What is a Statutory Audit for Foreign Company?
A statutory audit is a yearly check of accounts by an independent Chartered Accountant. The auditor reviews the books and gives an opinion on whether the financial statements show a true and fair view.
Under the Companies Act, 2013, a foreign company is a company incorporated outside India that has a place of business in India. It can also be a company that does business in India through an electronic mode. This includes a liaison office, branch office or project office of a foreign company.
People also use "foreign company" for an Indian company owned by foreign investors (a subsidiary). The audit rules for both are different, so this page covers both cases.
Is Statutory Audit Compulsory for a Foreign Company in India?
Yes. Audit and annual filing are compulsory in India, but the exact rule depends on how your business is set up.
| Type of Setup |
Is Audit Needed? |
Governing Rule |
|
Indian subsidiary or wholly owned subsidiary (incorporated in India)
|
Yes
|
Companies Act, 2013, Section 139 and 143
|
|
Branch office, liaison office or project office of a foreign company
|
Yes
|
Companies Act, 2013, Chapter XXII and the Foreign Companies Rules, 2014
|
|
Foreign company with 50% or more share capital held by Indian citizens or Indian companies
|
Yes
|
Companies Act, 2013, Section 379
|
|
RBI-approved liaison, branch or project office
|
Yes
|
FEMA rules
|
There is no turnover limit. Even a foreign company with no income in India has to file its annual documents.
What Does the Auditor Check?
The auditor goes through all records of your Indian business. The main points are:
- Bank statements, ledgers and cash records
- Remittances received from the head office or parent company
- Sales, purchase and service income
- Expenses and whether they match the approved activity
- Fixed assets and depreciation
- Loans taken from or given to group companies
- Deals with related parties abroad
- Foreign exchange gains and losses
- TDS, GST and withholding tax payments
- Whether the books match the Balance Sheet and Profit and Loss Account
Documents Required for Foreign Company Statutory Audit
Keep these ready before the audit starts:
- Certificate of Incorporation, MOA and AOA (for an Indian subsidiary)
- Registration papers of the foreign company and RBI approval (for a branch or liaison office)
- PAN, TAN and GST registration
- Bank statements for the full year, including foreign remittance advice
- FIRC and FIRS for money received from abroad
- Sales and purchase invoices
- Expense bills and vouchers
- Trial Balance and ledgers
- Agreements with the parent or group companies
- Fixed asset list with bills
- Salary and TDS records
- Previous year's audited financial statements
Income Tax Rules for a Foreign Company
A foreign company pays Indian tax on income earned in India. Points to remember:
- The tax rate for a foreign company is higher than for a domestic company
- A tax audit applies when turnover crosses the limit under Section 44AB
- The company files its income tax return in ITR-6
- If you have deals with related companies abroad, a transfer pricing report in Form 3CEB is needed
- Tax is deducted at source on many payments to foreign parties
Tax rates and filing dates change with each Finance Act, so confirm the current rate and dates with your CA.
What is the Process of Foreign Company Statutory Audit?
- Check your setup
- Appoint the auditor and file Form ADT-1
- Share the records with the CA
- Books are reviewed and errors are pointed out
- Corrections are made in the accounts
- Financial statements are prepared
- Auditor signs the report
- Board approves the accounts
- File the forms
- File tax return and other reports, such as tax audit, Form 3CEB and the FLA return.
Why Choose CA Arpit Gupta for Foreign Company Statutory Audit?
A timely audit keeps your Indian business safe from legal, tax and RBI trouble. CA Arpit Gupta helps foreign companies with:
- Appointment of auditor and ADT-1 filing
- Complete statutory audit of Indian subsidiaries and offices
- Preparation of financial statements
- Filing of AOC-4, MGT-7, FC-3 and FC-4
- Annual Activity Certificate for liaison, branch and project offices
- Tax audit, Form 3CEB and income tax return filing
- FLA return and FEMA related guidance
- Help with pending filings and late fee cases
- Clear fee quote before work starts
You get simple guidance in plain language, with no hidden steps.
Get Your Foreign Company Audit Done on Time
Do not wait for the last date. Late filing adds extra fees every single day.
Share your last year's accounts, bank statements and remittance papers, and get a clear plan and quote for your statutory audit.
Call or WhatsApp CA Arpit Gupta at: +91-7081220600.
