India rules · all investors

Exit: India rules for foreign companies

CA Utsav Dogra, Chartered Accountant, ICAI M. No. 542375

The cleanest exits are planned a year ahead: past filings regularised, intercompany balances settled, tax assessments closed where possible and a valuation prepared.

Planning an exit

The cleanest exits are planned a year ahead: past filings regularised, intercompany balances settled, tax assessments closed where possible and a valuation prepared.

A share sale to an Indian buyer needs FEMA-compliant pricing and FC-TRS reporting; the buyer may withhold tax on the consideration. A sale between two non-residents still has Indian tax consequences.

Voluntary liquidation goes through the insolvency framework and needs tax and regulatory clearances; small companies without liabilities may use the faster strike-off route. Mergers within a group can use the fast-track route for small and holding-subsidiary companies.

Routes

Route	Key points
Share sale	FEMA pricing; FC-TRS where a resident is involved
Buyback	Company-law limits; tax
Liquidation	Tax, GST and Registrar clearances
Merger	Tribunal or fast-track

Checklist

Regularise past filings
Settle intercompany balances
Valuation and tax computation
FC-TRS or closure filings
Clearances from tax and Registrar

Common mistakes

Selling without clean compliance history
Ignoring withholding by the buyer
Starting liquidation with open tax matters
Missing FEMA reporting on transfer

How this applies to your country

Our service: FEMA and RBI reporting

Questions

Can a company be struck off instead of liquidated?

Yes, if it has no liabilities and meets the conditions for strike-off, which is faster than liquidation.

How long does a voluntary liquidation take?

Usually many months, depending on tax and regulatory clearances.

Queries

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