Taxed as Indian, not foreign
Indian Subsidiary of a Foreign Company
An Indian subsidiary is taxed at domestic corporate rates. A branch of the same parent is taxed considerably higher.
GCC business setup specialists
The rate difference decides the structure
A company incorporated in India is an Indian company for tax purposes and pays domestic corporate rates. A branch of a foreign company is taxed as a foreign company, at a materially higher rate. For any ongoing business of scale that difference alone usually settles the question, before considering liability, perception or the ability to make downstream investments.
- The rate difference modelled against a branch before you choose
- Downstream investment rules explained where the subsidiary will invest
- Reserve Bank reporting handled within its deadlines
20+
Mainland, free zone and offshore jurisdictions we file in — so the recommendation is based on your activity, not on which authority we happen to be registered with.
7,000+
Companies successfully established.
Black Swan Business Setup Services•Black Swan Business Setup Services•Black Swan Business Setup Services
Compare the routes
Subsidiary against branch and liaison office
Tax rate is the headline difference.
| Subsidiary | Branch | Liaison office | |
|---|---|---|---|
| Status | Indian company | Foreign company | Representative only |
| Tax rate | Domestic corporate rates | Higher foreign company rate | No income permitted |
| Can earn revenue | Yes | Yes, within approved scope | No |
| Approval needed | FDI route only | Reserve Bank route | Reserve Bank route |
| Parent liability | No | Yes | Yes |
| Downstream investment | Possible, subject to rules | No | No |
Corporate tax rates, foreign company rates, approval routes and downstream investment rules are set by the authorities and change. Every Indian company must have at least one director resident in India, and foreign share subscription must be reported to the Reserve Bank of India within a short period after allotment.
How it works
Setting up the subsidiary
Route, incorporate, report.
01
Confirm the route
Whether the investment is on the automatic route or needs approval, including the land-border country check on beneficial ownership.
02
Incorporate
Resident director arranged, apostilled parent documents prepared, and the company incorporated through the integrated application.
03
Fund and report
Subscription funds received through banking channels, shares allotted at a compliant price, and the Reserve Bank filing made in time.
- Parent name, jurisdiction and ownership chain
- Whether any owner is in a land-border country
- Apostilled parent incorporation documents
- Apostilled board resolution approving the subsidiary
- Apostilled documents for nominated directors
- Who will be the resident director
- Proposed shareholding and capital
- Sector and activity of the subsidiary
- Whether downstream investment is planned
- Whether the parent will charge for services or licence IP
- Expected revenue and profit
- Timeline
Scope
What is included, and what is not
Stated plainly, so nothing is added once the engagement starts.
Included in the service fee
- Route and sector assessment
- Resident director co-ordination
- Apostille and documentation co-ordination
- Incorporation through the integrated application
- Share subscription and allotment documentation
- Valuation co-ordination for share pricing
- Reserve Bank reporting within deadlines
- Guidance on downstream investment rules
Not included, quoted separately
- Government fees, paid at cost
- Apostille, consularisation and translation charges
- Valuation report fees
- Share subscription funds
- Audit and tax audit fees
- Transfer pricing documentation, quoted separately
- Tax advice outside India
- Bank account opening decisions
Verify independently
Official Indian authorities
We file directly with these bodies on your behalf.
Reserve Bank of IndiaMinistry of Corporate AffairsRegistrar of CompaniesIncome Tax DepartmentAuthorised dealer banksController General of Patents, Designs and Trade Marks
Questions
India subsidiary — FAQs
Why is a subsidiary taxed lower than a branch?
Because a company incorporated in India is an Indian company for tax purposes and pays domestic rates, while a branch is taxed as a foreign company at a materially higher rate.
Can the parent own 100%?
In many sectors yes, under the automatic route. Others have caps or need approval, and the land-border country rule applies regardless of sector.
What are downstream investment rules?
Rules governing investment by a foreign-owned Indian company into other Indian companies, which carry their own conditions and reporting. They matter if the subsidiary will acquire or invest.
Is share pricing regulated?
Yes. Shares issued to non-residents must meet pricing requirements, which generally means obtaining a valuation. Pricing informally creates a compliance problem.
What is the reporting deadline after allotment?
Short, and it runs through your bank to the Reserve Bank. It is one of the most commonly missed obligations in Indian inbound investment.
Careers
Apply for a role
Tell us which role you are applying for and what you have done that is relevant. If you have UAE or GCC experience, say which jurisdictions and authorities you have worked with.
Connect with us
Request a setup assessment
For founders and business decision-makers considering paid business services. Not for job applications, employment searches or personal visa-only requests.
Talk to a consultant
At Black Swan Business Setup Services, our mission is simple: to empower entrepreneurs and companies of all sizes to establish and expand their presence in the UAE, Oman, Saudi Arabia, Bahrain, and beyond.
© 2026 Black Swan Business Setup Services. All rights reserved.