Before accounting compliance for foreign companies. We should know about the compliance for foreign companies. Compliance means permit to do business in India on the basis of rules and regulation as per different laws. All the laws which are made for Indians will have to follow all the companies who start their business in India.
Now, come the point of accounting compliance for foreign companies. Still there is not any special accounting rules for following except some provisions of Indian Company Laws 1956 and Income Tax Law 1961. Now, we learn what are the rules of Indian company law 1956 for foreign companies.
1. As per Company Law
All foreign companies have to make their profit and loss account and balance sheet as per the format given in this law book. They have to audited from chartered accountant of India and have to submit its one company to the registrar of India.
2. As per Income Tax Law
As per new budget 2013, Foreign companies has to pay 41.2% the tax on the net profit which they have earned from India. If they get royalty or fees from technical service, they have to pay 25% tax on it. Their tax able income will be calculated just like calculation of taxable income of Indian Companies.
Now, come the point of accounting compliance for foreign companies. Still there is not any special accounting rules for following except some provisions of Indian Company Laws 1956 and Income Tax Law 1961. Now, we learn what are the rules of Indian company law 1956 for foreign companies.
1. As per Company Law
All foreign companies have to make their profit and loss account and balance sheet as per the format given in this law book. They have to audited from chartered accountant of India and have to submit its one company to the registrar of India.
2. As per Income Tax Law
As per new budget 2013, Foreign companies has to pay 41.2% the tax on the net profit which they have earned from India. If they get royalty or fees from technical service, they have to pay 25% tax on it. Their tax able income will be calculated just like calculation of taxable income of Indian Companies.
Today, foreign companies business model is changing. So, it is responsibility of young accountants to make new standards for defining their expenses and incomes. There should be a perfect list of expenses which are allowed for foreign companies. There is also list of revenues specially for Indian subsidiary companies whose parent company is not in India.
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