US to India · Accounting and group reporting
Accounting for an Indian Subsidiary of a US Company
A US parent and its Indian subsidiary need reliable numbers for different purposes. The Indian entity must keep records and prepare statutory financial statements under the Indian framework that applies to it. The parent may also need monthly figures, management information and a reporting pack that fits its group accounting policies and close calendar.
Quick answer
How should accounting work for an Indian subsidiary of a US company?
Maintain the Indian subsidiary’s required local books and supporting records, then map the results to the US parent’s reporting framework where needed. Agree a chart of accounts, month-end close timetable, currency and intercompany reconciliation process, and coordinate accounting records with GST, tax, payroll, audit and applicable FEMA or transfer-pricing work.
Accounting is more than recording transactions. The process should make local compliance easier while giving the overseas finance team a consistent view of performance, cash, related-party balances and open items. For recurring statutory deadlines, see our annual compliance calendar for foreign-owned subsidiaries.
1. Separate local statutory reporting from parent reporting
An Indian subsidiary is a separate legal entity. It should maintain the books, vouchers, ledgers, bank records and supporting evidence required for its own business and filings. The accounting standards that apply to its statutory financial statements depend on the relevant Indian rules; do not assume every company automatically follows Ind AS.
The US parent may need a different presentation for group consolidation. That does not mean the local books should be replaced by a US ledger. Instead, agree how local accounts will map to the parent’s chart of accounts and which adjustments, if any, are required for group reporting.
Check current requirements through the Ministry of Corporate Affairsand with the subsidiary’s statutory auditor. The correct framework and records depend on the company’s facts.
2. Design the chart of accounts and monthly close
Agree the structure before transaction volumes increase. A documented chart of accounts helps the local team classify income, expenses, assets, liabilities, taxes and related-party balances consistently. The parent and India team should also agree a close timetable and a clear process for late invoices, accruals and corrections.
- Set up accounts for local revenue, payroll, vendors, taxes, bank balances and fixed assets.
- Identify parent-company and group-entity transactions separately.
- Define bank, vendor, customer, payroll and balance-sheet reconciliations.
- Agree the reporting currency, exchange-rate source and currency translation method required for the group pack.
- Keep a review list of estimates, unusual transactions, unposted invoices and unresolved balances.
The right software depends on the parent’s systems, local tax workflows, transaction volume, approvals and reporting needs. Select the process first, then decide whether the existing group platform can support it or whether a local accounting system and controlled mapping are needed.
3. Build a reporting pack the parent can use
A useful monthly or quarterly pack normally combines financial statements with a short explanation of what changed. Agree the content and delivery date with the parent rather than sending a trial balance without context.
| Report | Purpose | What to agree |
|---|---|---|
| Profit and loss | Track revenue, operating costs and margin | Account mapping, accruals and variance explanations |
| Balance sheet | Track assets, liabilities, tax balances and equity | Reconciliations and supporting schedules |
| Cash flow and bank | Give visibility into available funds and expected payments | Bank reconciliations, currency and funding assumptions |
| Intercompany balances | Match amounts due to and from the parent or group | Counterparty, invoice references, currency and confirmation process |
| Compliance summary | Show filing status, payments and upcoming actions | Named owner, due date, evidence and unresolved issues |
4. Keep intercompany transactions supported
Management fees, cost recharges, software or intellectual-property charges, loans and other dealings with the parent should be recorded consistently and supported by the relevant agreements and evidence. Where a cross-border transaction is between associated enterprises, transfer-pricing requirements may apply.
- Keep signed agreements and approvals for the arrangement.
- Retain invoices, calculations and evidence of services, deliverables or costs allocated.
- Reconcile both sides of the balance with the parent during the year.
- Coordinate the accounting treatment with tax withholding, GST and any applicable foreign-exchange requirements.
- Confirm whether transfer-pricing documentation or reporting applies for the relevant tax year.
Read our guide to transfer pricing between a US parent and Indian subsidiary and our FLA Return and transfer-pricing overview.
5. Connect accounting to tax, payroll and audit
Monthly accounting records feed into several other workstreams. A weak hand-off can lead to differences between the books, tax returns, GST data, payroll records and audit schedules. Agree who prepares each reconciliation and who reviews it.
- GST and tax: reconcile sales, purchases, input tax credit, withholding and tax payments to the books.
- Payroll: reconcile salary expense, deductions, payments and applicable employee contributions.
- Audit: keep schedules, supporting documents and explanations ready throughout the year.
- Foreign investment: retain remittance, share issue and ownership records for applicable RBI/FEMA reporting.
- Parent reporting: share the close pack on the agreed timetable and flag estimates or open items clearly.
For related requirements, see our GST guide, India payroll guide and statutory audit guide.
6. Agree responsibilities between the US parent and India team
A simple responsibility matrix prevents missed hand-offs. Identify who records transactions, approves payments, reviews reconciliations, supplies parent-company data and submits statutory filings. Include time-zone differences and the parent’s close deadlines in the timetable.
Before the first month-end close, agree these points in writing:
- Who owns the Indian books and who reviews them.
- Which records the parent must provide and by what date.
- What the reporting pack contains and when it is due.
- How intercompany balances and currency differences will be resolved.
- Where records and filing acknowledgements will be stored.
Frequently asked questions
Can a US parent use its US accounting records for its Indian subsidiary?
The Indian subsidiary must maintain the books and records required under Indian law for its own transactions. The US parent’s accounting system can support group reporting, but it should not replace the Indian entity’s required books, filings and supporting documents.
Does every Indian subsidiary have to prepare statutory accounts under Ind AS?
Not every company uses Ind AS. The accounting framework applicable to an Indian company depends on the relevant rules and the company or group circumstances. Confirm the framework with the statutory auditor before designing the reporting process.
How can an Indian subsidiary report to a US parent using US GAAP?
A common approach is to maintain compliant Indian statutory books and prepare a mapped reporting pack for the parent. The mapping can include chart-of-accounts alignment, agreed adjustments, currency translation, intercompany reconciliations and a documented month-end close process.
What records should be kept for intercompany charges?
Keep the relevant agreements, invoices, calculations, evidence of services or benefits, allocation methodology, approvals and payment records. Cross-border related-party transactions may also require transfer-pricing analysis and year-specific documentation or reporting.
Should accounting and compliance use the same calendar?
They should be coordinated. Monthly close, GST and payroll work can feed tax, audit, transfer-pricing and corporate filings. A shared calendar should identify the owner, deadline, source records and reviewer for each obligation.
Prepared by AU Corporate’s CA-led advisory team. This guide is general information, not legal, tax or accounting advice for a particular entity. Accounting frameworks and filing requirements depend on the company’s circumstances and current rules; confirm the position with a qualified professional.