Taxes for Subsidiaries

Income Tax Income from Business or Profession
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Do take your time but answer all the queries, please.

All 6 companies are registered in INDIA, private & unlisted.

Suppose I have a company (Main Company).

The Main company has 5 wholly owned subsidiaries companies
S-1 , S-2 , S-3 , S-4 , S-5

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The Main company has no revenue but the subsidiaries have revenue.

Q-1) Is it possible to have such company structure (The Main company [INDIAN] having 5 wholly owned subsidiaries [INDIAN] companies) in first place ?

Q-2) How should I file taxes, only file tax for the Main company considering aggregate P&L of all subsidiaries (or) file tax separately for 6 companies.

Q-3) Can expenses incurred in any subsidiary be shown as Main company expense.

@Shrutika_Shah @CA_Niyati_Mistry @Muskan_Balar

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Is there a way to do this to avoid all the cumbersome process ?

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Hello @dtyxg,

Apologies for delayed response.

Here is the answer to all your queries:

  1. Yes, there is no such restriction so an Indian company can have multiple wholly owned subsidiaries.
  2. You will be required to file the income tax returns for all the 6 companies including one parent and 5 subsidiaries as they are all considered independent legal entities with different PANs.
  3. The expenses incurred by the subsidiary company can be claimed by subsidiary only. If any expenses is incurred by parent in subsidiary it is considered as investment.

There is no such way where you can escape filing taxes for all the companies. However, you can merge all the companies into one to ease management.

Hope this helps!

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