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.
Yes, there is no such restriction so an Indian company can have multiple wholly owned subsidiaries.
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.
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.
Yes, such a structure is legally permissible in India.
Q1. Company Structure
An Indian company can act as a holding company and own multiple wholly owned Indian subsidiaries. This arrangement is valid under the Companies Act, 2013.
Q2. Tax Filing
Each company is treated as a separate legal entity. Therefore, all 6 companies must file separate Income Tax Returns. India does not permit consolidated tax filing under the Income-tax Act, 1961.
Consolidated financial statements may be prepared for reporting purposes, but taxation remains individual.
Q3. Expense Treatment
Expenses of a subsidiary cannot normally be claimed as expenses of the holding company. Costs must be recorded in the books of the entity that actually incurred them. Cross-charging or management fees are possible only through proper inter-company agreements.
Summary: Structure allowed Separate tax filing required
✘ Direct expense shifting not permitted without formal arrangements. - Setindiabiz
Structure allowed