Year-End Compliance for Foreign-Owned Companies in India: Audit, Income Tax, ROC & Annual Filing Guide

31 March Is the End of the Financial Year. But Is It the End of Compliance?

For the foreign parent company, 31 March may simply appear to be the financial year-end of its Indian subsidiary.

For the Indian finance and compliance team, however, it marks the beginning of one of the most important compliance cycles of the year.

The books need to be closed.

Bank, customer and vendor balances need to be reconciled.

Financial statements need to be prepared.

The statutory audit needs to be completed.

Income-tax and, where applicable, transfer-pricing requirements need attention.

The financial statements need to move through the corporate approval process.

ROC annual filings follow.

And for many foreign-owned companies, FEMA reporting adds another layer.

This is why Year-End Compliance for Foreign-Owned Companies in India should not be viewed as a collection of unrelated filings.

It is one connected process:

Book Closure → Reconciliation → Financial Statements → Audit → Tax → Board/AGM → ROC → FEMA

A delay or mistake at the beginning can affect everything that follows.

Why Year-End Compliance Can Be More Complex for a Foreign-Owned Company

An Indian subsidiary of a foreign parent is incorporated under Indian law and must comply with the Indian regulatory framework applicable to it.

At the same time, it may also have to satisfy reporting requirements of its overseas parent.

That can mean dealing with:

• Indian statutory financial statements
• Group reporting packages
• Different financial year/reporting periods
• Foreign currency balances
• Intercompany transactions
• Parent-company reimbursements
• Management or technical service charges
• Foreign shareholding
• Transfer pricing
• FEMA reporting
• Overseas reporting deadlines

A foreign parent may therefore receive one set of numbers for group reporting and another set prepared under the applicable Indian financial-reporting framework.

Those differences need to be understood and reconciled.

The objective at year-end should not simply be to “get the audit done.”

The objective should be to close the year with reliable financial records that support all the company’s subsequent statutory filings.

Step 1: Close the Books of Accounts Properly

The annual compliance process starts with accounting.

Before the financial statements can be finalised or the audit meaningfully begins, the books should be reviewed and closed.

Some of the major areas include:

Bank Reconciliation

Every bank account should be reconciled with the books.

Old unreconciled entries, bank charges, interest, foreign remittance charges and transactions appearing only in the bank statement should be investigated.

Customer and Vendor Balances

Receivables and payables should be reviewed.

Ask:

• Are old balances genuine?
• Are credit notes pending?
• Are customer receipts correctly adjusted?
• Have all vendor invoices been booked?
• Are advances separately identified?
• Are balance confirmations required?

Accrued and Prepaid Expenses

Expenses relating to the year may need to be recognised even where an invoice has not yet been received.

Similarly, expenses covering future periods may require appropriate prepaid treatment.

Fixed Assets

The company should review:

• Additions during the year
• Capitalisation dates
• Supporting invoices
• Disposals
• Depreciation
• Capital work-in-progress, where applicable

Employee Costs

Salary, bonus, incentives, reimbursements, leave-related liabilities, gratuity and other employee costs should be reviewed based on the facts and applicable requirements.

Inventory

Where the company holds inventory, quantities and valuation need appropriate year-end attention.

Foreign Currency Balances

Foreign-currency receivables, payables, loans and other monetary balances may require year-end restatement under the applicable accounting framework.

Provisions and Outstanding Expenses

Professional fees, audit fees, utilities, employee-related costs and other expenses relating to the year should be reviewed for appropriate recognition.

The principle is simple:

A smooth annual compliance process begins with clean books—not with filing forms.

Step 2: Complete the Major Year-End Reconciliations

Closing the ledger is not enough.

The next step is to reconcile the books with the company’s tax, statutory and operational records.

GST Reconciliation

Depending on the company’s activities and registrations, review the relationship between:

Books of Accounts ↔ GSTR-1 ↔ GSTR-3B ↔ ITC records

Differences should be identified rather than carried forward without explanation.

TDS Reconciliation

TDS recorded in the books should be reconciled with:

• TDS returns
• Challans
• Vendor ledgers
• Expense ledgers
• Applicable certificates/statements

Payroll Reconciliation

Salary costs in the books should reconcile with the payroll records and applicable statutory payments.

Bank Reconciliation

The closing bank balance in the financial statements should be supported by reconciled bank records.

Intercompany Reconciliation

For a foreign-owned company, this deserves particular attention.

Balances with the foreign parent and other group entities should be reconciled before the audit.

For example, if the Indian subsidiary shows ₹80 lakh payable to its parent but the parent company’s records show a different amount, the difference should be investigated.

It may arise from:

• Timing differences
• Exchange rates
• Unrecorded invoices
• Credit notes
• Reimbursements
• Payments in transit
• Different accounting periods

Leaving these differences until the auditor raises the question can unnecessarily delay the audit.

Step 3: Prepare the Annual Financial Statements

Once the books have been substantially closed and reconciled, the company moves towards preparation of its annual financial statements.

Depending on the applicable framework, these may include:

• Balance Sheet
• Statement of Profit and Loss
• Cash Flow Statement, where applicable
• Notes to Accounts
• Significant accounting policies
• Other required disclosures and schedules

For a foreign-owned company, additional attention may be needed around:

• Related-party disclosures
• Foreign-currency transactions
• Parent-company transactions
• Share capital
• Loans
• Commitments
• Employee benefits
• Contingent liabilities
• Applicable group-company disclosures

These financial statements ultimately become the foundation for the statutory audit and corporate annual filings.

Step 4: Complete the Statutory Audit

A company incorporated in India is subject to the statutory-audit framework under the Companies Act, 2013; the Act provides for appointment of an auditor for every company through its audit provisions.

This is different from a tax audit under income-tax law.

The statutory audit is not simply about checking whether numbers have been added correctly.

The auditor examines the company’s financial statements and underlying records in accordance with the applicable legal and professional framework.

The process typically involves:

Audit Planning → Information Requests → Testing → Audit Queries → Management Responses → Adjustments, if required → Financial Statement Finalisation → Audit Report

Depending on the company and circumstances, areas reviewed may include:

• Revenue
• Purchases and expenses
• Bank balances
• Receivables
• Payables
• Fixed assets
• Loans and advances
• Employee costs
• Statutory dues
• Related-party transactions
• Share capital
• Supporting documents
• Financial-statement disclosures
• Internal controls, as applicable

Step 5: Pay Special Attention to Foreign-Parent Transactions

This is where Statutory Audit for Foreign-Owned Companies can become more involved than for a simple domestic business.

The finance team should separately review transactions involving the foreign parent and other overseas group entities.

Foreign Share Capital

Check whether the accounting records agree with:

• Share certificates
• Corporate records
• Inward remittance documentation
• Applicable FEMA reporting
• ROC records

Intercompany Services

The Indian company may receive services such as:

• Management support
• IT services
• Technical services
• Marketing
• HR support
• Shared services

These transactions may require examination from multiple perspectives, including:

Accounting + Withholding Tax + GST + Transfer Pricing + FEMA + Documentation

Parent-Paid Expenses

A foreign parent may initially pay expenses on behalf of its Indian subsidiary.

At year-end, these should not remain as unexplained balances.

The company should understand:

• Nature of the expense
• Beneficiary
• Supporting documents
• Accounting treatment
• Whether reimbursement is due
• Tax/FEMA implications, where applicable

Foreign Loans

Where funding has been provided through permitted foreign borrowing, review the applicable documentation, interest, accounting, FEMA/ECB requirements and withholding-tax implications.

Intercompany Balance Confirmation

Where practical, obtain confirmation and reconcile balances between the Indian company and overseas group entities before the audit is finalised.

Step 6: Determine Income-Tax and Tax-Audit Requirements

Statutory Audit and Tax Audit are not the same thing.

A statutory audit arises under the Companies Act.

A tax audit applies under income-tax law where the relevant conditions are satisfied.

For FY 2025-26 / AY 2026-27, the Income Tax Department confirms that tax audits continue under the Income-tax Act, 1961 using Forms 3CA/3CB and 3CD, as applicable. For an entity already audited under another law, Form 3CA-3CD is the relevant framework where section 44AB applies.

For companies, year-end income-tax work may involve:

• Tax computation
• Review of accounting profit vs taxable income
• Depreciation differences
• Disallowable expenses
• TDS-related issues
• Brought-forward losses/depreciation
• Related-party transactions
• Advance/self-assessment tax
• Applicable tax-audit reporting
• Filing of the corporate income-tax return

For AY 2026-27 specifically, the Income Tax Department states that the tax-audit report for a standard audit case is due one month before the 31 October 2026 ITR due date—i.e. 30 September 2026. For transfer-pricing cases with a 30 November 2026 ITR due date, the corresponding report deadline is 31 October 2026.

Because statutory deadlines can change through notifications or extensions, they should always be checked for the relevant year before filing.

Step 7: Review Transfer Pricing Compliance

This is particularly important for foreign-owned Indian companies.

If the Indian subsidiary enters into international transactions with associated enterprises, transfer-pricing provisions may apply.

Examples can include:

• Purchase of services from the parent
• Management fees
• IT support
• Technical services
• Sale/purchase of goods
• Intercompany loans
• Interest
• Cost allocations
• Reimbursements
• Royalty or licence arrangements

The Income Tax Department confirms that taxpayers entering into international transactions or specified domestic transactions are required to obtain the prescribed accountant’s report in Form 3CEB under section 92E for AY 2026-27.

The important point is not simply filing the form.

The company should also ensure that:

Agreement → Invoice → Accounting → Transfer-Pricing Position → Form 3CEB

all tell the same story.

Transfer-pricing analysis should therefore not be left until the final few days before the filing deadline.

Step 8: Board Approval and Annual General Meeting

Once the financial statements and statutory audit are ready, company-law procedures follow.

The financial statements move through the required approval and adoption process.

For companies other than OPCs, the Companies Act generally requires an AGM each year. The first AGM is to be held within nine months from the close of the first financial year; subsequent AGMs are generally required within six months from the close of the financial year, subject to the Act’s provisions.

For a normal 31 March year-end, this corporate calendar needs to be planned backward from the applicable AGM timeline.

For foreign-owned companies, coordination can take longer because:

• Directors may be in different countries
• Parent-company approval may be required internally
• Group reporting may still be under review
• Intercompany differences may remain unresolved
• Documents may require overseas signatures or coordination

This is why year-end planning should begin much earlier than the AGM deadline.

Step 9: Complete ROC Annual Filing

The AGM does not complete annual company compliance.

The required documents must subsequently be filed with the Registrar of Companies.

Two of the central annual filing areas are:

Filing of Financial Statements

Section 137 of the Companies Act requires the financial statements and prescribed accompanying documents to be filed with the Registrar generally within 30 days of the AGM.

This is commonly associated with the applicable AOC-4 filing framework.

Annual Return

The Companies Act requires the annual return to be filed generally within 60 days from the AGM.

This is generally associated with MGT-7 / the applicable annual-return form, depending on the company.

Other annual or event-based company-law requirements may also apply based on the company’s circumstances.

A useful distinction for foreign management is:

Audit completion does not mean annual compliance is complete.

The audit feeds into the financial statements, which feed into the corporate approval process, which then feeds into ROC filings.

Step 10: Don’t Forget FEMA Annual Reporting

For foreign-owned companies, annual compliance may extend beyond the Companies Act and Income Tax Act.

One important requirement is the Annual Return on Foreign Liabilities and Assets (FLA).

RBI guidance states that the FLA return applies to specified India-resident entities that have received FDI and/or made overseas direct investment and continue to meet the relevant reporting criteria. The return is generally due by 15 July each year and can be filed based on unaudited figures if the audit has not been completed by that date, with revision subsequently where required.

This timing is important.

A foreign-owned company should not simply wait for its statutory audit to finish before considering the FLA return.

Also remember that annual FLA reporting is different from event-based FEMA reporting.

For example, RBI’s foreign-investment reporting framework separately prescribes FC-GPR reporting for qualifying issues of equity instruments to persons resident outside India.

So the compliance team should maintain both:

Annual FEMA Compliance

and

Event-Based FEMA Compliance

throughout the year.

The Complete Year-End Compliance Cycle

For a foreign-owned company, the overall process can be visualised like this:

The exact sequence can overlap. For example, FLA may become due before the statutory audit is completed.

That is precisely why companies need a compliance calendar rather than a simple year-end checklist.

10 Questions Foreign Management Should Ask the India Finance Team

If you manage an Indian subsidiary from overseas, you don’t necessarily need to review every ledger yourself.

But before annual compliance is completed, you should be able to obtain clear answers to these questions:

Have the books for the year been closed?

Are all bank accounts reconciled?

1: Are customer and vendor balances reviewed?
2: Do the parent-company/intercompany balances reconcile?
3: Have GST, TDS and payroll records been reconciled with the books?
4: Are all intercompany transactions supported by agreements and invoices?
5: Is transfer pricing applicable, and is the documentation being prepared?
6: Is the statutory audit progressing according to schedule?
7: Have the AGM and ROC filing timelines been planned?
8: Are applicable FEMA/FLA requirements complete?

If the answer to several of these questions is “we will check later,” the company may already be heading towards a difficult year-end.

The Better Approach: One Annual Compliance Process

One of the biggest mistakes businesses make is managing every compliance in isolation.

The accountant closes the books.

The GST team looks at GST.

The tax team prepares the tax return.

The auditor conducts the audit.

The company secretary handles ROC.

The FEMA team looks at foreign-investment reporting.

Each function may be correct individually, but somebody still needs to ensure that the same underlying transaction is being treated consistently across all of them.

Consider one intercompany service invoice from the foreign parent.

It could affect:

Accounting
↓
GST / Import of Services
↓
Withholding Tax
↓
Transfer Pricing
↓
Foreign Remittance Documentation
↓
Statutory Audit
↓
Financial Statement Disclosures

That is why annual compliance should be managed as a connected process.

How Manish Anil Gupta & Co. Supports Foreign-Owned Companies

For foreign management, coordinating multiple Indian service providers can become a challenge in itself.

At Manish Anil Gupta & Co., we work with foreign-owned companies across the annual compliance cycle, including:

Accounting & Book Closure
↓
GST & TDS Reconciliation
↓
Financial Statement Preparation
↓
Statutory Audit
↓
Income-Tax Compliance
↓
Transfer-Pricing Coordination
↓
ROC Annual Compliance
↓
FEMA / Foreign-Investment Compliance

The objective is not simply to complete individual filings.

It is to make sure that the accounting, audit, tax and corporate-compliance pieces work together.

Final Thoughts

For a foreign-owned company in India, 31 March should not trigger a last-minute compliance exercise.

A well-managed year-end starts much earlier.

The company should enter the annual compliance season with:

• Clean books.
• Reconciled balances.
• Documented intercompany transactions.
• A clear audit plan.
• A tax and transfer-pricing plan.
• A defined ROC and FEMA compliance calendar.

The most important takeaway is this:

Annual compliance doesn’t start with the statutory audit and doesn’t end with filing the income-tax return.

It is one connected journey from closing the books to completing the company’s audit, tax, ROC and applicable FEMA requirements.

For foreign founders and overseas finance teams, getting that process organised can mean fewer last-minute queries, better visibility over the Indian subsidiary and a much smoother year-end.

Managing a foreign-owned company in India?

Manish Anil Gupta & Co. can help you coordinate your Indian subsidiary’s accounting, statutory audit, income tax, transfer pricing, ROC and FEMA compliance through one structured annual compliance process.

Disclaimer

This article is intended for general informational purposes only and does not constitute legal, tax, audit, FEMA or other professional advice. Applicability, forms and due dates depend on the company’s facts and the law applicable for the relevant financial year. Statutory requirements may also be amended or extended by subsequent notifications. Specific professional advice should be obtained before acting on any information contained in this article.