India Entry for Foreign Startups: The FEMA-TDS-Company Structure Checklist (Days 1–90)

Foreign founders entering India face a cliff of compliance. Not all at once — but staggered across 90 days, triggered by specific events, each with a deadline and a penalty for missing it.

Most foreign startups hire a company secretary and assume compliance is handled. Then at Series A diligence, they discover: FC-GPR was filed 45 days late. TDS treaty documentation was never filed, so management fees to the parent were TDS-deducted at 25% instead of the treaty rate of 10%. The company structure choice was never audited against the business model, locking in a higher tax rate than necessary.

Phase 0: Before You Incorporate

You have three structural options. Choose wrong, and you carry higher taxes and compliance overhead for 5+ years.

• Subsidiary (Private Limited Company): separate legal entity, highest compliance load, most tax-efficient — 90%+ of foreign companies choose this

• Branch Office: extension of parent company, lower incorporation friction, higher TDS obligations

• Liaison Office: lowest compliance, cannot earn revenue, not suitable for operating startups

Phase 1: Pre-Incorporation (Weeks 1–2)

Verify your business sector is permitted for foreign investment. Most technology, SaaS, fintech, and B2B e-commerce startups are 100% permitted on the automatic route.

Your Indian company will need apostilled copies of: the parent company's Certificate of Incorporation, Memorandum and Articles of Association, a board resolution authorizing investment in India, and director identification documents.

Phase 2: Incorporation (Weeks 2–4)

Use the SPICe+ portal on the MCA website. Takes 7-15 working days. A Digital Signature Certificate is mandatory for at least one director — if your foreign director doesn't have one, appoint a local nominee director.

Register your FEMA Master Record on the FIRMS portal as an Indian Investee Company. This is the step most foreign startups skip, and it causes the biggest problems later.

Phase 3: Capital Remittance

Deadline: file FC-GPR within 30 days of share allotment to a non-resident investor. Before the investor wires money, obtain a Fair Market Value certificate from a SEBI-registered merchant banker — foreign investors cannot purchase shares below Fair Market Value.

File Form 10F and a Tax Residency Certificate from the foreign parent's tax authority before the first intercompany payment. Default TDS rate without treaty documentation is 25.17%; the India-US DTAA rate is 10%. On ₹100 crore of annual management fees, that gap is ₹15 crore in cash.

Phase 4: Ongoing Annual Compliance

File the FLA Return every year by July 15 if you have any FDI or ODI, even if no new money moved — this is the most commonly missed filing by foreign-funded startups. File the Annual Performance Report by December 31 if you have overseas investment.

Press Note 2 (2026): What Just Changed

On May 2, 2026, the Government of India clarified the beneficial ownership test for foreign investments from land-border countries. Indirect foreign investments under the automatic route are now permitted if the beneficial owner's stake from a land-border country does not exceed 10%. Direct investments retain the prior approval requirement.

Checklist: India Entry, Days 1–90

• Week 1-2: Confirm FDI route, request apostilled parent documents

• Week 2-4: Incorporate via SPICe+, register entity master on FIRMS portal, file GST registration

• Week 4-6: Obtain FMV certificate, pass board resolution for share allotment

• Week 6-8: Obtain FIRC from bank, file FC-GPR with RBI, file Form 10F + TRC before first intercompany payment

Foreign founder compliance isn't just FEMA filing. It's FEMA plus TDS treaty plus company structure tax optimization plus cap table architecture. Dugain's advisory model covers all three — talk to us before your Day 1.