# US Subsidiary of an Indian Company

> An Indian company can set up a US subsidiary under the automatic route of the Overseas Investment Rules, 2022, within limits linked to its net worth, by reporting the investment through its authorised dealer bank in Form ODI and obtaining a UIN. Every year it files an Annual Performance Report. Transactions between the Indian company and the US subsidiary must be priced at arm's length, and the subsidiary should be managed in the US to avoid being treated as Indian-resident under POEM.

Practice: US Company Registration — https://www.industax.com/services/us-company-registration/

We choose the entity (LLC or C corp) and state, form it, complete the ODI reporting, set up intercompany agreements and transfer pricing, and run both countries' compliance — US returns and Form 5472, Indian Form 48 (formerly 3CEB) and APR.

Dividends from the US subsidiary are taxed in India with credit for US withholding; repatriation and the use of the subsidiary's funds must also follow FEMA timelines.

## Key facts

| Item | Detail |
| --- | --- |
| Route | Automatic route under the OI Rules 2022 (within limits) |
| Reporting | Form ODI via AD bank; UIN |
| Annual | Annual Performance Report; Form 48 transfer pricing |
| US | Federal and state returns; Form 5472 |
| Risk | POEM if managed from India |

## Who needs this

- Indian IT, SaaS and services companies entering the US
- Manufacturers setting up US distribution
- Companies acquiring US businesses

## What's included

- Structure and state choice
- Formation and ODI reporting
- Intercompany agreements
- Two-country compliance

## Documents

- Indian company's financials and board resolution
- Business plan for the US entity
- Directors' KYC

## Process

1. **Plan** — Structure, funding and TP model.
2. **Set up** — Entity formed and ODI reported.
3. **Run** — Annual US and Indian compliance.

## FAQs

### Does an Indian company need RBI approval for a US subsidiary?

Not under the automatic route, if limits and conditions are met; the investment is reported through the AD bank.

### What is POEM and why does it matter?

Place of Effective Management. If key management decisions for the US subsidiary are actually made in India, it can be treated as an Indian resident and taxed in India on its global income.

### Should the US subsidiary be an LLC or a C corp?

Usually a C corp, because an LLC owned by an Indian company creates classification mismatches for Indian tax credits. The right answer depends on the business and funding plans.

## Official sources

- RBI — Overseas Investment: https://www.rbi.org.in/

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Canonical page: https://www.industax.com/services/us-company-registration/us-subsidiary-of-indian-company
Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.