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India compliance checklist for a new capability centre

Kompass Technologies · Updated September 2026 · 10 min read

The short answer

A new Indian subsidiary needs incorporation, PAN and TAN, a bank account with FDI reporting, GST registration, Shops and Establishment registration, Provident Fund and ESI registration, and professional tax where the state applies it. Ongoing obligations include monthly payroll remittances and TDS, quarterly TDS returns, monthly or quarterly GST returns, annual ROC filings, a statutory audit and transfer pricing documentation. Several registrations block your first payroll, so sequence them before hiring, not alongside it.

This is a general guide, not legal or tax advice. Requirements vary by state, sector and shareholding structure — confirm your specific position with qualified Indian counsel and a chartered accountant.

Before the first employee joins

Setup registrations, roughly in dependency order.
RegistrationPurposeBlocks
Digital signature certificates and DINEnables directors to sign filingsIncorporation
Incorporation (SPICe+)Creates the company; issues CINEverything downstream
PAN and TANTax identity; tax deduction at sourcePayroll, banking
Corporate bank accountReceives share capital; pays salariesPayroll
FDI reporting (FC-GPR)Reports foreign share subscription to RBIRegulatory standing
GST registrationRequired to invoice the parentIntercompany billing
Shops and EstablishmentState licence to operate an officeEmployment
Provident Fund and ESIMandatory social security enrolmentPayroll
Professional taxState-level payroll deductionPayroll (state-dependent)
Intercompany service agreementEstablishes the cost-plus arrangementTransfer pricing position

Recurring obligations

Monthly

  • Payroll processing, TDS deduction and deposit
  • Provident Fund and ESI contributions and returns
  • Professional tax remittance where applicable
  • GST return filing, depending on turnover and scheme

Quarterly

  • TDS returns for salary and non-salary payments
  • Board meeting, with minutes recorded
  • Advance tax instalments

Annually

  • Statutory audit and filing of financial statements
  • Annual return and financial statement filings with the Registrar of Companies
  • Corporate income tax return
  • Transfer pricing study, accountant’s report and master file where thresholds are met
  • Form 16 issuance to employees
  • Annual return on foreign liabilities and assets
  • POSH committee annual report

Employment obligations people forget

  • Gratuity. A statutory payment on exit after five years of service. Accrue for it from the start; it is real money.
  • POSH. An internal committee against workplace sexual harassment is mandatory above ten employees, with training and an annual report.
  • Maternity benefit. Twenty-six weeks of paid leave, plus crèche obligations above fifty employees.
  • Notice periods. Typically 30 to 90 days and commonly enforced, which shapes both your hiring lead times and your exit planning.
  • Data protection. The Digital Personal Data Protection Act imposes obligations on how employee and customer data is handled. Align your policies with both Indian requirements and your parent’s regime.

How to keep it from becoming a problem

None of this is individually difficult. It becomes a problem through drift: a filing missed in month four, discovered in month fourteen during an audit, with penalties and interest accrued. Run compliance as a dated calendar with named owners and a monthly review, from the first month. Kompass maintains that calendar as a standing part of every engagement and reports against it monthly.


Frequently asked

Ask about your compliance position