directors to sign filings | Incorporation |
| Incorporation (SPICe+) | Creates the company; issues CIN | Everything downstream |
| PAN and TAN | Tax identity; tax deduction at source | Payroll, banking |
| Corporate bank account | Receives share capital; pays salaries | Payroll |
| FDI reporting (FC-GPR) | Reports foreign share subscription to RBI | Regulatory standing |
| GST registration | Required to invoice the parent | Intercompany billing |
| Shops and Establishment | State licence to operate an office | Employment |
| Provident Fund and ESI | Mandatory social security enrolment | Payroll |
| Professional tax | State-level payroll deduction | Payroll (state-dependent) |
| Intercompany service agreement | Establishes the cost-plus arrangement | Transfer pricing position |
Recurring obligations
Monthly
- Payroll processing, TDS deduction and deposit
- Provident Fund and ESI contributions and returns
- Professional tax remittance where applicable
- GST return filing, depending on turnover and scheme
Quarterly
- TDS returns for salary and non-salary payments
- Board meeting, with minutes recorded
- Advance tax instalments
Annually
- Statutory audit and filing of financial statements
- Annual return and financial statement filings with the Registrar of Companies
- Corporate income tax return
- Transfer pricing study, accountant’s report and master file where thresholds are met
- Form 16 issuance to employees
- Annual return on foreign liabilities and assets
- POSH committee annual report
Employment obligations people forget
- Gratuity. A statutory payment on exit after five years of service. Accrue for it from the start; it is real money.
- POSH. An internal committee against workplace sexual harassment is mandatory above ten employees, with training and an annual report.
- Maternity benefit. Twenty-six weeks of paid leave, plus crèche obligations above fifty employees.
- Notice periods. Typically 30 to 90 days and commonly enforced, which shapes both your hiring lead times and your exit planning.
- Data protection. The Digital Personal Data Protection Act imposes obligations on how employee and customer data is handled. Align your policies with both Indian requirements and your parent’s regime.
How to keep it from becoming a problem
None of this is individually difficult. It becomes a problem through drift: a filing missed in month four, discovered in month fourteen during an audit, with penalties and interest accrued. Run compliance as a dated calendar with named owners and a monthly review, from the first month. Kompass maintains that calendar as a standing part of every engagement and reports against it monthly.