India rules · all investors
Set-up Cost: India rules for foreign companies
CA Utsav Dogra, Chartered Accountant, ICAI M. No. 542375
Set-up costs are modest compared with running costs. The larger first-year spend is usually people, premises and the recurring compliance that starts from incorporation, whether or not the company has revenue.
Planning the first-year budget
Set-up costs are modest compared with running costs. The larger first-year spend is usually people, premises and the recurring compliance that starts from incorporation, whether or not the company has revenue.
Government fees and stamp duty depend mostly on the authorised capital and the state of the registered office. Setting authorised capital at a sensible level avoids paying for headroom that may never be used, while leaving room for the first capital increase.
Running costs include monthly accounting and payroll, GST and TDS filings, the statutory audit, annual company and RBI returns and, where there are transactions with the parent, transfer pricing documentation. These are predictable and can be fixed in an annual engagement.
Budget lines
| Item | Who it is paid to |
|---|---|
| foreign notary, legalisation | foreign providers |
| Government fees and stamp duty | MCA and the state |
| Professional fees | Indian advisers |
| Accounting, payroll, GST, audit, filings | Monthly and annual, from incorporation |
| Share capital | Stays in the Indian company |
Checklist
- Home-country notary, legalisation and translation
- Government fees and stamp duty by state
- Professional fees for incorporation
- Office or registered-office arrangement
- Monthly compliance and annual audit
- Capital to fund the first year
Common mistakes
- Budgeting only for incorporation
- Setting authorised capital far above need
- Ignoring the cost of transfer pricing documentation
- Under-capitalising and relying on parent loans
How this applies to your country
- USA to India en-US
- UK to India en-GB
- Japan to India en-JP
- Germany to India en-DE
- Singapore to India en-SG
- Australia to India en-AU
- China to India en-CN
- Hong Kong to India en-HK
- Russia to India en-RU
- Spain to India en-ES
- France to India en-FR
- UAE to India en-AE
Our service: Indian subsidiary incorporation
Questions
Do fees depend on the share capital?
Government fees and stamp duty rise with authorised capital and vary by state.
Is there a cost to keep a dormant company?
Yes. Annual filings, audit and tax returns continue even without business.
Is share capital an expense?
No. It is the parent's investment and remains on the Indian company's balance sheet.
Queries
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