GST Compliance for an Indian Subsidiary of a US Company

Prepared by AU Corporate's CA-led advisory team · Last updated 12 October 2026 · About AU Corporate

GST planning is part of operating an Indian subsidiary, not simply a form to complete after incorporation. The right approach depends on what the company sells, where its customers and business locations are, whether it imports or exports, and how it works with its US parent. A foreign shareholder does not by itself decide whether GST registration is required.

1. Decide whether GST registration is required

GST registration depends on the entity’s supplies, aggregate turnover, operating locations and applicable registration provisions. Thresholds are not the only test: the law contains compulsory-registration rules and exceptions, and the result can differ with the type of supply and the way the business operates.

Before launch, list the planned activities: domestic sales, services to the US parent, services to Indian customers, imports, exports, online sales, warehouses and any additional offices. Review each activity against the current registration rules rather than relying on a generic turnover figure from an old checklist.

Where the company has operations in more than one state or union territory, check whether separate GST registrations are needed. The location from which a supply is made and the nature of the establishment matter; an office address alone does not answer every registration question.

2. Map the supply before deciding how to invoice

For each revenue stream, record who the customer is, what is supplied, where the supplier is located, where the place of supply is determined to be, and which contract governs the work. This is especially important where the Indian subsidiary provides engineering, software development, management support or other services to its US parent.

The invoice treatment follows the legal character of the transaction. A service fee, reimbursement, royalty, loan and equity contribution are not interchangeable categories. Keep the agreement, invoice description, accounting entry and payment evidence consistent with the actual arrangement.

3. Services to a US parent: test export treatment carefully

A service provided by an Indian subsidiary to a US parent is not automatically an export merely because the customer is outside India. The statutory definition of export of services includes multiple conditions, such as the supplier being in India, the recipient being outside India, the place of supply being outside India, receipt of payment in convertible foreign exchange or another permitted manner, and the parties not being merely establishments of a distinct person under the applicable provision.

The place-of-supply analysis can be decisive. The general rule is not the only rule: specified service categories and intermediary arrangements can be treated differently. Review what the Indian team actually does, who contracts with and receives the service, who controls the work, and whether the Indian company acts on its own account or arranges supplies between other parties.

If the supply qualifies as an export under the GST framework, it may be zero-rated, subject to the applicable procedural and documentation requirements. Confirm the available route, such as the relevant bond or letter of undertaking process where applicable, and retain evidence that supports the treatment. Do not describe a transaction as zero-rated solely because the invoice is raised in US dollars.

4. Issue invoices and maintain transaction records

A registered subsidiary should configure its invoicing process to reflect the supply type, applicable tax treatment and required invoice particulars. Finance teams should also have a process for credit notes, debit notes, customer master data, place-of-supply review and reconciliation between invoices, accounting records and returns.

• Keep executed customer and intercompany agreements and clear descriptions of the services or goods supplied.
• Retain invoices, credit notes, debit notes and evidence supporting the applicable tax treatment.
• For cross-border services, preserve relevant payment and remittance records and the analysis supporting export treatment.
• Reconcile sales and purchase registers with filed returns and accounting records.
• Document any related-party pricing analysis separately from the GST classification where needed.

5. Review input tax credit before assuming every GST amount is recoverable

GST paid on purchases is not automatically recoverable. Input tax credit depends on the statutory conditions, valid supporting documents, business use, supplier and return data, and restrictions that may apply to particular expenses. The finance team should review credit eligibility and reconcile the records regularly.

Where the subsidiary exports services or makes other zero-rated supplies, the credit and refund position should be reviewed under the route available for the transaction and the rules in force. Keep the export documentation, invoices, return data and payment evidence together so that the tax treatment can be explained if a query arises.

6. Build GST into the monthly and annual compliance calendar

After registration, the company may need to file periodic returns, pay tax by the relevant due date, reconcile input credits, respond to notices and maintain supporting records. The exact return set and frequency depend on the registration, turnover, supply type, chosen schemes and current law. Use the GST portal’s current calendar and confirm which filings apply to the company.

Assign clear responsibility for invoice review, return preparation, payment approval and final reconciliation. A calendar should include internal cut-off dates so the team can resolve missing invoices or mismatches before statutory deadlines, rather than leaving every issue to the filing day.

7. Coordinate GST with transfer pricing and the US parent’s records

GST and transfer pricing are separate regimes, but the underlying intercompany facts should be consistent. Agreements, service descriptions, invoices, cost allocations and evidence of work performed should tell the same commercial story. A transfer-pricing position does not by itself decide GST export treatment, and a GST invoice does not by itself establish an arm’s-length price.

For the related-party pricing workstream, see our transfer-pricing guide for a US parent and Indian subsidiary. For the wider operational calendar, use the post-incorporation compliance checklist.

Common GST planning mistakes

• Assuming every foreign-owned subsidiary must register immediately, or assuming no registration is needed below a turnover figure without checking exceptions.
• Treating every invoice to the US parent as an export or zero-rated supply.
• Using the same tax treatment for services, reimbursements, royalties and funding transfers.
• Assuming one GST registration covers every state and establishment without reviewing the rules.
• Claiming input tax credit without checking eligibility, documents and reconciliations.
• Leaving the GST process until after the first invoice instead of planning it before operations begin.

Frequently asked questions

How AU Corporate can help

AU Corporate supports foreign businesses with Indian incorporation and ongoing finance and compliance work. For a US-owned subsidiary, the GST review should be based on the proposed contracts, supplies, locations and operating model. The appropriate registration, invoice treatment and filing process should be confirmed against the rules in force and the company’s actual facts.

Start with our company registration guide for US businessesor explore the US-to-India entry guides.

Official resources

• GST portal — registration, returns and current filing services.
• Central Board of Indirect Taxes and Customs — GST legislation and official guidance.
• Integrated Goods and Services Tax Act — export-of-services definition and place-of-supply provisions.
• Central Goods and Services Tax Act — registration provisions and related rules.

This guide is general information, not a determination of GST liability. GST treatment depends on current law and the facts of each supply; obtain transaction-specific advice before filing or issuing invoices.