Incorporating an Indian subsidiary is only the starting line. For most foreign companies, operational work begins after the certificate of incorporation is issued.
The first 90 days usually decide whether the India entity becomes clean, audit-ready and easy to manage, or whether it starts accumulating small compliance gaps that become expensive later.
The risk is not only legal. It is practical. The company needs a bank account, capital remittance, share issue documentation, FEMA reporting, accounting books, GST decisions, TDS controls, payroll setup, board records, statutory registers and parent-company reporting. If these are handled in fragments, the Indian subsidiary may look incorporated on paper but remain weak operationally.
For a foreign parent, that creates avoidable friction. Payments get delayed because the bank account is not ready. Capital comes in without a proper documentation trail. GST registration is taken too early or too late. TDS starts applying before the finance team has a deduction process. Accounting begins after several transactions have already happened.
A clean first 90 days plan prevents that.
Why the First 90 Days Matter
Many foreign companies treat Indian incorporation as a one-time secretarial task. The immediate focus is usually on getting the company formed and opening a bank account.
That is understandable, but incomplete.
Once the subsidiary exists, it has statutory responsibilities even before revenue starts. It must maintain books of account, hold required board meetings, issue shares properly, maintain registers, track capital received from the foreign shareholder, and comply with tax and regulatory requirements based on its activities.
The parent company also needs reliable reporting:
- Has share capital been received and documented correctly?
- Has the company issued shares within the required framework?
- Are FEMA/RBI filings being tracked?
- Has the bank account been opened and activated?
- Are expense payments being booked correctly?
- Does GST registration make sense now or later?
- Is TDS applicable on local vendor payments, rent, contractors or professional fees?
- Is payroll being set up before hiring begins?
- Are board approvals and statutory records complete?
If these questions are not answered early, the subsidiary starts with a backlog.
The Cost of a Weak Start
The visible cost is professional fees for cleanup. The larger cost is delay.
Banks may ask for additional documents. Auditors may question capital entries, related-party payments or unsupported expenses. Vendors may not get paid on time because approvals and tax deductions are unclear. GST input credit may be missed because invoices were not captured properly. TDS liabilities may remain hidden until a quarterly return is due.
For foreign-owned subsidiaries, FEMA documentation is especially important. Capital remittance, valuation, share allotment and reporting must be handled with care. A casual approach can create avoidable follow-ups, compounding fees, banker queries and audit comments.
The parent company may also face internal control concerns. A subsidiary that cannot produce clean books and compliance evidence within the first quarter is harder to scale.
First 90 Days Checklist for an Indian Subsidiary
Start with governance. After incorporation, complete the first board meeting, approve bank account opening, appoint the first auditor where applicable, record registered office details, approve preliminary expenses and document operating authority.
Next, open the bank account. Foreign parent teams should prepare constitutional documents, KYC documents, board resolutions, beneficial ownership information and authorised signatory documents in advance. Bank onboarding can take time where foreign shareholders, foreign directors or overseas parent entities are involved.
Once the bank account is ready, plan capital remittance carefully. The parent should remit funds through proper banking channels with clear purpose codes and supporting documents. The Indian company should track the date of receipt, amount, currency, INR conversion, foreign shareholder details and bank advice.
After capital is received, the share issue and FEMA reporting trail should be monitored. This typically includes valuation support where required, board/shareholder documentation, share allotment records, statutory registers and RBI/FEMA reporting timelines. The exact requirements depend on the transaction structure and current law, so do not leave this to memory.
Set up accounting before transactions become messy. Create a chart of accounts suited to the subsidiary's activity, parent reporting format, GST/TDS needs, payroll, inter-company transactions and audit requirements.
Review GST registration. Not every company needs GST immediately, but many subsidiaries register early because they expect taxable supplies, inter-state services, export of services, vendor onboarding requirements or input tax credit. The decision should be documented. If GST is taken, invoice format, place of supply, LUT for exports where relevant, return calendar and input credit process should be set up.
Review TDS before paying vendors. Indian TDS can apply to professional fees, contractor payments, rent, commission, interest, salary, director payments and certain other transactions. Foreign parent teams often miss this because witholding tax may not operate the same way in their home country. The subsidiary should maintain a vendor master with PAN, nature of service, TDS section, rate and certificate status.
If employees will be hired, set up payroll early: salary structure, offer documentation, employee declarations, salary TDS, PF/ESI/professional tax review where applicable, reimbursements and monthly payroll accounting.
Finally, create a compliance calendar. The calendar should cover board meetings, accounting close, GST, TDS, payroll, ROC, FEMA, auditor requirements and parent reporting deadlines. Someone must own each item.
Finance and Tax Setup Decisions to Make Early
The first 90 days are the right time to decide how the subsidiary will be managed. Will accounting be done monthly or only near audit? Will the parent require a monthly MIS? Who approves vendor payments? Who reviews GST and TDS before filing? Who keeps statutory records?
These questions decide whether compliance is built into the operating rhythm or pushed into cleanup mode later.
A good setup has three layers:
- Statutory compliance: ROC, board records, registers, FEMA and tax filings.
- Finance operations: accounting, bank reconciliation, vendor payments, payroll and MIS.
- Tax controls: GST, TDS, withholding review, input credit and documentation.
When these layers are connected, the subsidiary becomes easier to run.
Common Gaps Foreign Parent Teams Miss
The most common mistake is assuming incorporation equals readiness. It does not.
Other frequent gaps include delaying bank KYC preparation, receiving capital without a complete tracking sheet, missing FEMA timelines, not documenting board approvals, registering for GST without a return process, paying Indian vendors without TDS review, booking expenses months later, and not aligning accounting with parent-company reporting.
Another common issue is fragmented ownership. One consultant handles incorporation, another opens the bank account, someone else files GST, and an internal employeee starts vendor payments.
That is where gaps appear.
When You Should Get Help
You should consider professional India subsidiary support if:
- The foreign shareholder has incorporated the company but the bank account is still pending.
- Capital has been received or is about to be received from outside India.
- You are unsure about FEMA/RBI reporting timelines.
- GST registration is required but the invoicing and return process is not ready.
- Vendor payments have started without TDS review.
- Employees or contractors will be hired in India.
- Parent-company reporting requires clean monthly books.
- The first board meeting, registers, auditor appointment or share records are incomplete.
- Different vendors are handling different pieces and no one owns the full compliance picture.
A proper first 90 days cleanup does two things. It closes immediate compliance gaps and creates a monthly operating system for the Indian subsidiary.
Get a First 90 Days India Subsidiary Tracker
If you are setting up an Indian subsidiary, SetMyCompany can help you build a clean first 90 days plan covering bank account, capital remittance, FEMA tracking, accounting, GST, TDS, payroll and board compliance.
Send "INDIA 90" on WhatsApp: https://wa.me/919611189911
Ask for the First 90 Days India Subsidiary Compliance Tracker, and we will share the structure you can use to check what is complete, pending and risky in your India setup.
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