Onesto Legal · New Delhi
We keep the books, run the payroll, file the returns and get the profit home.
For foreign owned Indian entities that need their numbers to be right locally and legible to a parent company in Europe at the same time.
A subsidiary’s books drift out of parent company standard within two quarters without local oversight. Not through anyone’s fault, but because Indian statutory accounts and a European group reporting pack are answering different questions.
We produce both, from one set of records, so the audit and the consolidation do not fight each other.
The problem
Indian statutory reporting and European group reporting have different formats, different timing and different definitions, and most foreign subsidiaries end up maintaining them badly in parallel.
India requires a statutory audit of every company, regardless of turnover. There is no small company exemption. That audit is conducted against Indian accounting standards, on an April to March financial year that will not line up with a December year end in Europe.
Meanwhile the parent needs monthly management accounts in its own chart of accounts, in euros, on its own calendar, and reconciled well enough that the group auditor will accept it.
Where this breaks down is not the bookkeeping. It is withholding tax on payments to the parent, input tax credit that has been claimed but not reconciled, intercompany charges set without documentation, and payroll deductions that are correct on the payslip and late to the authority.
All of which surfaces at once, usually in the second year, usually during an audit, and usually to a finance director who was told everything was fine.
The rhythm
A representative picture for a private limited company with employees and intercompany transactions. Frequencies vary with turnover, registration type and headcount.
| Cycle | What is due | Who it goes to | Why it matters |
|---|---|---|---|
| MonthlyPayroll run, payslips and deposits | Provident fund, state insurance, professional tax, and tax deducted from salaries. | Employees and the respective authorities | Late deposits are the fastest way to turn an administrative issue into an employee relations one. |
| MonthlyWithholding tax deposits | Tax deducted at source on vendor payments, rent, professional fees and payments to the parent. | Income tax department | Failure to deduct or deposit can disallow the underlying expense entirely. |
| Monthly or quarterlyGST returns | Outward supplies and the summary return, with input credit reconciled against what suppliers have filed. | GST authorities | Unreconciled credit is denied, and your customers feel it before you do. |
| MonthlyManagement accounts | Trial balance, profit and loss, balance sheet and cash position, mapped to the parent’s chart of accounts. | The parent company | The difference between a subsidiary that is managed and one that is reported on annually. |
| QuarterlyWithholding tax returns | Statements of tax deducted, and the certificates vendors and employees need. | Income tax department | Errors here surface as employee tax credit problems the following year. |
| QuarterlyAdvance tax | Estimated corporate tax paid in instalments through the year. | Income tax department | Underestimating attracts interest, so the forecast has to be honest rather than optimistic. |
| AnnuallyStatutory audit and accounts | Financial statements prepared and audited, then filed with the corporate registry. | Auditor and Registrar of Companies | Mandatory for every company. There is no turnover exemption in India. |
| AnnuallyCorporate income tax return | With tax audit where thresholds are met. | Income tax department | Late filing costs the right to carry losses forward, which matters in the early years. |
| AnnuallyTransfer pricing documentation | Study and accountant’s report where there are transactions with the parent or group. | Income tax department | Adjustments are made to taxable income, with penalty calculated on the adjustment. |
| AnnuallyForeign liabilities and assets return | A return on foreign investment held in the company. | Reserve Bank of India | Routinely missed by companies with no other central bank interaction that year. |
Thresholds, due dates and forms change with each Finance Act. We confirm the current position for your entity rather than working from a general calendar.
What we run
Taken on as a whole, or in the parts you cannot cover from Europe.
Day to day accounting maintained in India, with monthly management accounts mapped to your group chart of accounts and reported in your currency alongside the statutory position.
Preparation of financial statements to Indian accounting standards, coordination of the audit, and management of the auditor’s queries so the process does not consume your finance team.
Advance tax estimation and payment, the annual return, tax audit where required, and representation in assessments, notices and appeals when the department comes back.
Registration, classification, monthly and annual returns, input credit reconciliation against supplier filings, export refunds, and replies to departmental notices.
Correct deduction on vendor payments and on payments to the parent, monthly deposits, quarterly returns, and the certificates your counterparties will ask for.
Monthly payroll, payslips, provident fund and state insurance, professional tax, gratuity provisioning, and the statutory registers a labour inspection expects to see.
Setting intercompany pricing before the transactions happen, then documenting it: the study, the benchmarking and the accountant’s report filed annually.
The routes out of India compared honestly: dividend, royalty, service and management fees, and interest. Each has a different withholding rate, treaty position and documentation burden.
How it runs
Most of what we take on is not a new company. It is one that has been running for two or three years with nobody senior looking at it closely.
Books, filings and payroll checked against what should have been done since incorporation, with the gaps quantified rather than described.
Outstanding returns filed, reconciliations completed, input credit recovered where it still can be, and penalties dealt with before they grow.
Chart of accounts aligned to the parent, payroll structured properly, intercompany arrangements documented, and the calendar built.
Monthly close, monthly reporting, every return filed on time, with a single named contact who knows your entity.
Audit managed, accounts filed, tax return submitted, and a written note to the parent on the year and on anything that needs a decision.
Common questions
General guidance rather than advice on a particular matter. Requirements and timelines change, and sector rules vary.
Yes. Every company incorporated in India requires a statutory audit each year, irrespective of turnover or activity, including a dormant one. This surprises almost every European parent, because most jurisdictions exempt small entities.
A separate tax audit applies above prescribed thresholds, which is a different exercise from the statutory audit.
The main routes are dividend, royalty, service or management fees, and interest on a permitted loan. Each has its own withholding rate, its own documentation, and its own scrutiny profile.
Dividends are the cleanest but require distributable profits. Fees and royalties can be paid earlier in the life of the business, but they must be genuine, priced at arm’s length and documented, or they are the first thing an assessment challenges.
Tax deducted at source is a withholding obligation. When your Indian company pays a vendor, a landlord, a professional or the parent, it must deduct tax at the prescribed rate, deposit it and issue a certificate.
Vendors ask because that certificate is how they claim credit for the tax you deducted. Failing to deduct or deposit can result in the whole expense being disallowed, which costs far more than the tax itself.
Provident fund and state insurance are statutory employee benefits with employer and employee contributions, applicable once headcount and wage thresholds are met. Registration is mandatory at that point rather than optional.
They are administered separately from payroll tax, with their own monthly deposits and returns, and employees notice immediately when the contributions are late.
Yes, and we treat that as the point rather than an extra. We maintain one set of records and report from it twice: Indian statutory accounts for the audit and the registry, and management accounts in your chart of accounts and your currency for the group.
Where your financial year differs from the Indian April to March year, we run both cut offs.
It is the annual certification filed where an Indian company has transactions with associated enterprises abroad, confirming that the transfer pricing documentation exists and setting out the transactions.
It applies to almost every foreign owned subsidiary that buys from, sells to, or is charged by its parent, which is most of them.
Yes, and it is common. We start with a position review so that you know what you are inheriting before anything is transitioned, and we handle the handover of records and portal access ourselves rather than leaving you to broker it.
Onesto Legal
Onesto Legal is the in-house legal practice of Onesto Management Consultancy, operating from our New Delhi office. The people who advise are the people who act.
Legal Head
Heads the practice from New Delhi, with day to day conduct of corporate, regulatory and contentious matters.
Advocate
Advocate and founder of Onesto Management Consultancy. Doctoral candidate in International Law at the University of Deusto, Bilbao.
Advocate
Advocate, co-founder and director. Doctoral candidate in International Law at the University of Deusto, Bilbao.
Related
The corporate filing calendar that sits alongside the tax one.
Read more →The structure decision that determines your tax position later.
Read more →Diligence, structuring and documentation when you buy or partner.
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Whether you are setting the entity up now or suspect the current arrangement has drifted, a position review tells you where you stand before you change anything.
We answer from New Delhi and from Bilbao, so European clients are not waiting a day for a reply.
Onesto Legal, Onesto Management Consultancy
New Delhi, India and Bilbao, Spain
The Bar Council of India does not permit advertisement or solicitation by advocates. This page is published for general information about the areas in which Onesto Legal practises and is made available on the basis that the reader has sought it out of their own accord. Nothing here is legal advice, and reading it does not create a lawyer and client relationship. Statutory requirements, thresholds and timelines change, and any reference to a rule, a form or a period is a general description rather than advice on a particular matter.