Resident Indians (An Indian Party (IP) / Resident Individual (RI)) who have incorporated a Wholly Owned Subsidiary (WOS) in Singapore and have made an investment in that WOS through Overseas Direct Investment (ODI) scheme, need to file the following forms with RBI as applicable.
Forms | Description |
ODI Part I |
This form must be filed with RBI for making an investment under ODI route (Automatic/Approval) and also if there are any Post Investment changes (change in name, address, networth, capital structure etc.) • Once, the form is filed by the Indian Party, RBI allots Unique Identification Number (UIN) for that WOS. Subsequent investments in the same WOS can be made only after allotment of the UIN.
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ODI Part II |
The Indian Party is required to submit the Annual Performance Report (APR) based on Audited Financial Statements of the overseas JV/WOS by 30th June of every year. • If the law does not mandatorily require auditing of the books of accounts of JV / WOS, the APR may be submitted by the Indian party based on the Un-audited Annual Accounts of the JV / WOS provided: a) The Statutory Auditor of the Indian party certifies that ‘The un-audited annual accounts’ of the JV / WOS reflect the true and fair picture of the affairs of the JV / WOS’ and b) That the un-audited annual accounts of the JV / WOS has been adopted and ratified by the Board of the Indian party.
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ODI Part III |
For Reporting of Disinvestment by way of Sale or Transfer of Shares / Closure / Voluntary Liquidation /Winding Up/ Merger /Amalgamation of JV / WOS, you are required to submit this form to RBI.
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FLA Return |
The annual return on Foreign Liabilities and Assets (FLA) is required to be submitted to RBI every year by 15 July directly by all the Indian companies which have received FDI (foreign direct investment) and/or made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year i.e. who holds foreign Assets or Liabilities in their Balance Sheets. • The Indian Party shall file the FLA with RBI even if APR has been filed.
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ODI Investment Companies must audit the financial statements for APR submission
a) The APR shall be based on the audited financial statements of the foreign entity provided that where the person resident in India does not have control in the foreign entity and the laws of the host country or host jurisdiction, as the case may be, do not provide for mandatory auditing of the books of accounts, the APR may be submitted based on unaudited financial statements certified as such by the statutory auditor of the Indian entity or by a chartered accountant where the statutory audit is not applicable.
b) A person resident in India acquiring equity capital in a foreign entity which is reckoned as ODI, shall submit an Annual Performance Report (APR) with respect to each foreign entity every year by 31st December and where the accounting year of such foreign entity ends on 31st December, the APR shall be submitted by 31st December of the next year.
Deduction of Tax at Source when you make overseas payment (including ODI)
There is a 20% tax collection at source on individual making remittances abroad and not on the corporate making investment to create subsidiaries abroad. TCS that is tax collected at source is like an advance tax payment made which can be adjusted against your personal income tax liability for the year and any refund due can be claimed. If there is no tax liability you have to file the tax return for the sake of claiming the refund.
AUDIT FOR WHOLLY OWNED SUBSIDIARY (WOS) OF AN INDIAN COMPANY
In Singapore there is no requirement for audit for small companies (SGD 10 million and below in revenue). But, as per the RBI regulations, when you file the annual return in India by the holding Company it is required that the WOS must be audited. If it is not audited due to the exemption in Singapore, it shall be audited by an Indian auditor for submission.
DIVIDEND DECLARATION MADE BY THE WHOLLY OWNED SUBSIDIARY (WOS) OF AN INDIAN COMPANY
There is a double taxation avoidance agreement (DTAA) between India and Singapore. If the Singapore company has paid the tax and subsequently you declare a dividend in the same financial year when the dividend is declared, you can claim the tax credit on India side. If the Singapore company has paid taxes over the years and accumulated the profit and if any dividend is declared out of the accumulated profit, you cannot claim the tax benefit under the DTAA.