US to India · Consulting and professional services
Setting Up an Indian Subsidiary for a US Consulting or Professional Services Company
Prepared by AU Corporate's CA-led advisory team · Published 12 October 2026 · General guidance; confirm the rules for the specific services and transactions.
A US consulting, advisory, staffing, design or other professional services firm may consider India to build a delivery team, support the US business, serve Indian customers or combine these activities. The right setup depends on what the India team will do, who will contract with clients, where revenue will arise and how the US and Indian businesses will work together.
Quick answer
What should a US professional services firm check before setting up in India?
Define the services and customer model first. Then review foreign-investment eligibility, the legal structure, contracts between the US parent and Indian entity, employee and data arrangements, GST and tax, transfer pricing, funding and ongoing compliance. A company registration is only one part of making the operating model work.
1. Define the India operating model
Professional services firms use India in different ways. The proposed activity matters more than the broad label of “consulting” or “services”. Document which work will be done in India, who will supervise it, who owns the client relationship and which entity will bear delivery risks.
| Operating model | Questions to resolve |
|---|---|
| Delivery team for the US parent | Service scope, supervision, cost allocation, deliverables and intercompany pricing |
| Indian client services | Client contracts, local invoicing, GST, professional requirements and collections |
| Research or analytical support | Data access, confidentiality, deliverable ownership, quality review and data handling |
| Staffing or recruitment support | Who employs staff, who contracts with customers, state-level requirements and worker classification |
| Mixed delivery and sales model | Separate revenue streams, roles, contracts, responsibilities and pricing support |
These arrangements can coexist, but the contracts and accounting should reflect what actually happens. Avoid treating a team that provides services to its parent as identical to a local client-facing consulting practice.
2. Compare the available legal structures
A private limited company is one option to assess when the US firm wants a separate Indian entity to employ a team, sign contracts or conduct business. An LLP may fit some partner-led models, but foreign-investment eligibility and conditions must be checked rather than assumed. Branch and liaison office routes have their own permitted-activity and regulatory conditions.
Before choosing, consider ownership, liability, the ability to raise capital, employee incentives, decision-making, the intended client base and the likely future of the business. The correct structure is specific to the facts and current rules.
For the incorporation sequence, see our company registration guide for US businesses, subsidiary vs LLP comparison and subsidiary vs branch office guide.
3. Check foreign-investment eligibility before committing funds
Foreign-investment rules depend on the activity, investor and ownership structure. A general description such as “consulting” may not be enough if the business also conducts a regulated activity or provides services subject to separate requirements. Describe the services and intended revenue model precisely before deciding the shareholding or sending capital.
Review the current Department for Promotion of Industry and Internal Trade (DPIIT) resources and any applicable sector-specific rules. If the proposed business includes financial services, legal services, insurance, healthcare or another regulated activity, obtain a separate review of the relevant permissions and professional requirements.
4. Document services between the parent and subsidiary
If the Indian team supports the US parent, prepare agreements that describe the services, responsibilities, deliverables, payment method, confidentiality, intellectual property and the way costs are allocated. Keep the agreement consistent with invoices, timesheets, project records and the work actually performed.
Depending on the arrangement, documents may include:
- An intercompany services agreement with a clear scope of work.
- A cost allocation or recharge policy with supporting calculations.
- Confidentiality, data access and information-security terms.
- IP assignment or licence terms for reports, methods, software, designs and other work products.
- Client or subcontractor agreements where the Indian entity works with third parties.
Do not use a generic agreement without checking whether it reflects the real relationship between the entities.
5. Review transfer pricing and cross-border tax
Cross-border transactions between associated enterprises may be subject to Indian transfer-pricing rules. Common examples include service fees, cost recharges, management charges, staff support, intellectual-property licences, loans and guarantees. The right approach depends on the functions performed, assets used, risks assumed and the actual transaction.
Keep records that explain what the Indian team does, who supervises the work, how the service benefits the recipient and how the charge was calculated. A standard markup copied from another business may not fit the facts. Review the applicable documentation, reporting and tax treatment with the relevant advisers.
For a focused overview, see our transfer-pricing guide for US parents and Indian subsidiaries. The US parent should also coordinate with its US tax adviser on any reporting or tax consequences on that side.
6. Check GST and client invoicing
The GST position may differ depending on whether the Indian entity serves domestic clients, provides services to the US parent or supplies services to other overseas customers. A cross-border invoice does not automatically mean that a supply qualifies as an export of services. The contract, place of supply, recipient, payment and other legal conditions need to be reviewed.
Before issuing the first invoice, check registration requirements, invoice details, return processes and whether an export procedure such as a Letter of Undertaking is relevant. Keep contracts, deliverables, remittance evidence and supporting records together. See our GST compliance guide for US-owned Indian subsidiaries.
7. Plan hiring, data and intellectual property
Before the first employee joins, decide which entity is the employer and prepare suitable employment terms, payroll processes and any applicable registrations. If the India team will access customer information or sensitive business data, set out permitted access, confidentiality, security controls and escalation responsibilities.
Agree who owns existing methods, templates, reports, software, designs and new work products. If the US parent is meant to own work created by the India team, document the intended ownership and review the applicable employee and intercompany terms. Consider third-party rights and client contract restrictions as well.
8. Prepare a practical compliance calendar
After incorporation, assign responsibility for accounting, tax, payroll, company-law records, board and shareholder matters, banking and any applicable foreign-investment reporting. The exact list depends on the entity, activity, employees, transactions and current law.
- Maintain statutory company records and plan required filings.
- Set up accounting, invoicing, tax and GST processes appropriate to the services.
- Track payroll, employee records and applicable workplace obligations.
- Retain intercompany contracts, invoices, working papers and transfer-pricing support.
- Review foreign-investment reporting and funding records where applicable.
- Assign an owner and review date to each recurring obligation.
Our post-incorporation checklist and annual compliance calendar can help organise this work.
Questions to settle before incorporation
- Will the India team serve the US parent, Indian clients, overseas clients or a mix?
- Which entity signs customer contracts and invoices for the work?
- Which legal structure fits the ownership and funding plans under current rules?
- How will intercompany services be described, priced and evidenced?
- What GST treatment applies to each type of supply?
- Who owns client deliverables, methods, software and other intellectual property?
- Who will manage hiring, payroll, accounting and recurring compliance?
How AU Corporate can help
AU Corporate supports foreign businesses with India incorporation coordination and ongoing corporate, tax and compliance work. For a US professional services firm, the starting point is to understand the work planned in India and the relationship between the US parent, Indian team and customers, then identify the relevant setup and compliance steps.
Start with our India incorporation guide for US businesses or explore the US-to-India entry guides.
Official resources
- Ministry of Corporate Affairs — company incorporation and corporate-law resources.
- DPIIT — foreign-investment policy resources.
- Reserve Bank of India — foreign-investment and foreign-exchange reporting.
- GST Portal — GST registration and compliance resources.
- Income Tax Department — Indian tax resources.
Frequently asked questions
Can a US consulting company set up an Indian subsidiary?
A US consulting or professional services company may establish an Indian entity, subject to the proposed activities, ownership structure and current foreign-investment rules. Review the exact services and client model before selecting a structure.
Should a US consulting firm use an Indian subsidiary or an LLP?
The answer depends on the ownership, funding, governance and operating model. An LLP is not suitable for every foreign investment, and eligibility conditions can apply. Compare both structures against the current FDI rules and the firm’s plans before deciding.
Can an Indian subsidiary provide services to its US parent?
It may provide services under a properly documented arrangement, but the actual functions, contracts, tax treatment, GST position and transfer-pricing requirements should be reviewed. The paperwork should match the work performed and the responsibilities of each entity.
Can the Indian entity serve customers in India and overseas?
Potentially, depending on the services, registrations, contracts and applicable rules. Map domestic client work separately from services provided to the US parent or other overseas customers, because tax and GST treatment can differ.
Does a US parent need transfer-pricing documentation?
Cross-border transactions between associated enterprises may be subject to Indian transfer-pricing rules. The scope of documentation and reporting depends on the facts and current law, so identify intercompany services, cost recharges, royalties and loans early.
What should be planned before hiring in India?
Plan the employing entity, employment terms, payroll and applicable registrations, data access, confidentiality and intellectual-property provisions, accounting, contracts, tax and the recurring compliance calendar.