How to close an Indian subsidiary: Strike off, Voluntary liquidation and Branch office closure

A foreign parent company can close its Indian subsidiary through two routes: strike off under Section 248 of the Companies Act 2013 for defunct companies with no assets or liabilities, or voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code 2016 for solvent companies that need a final, court-recognised exit with repatriation of surplus. Branch, liaison and project offices close through a separate application to the designated AD Category-I bank under FEMA. Strike off typically takes 3 to 6 months. Voluntary liquidation typically takes 9 to 15 months end to end, including repatriation of funds to the parent.

That is the short answer. The rest of this guide covers how to pick the right route, what each one actually involves, how the money leaves India, and where exits get stuck.

Who this guide is for

This is written for the people who actually run this decision: the CFO or general counsel at a foreign headquarters with an Indian subsidiary that no longer makes sense, the founder who flipped to Delaware and now has an Indian entity to wind down, and the overseas counsel coordinating a multi-country exit with India as one leg.

We run these mandates at Treelife. The pattern is consistent: the India entity was set up in a growth phase, the strategy changed, and now someone two oceans away needs to close it without creating director liability, stranded cash or a tax notice eighteen months later.

The three exit routes

India does not have a single “close company” filing. The route depends on what the entity is and what is left inside it.

Route	Applies to	Best when	Governing law	Typical timeline
Strike off	Private/public company	No operations for 2+ financial years, nil assets and liabilities	Section 248, Companies Act 2013	3 to 6 months
Voluntary liquidation	Company or LLP, solvent	Assets, surplus cash or operating history exist; parent wants a final, clean exit	Section 59, IBC 2016	9 to 15 months
Branch / liaison / project office closure	BO, LO or PO of a foreign company	Entity is an office, not an incorporated subsidiary	FEMA 22(R)/2016 and RBI Master Direction	2 to 4 months after documents are ready

Two alternatives sit outside formal closure. You can sell the entity, which transfers the problem along with the company, and works when the entity holds licences or carried-forward value a buyer wants. Or you can park it as a dormant company under Section 455 of the Companies Act 2013, which keeps the entity alive at minimal compliance cost if there is any chance of returning to India within a few years. Reviving a dormant company is far cheaper than incorporating again.

A common mistake is picking strike off because it is cheaper, then discovering the company has assets, a bank balance, or pending receivables. Strike off requires the company to be a shell at the time of filing. If there is surplus to repatriate, you either extract it first through a dividend or capital reduction, or you choose voluntary liquidation, where distribution to shareholders is built into the process. For most foreign-owned subsidiaries with real operating history, voluntary liquidation is the cleaner answer, and it is the only route that ends with a tribunal order of dissolution.

Before you file anything: the cleanup that decides your timeline

The filing is the easy part. The cleanup before it is where timelines are actually decided. Every item below has stalled at least one exit we have seen.

FEMA reporting history. Every equity remittance from the parent should have a corresponding FC-GPR filing, annual FLA returns should be current, and any overseas investment by the Indian entity needs its ODI reporting closed through the AD bank. Liquidators and AD banks check this history. A missed FC-GPR from 2019 surfaces in 2026 and adds months, because compounding or regularisation with RBI comes first.

Income tax. File returns up to the final year. Chase pending refunds before you start, because a refund due to a company in liquidation is slow money. Surrender TAN once TDS obligations end.

GST. Apply for cancellation in Form REG-16, reverse input tax credit on any stock or capital goods on hand, and file the final return in GSTR-10 within three months of the cancellation order. An open GST registration with nil returns piling up is a standing penalty generator.

Employees. Full and final settlements, gratuity for anyone past five years of service, and retrenchment compliance under the Industrial Disputes Act 1947 for workmen, including notice or pay in lieu and retrenchment compensation. Employee dues rank ahead of the shareholder in any distribution, and unresolved dues are the most common objection to a closure.

Contracts and licences. Exit leases, terminate vendor contracts, surrender the Import Export Code, shops and establishment registration, and any sectoral licences.

Banking. Reduce to one operating account. In a voluntary liquidation the liquidator opens a dedicated account for the process; in a strike off all accounts must be closed before filing, with closure certificates in hand.

Do this cleanup first and either route runs close to its stated timeline. Skip it and the timeline belongs to the regulator.

Route 1: strike off under Section 248

Strike off is the administrative removal of the company’s name from the register. Since May 2023, all voluntary strike off applications are processed centrally by C-PACE, the Centre for Processing Accelerated Corporate Exit, instead of regional ROCs. Processing has become noticeably faster and more uniform since.

Eligibility

A company can apply voluntarily under Section 248(2) if it has not commenced business within one year of incorporation, or has not carried on any business for the two immediately preceding financial years and has not applied for dormant status under Section 455.

Before filing, the company must extinguish all liabilities and pass a special resolution, or obtain consent of 75% of members by paid-up share capital.

Section 249 then blocks the application if, in the previous three months, the company changed its name, shifted its registered office between states, disposed of property or rights for value, or engaged in any activity other than what was necessary for closing. A company being wound up under the IBC or with a pending compromise or arrangement application cannot apply either.

The filing

The application is Form STK-2 on the MCA V3 portal, with a government fee of ₹10,000. The supporting pack:

• Indemnity bond in Form STK-3 from every director, notarised
• Affidavit in Form STK-4 from every director
• Statement of accounts in Form STK-8, certified by a chartered accountant, dated no earlier than 30 days before filing, showing nil assets and nil liabilities
• Copy of the special resolution or 75% consent
• Bank account closure certificates
• NOC from the sectoral regulator where the company is regulated (RBI for NBFCs, SEBI, IRDAI and similar)
• Latest income tax return acknowledgement

For a foreign-owned subsidiary, every document executed by directors or authorised signatories outside India must be notarised and apostilled (or consularised where the country is not an Apostille Convention member). Build two to three weeks into the plan just for this.

C-PACE publishes a public notice in Form STK-6 inviting objections, and if none survive scrutiny, issues the strike off and dissolution notice in Form STK-7. The company stands dissolved from the date of that notice.

What strike off does not do

Strike off removes the name from the register. It does not extinguish liability. Under Section 248(7), the liability of every director, manager and officer continues and can be enforced as if the company had not been dissolved. And the company can be restored to the register by the NCLT on an application by a creditor, workman or the company itself for up to 20 years under Section 252.

This is why filing a strike off with an undisclosed creditor or a pending tax demand is a false economy. The closure is only as final as the cleanup behind it.

Route 2: voluntary liquidation under Section 59 of the IBC

Voluntary liquidation is the structured wind-down for a solvent company. An insolvency professional takes over as liquidator, claims are invited and settled, assets are realised, surplus is distributed to shareholders, and the NCLT passes a dissolution order. It is the only route that combines repatriation of surplus with a final tribunal order, which is exactly what a foreign parent’s auditors and board want to see.

The process is governed by Section 59 of the IBC read with the IBBI (Voluntary Liquidation Process) Regulations 2017, which have been amended several times, most recently in 2025 and 2026. The current sequence:

1. Declaration of solvency. A majority of directors declare by affidavit that the company has no debt or will be able to pay its debts in full from the proceeds of assets, and that the liquidation is not intended to defraud anyone. The declaration is accompanied by audited financial statements for the previous two years and, where the company has assets, a valuation report from a registered valuer. Since the IBBI amendment notified on 25 February 2026, that valuation report must follow the format specified by the IBBI, with supporting documentation maintained as prescribed. Directors must also disclose pending proceedings or assessments before statutory authorities.

2. Shareholders’ special resolution. Within four weeks of the declaration, members pass a special resolution to liquidate and appoint an insolvency professional as liquidator.

3. Creditor approval. If the company owes any debt, creditors representing two-thirds in value must approve within seven days of the resolution.

4. Intimation. The company notifies the ROC and the IBBI within seven days of the resolution or creditor approval. Liquidation commences from the date of the special resolution.

5. Public announcement and claims. The liquidator makes a public announcement within five days of appointment, in one English and one regional newspaper and on the company’s website, calling for claims within 30 days. Claims come in on prescribed forms by category: operational creditors, financial creditors, workmen and employees, and other stakeholders.

6. Tax intimation. The liquidator notifies the jurisdictional income tax officer of the appointment within 30 days under Section 178 of the Income-tax Act 1961, and the officer can require an amount to be set aside for anticipated tax dues. Skipping this step creates personal liability for the liquidator, so no competent IP skips it.

7. Realisation and distribution. The liquidator opens a dedicated bank account, realises assets, settles verified claims, and distributes the surplus to shareholders.

8. Final report and dissolution. The liquidator submits the final report with Form H compliance certificate and applies to the NCLT for dissolution under Section 59(7). The regulations expect the process to be completed within 90 days of commencement where there are no creditors, and 270 days where creditor approval was involved. The NCLT order dissolves the company under Section 59(8), and the order is filed with the ROC within 14 days.

In practice, the liquidator-side work fits the 90/270 day frame if the cleanup was done. The NCLT hearing and order add anywhere from two to six months depending on the bench. End to end, plan for 9 to 15 months.

What changed recently in voluntary liquidation

Three updates matter if your reference point is an article written before 2025.

First, the process went digital. Since the IBBI amendment of 28 January 2025, liquidators file electronic forms VL1 to VL4 on the IBBI portal at each stage, with a late fee of ₹500 per form per month of delay. Unclaimed dividends and undistributed proceeds now sit in a Corporate Voluntary Liquidation Account maintained with a scheduled bank, with stakeholder-wise and tax details captured at deposit.

Second, valuation got standardised. The February 2026 amendment prescribes the format and documentation for valuation reports, closing a gap where valuation quality varied widely between cases.

Third, there is now an exit from the exit. The Insolvency and Bankruptcy Code (Amendment) Act 2026, which received assent on 6 April 2026, amends Section 59 to allow a company in voluntary liquidation to terminate the process before dissolution, with the specified member and creditor approvals, by intimating the IBBI and the ROC; the process stands terminated from the date of intimation. The IBBI operationalised this through a new Regulation 42 effective 1 June 2026, requiring the termination resolution to state the reasons. Earlier, a company that changed its mind mid-process had no clean statutory route back. The same Amendment Act also prescribes that voluntary liquidation be completed within a period not exceeding one year, with provisions taking effect as notified, and the accompanying regulatory changes tightened claims handling, requiring stakeholders to update claims that have been partly or fully satisfied and liquidators to record reasons for rejecting any claim.

The money path: how surplus actually leaves India

This is the section most closure guides skip, and it is the section your board cares about. Getting ₹20 crores of surplus out of a liquidating Indian subsidiary is a tax event and a FEMA event, and both have to be sequenced correctly.

Tax in the foreign shareholder’s hands

When a shareholder receives money or assets from a company in liquidation, Indian tax law splits the receipt into two parts.

The portion attributable to the company’s accumulated profits is treated as a deemed dividend under Section 2(22)(c) of the Income-tax Act 1961. For a foreign parent, that dividend is taxable in India, and the liquidator withholds tax on it, at 20% plus surcharge and cess under domestic law, or at the lower treaty rate where the parent qualifies, commonly 5% to 15% depending on the treaty and shareholding.

The balance is taxed as capital gains under Section 46(2): the money plus the fair market value of any assets received, minus the deemed dividend portion, is treated as consideration for the shares, against the parent’s cost of acquisition. For shares held over 24 months, the gain is long term, taxed at 12.5% without indexation. Treaty relief on capital gains is largely unavailable for shares acquired on or after 1 April 2017 under the amended Mauritius, Singapore and Cyprus treaties, so most parents should budget for Indian capital gains tax on this leg.

On the company side, Section 46(1) provides that a distribution of assets in specie to shareholders on liquidation is not a transfer by the company, so the company itself has no capital gains on that distribution. If the liquidator sells assets and distributes cash, the company is taxed on those sales first.

One transition note your advisors must handle: the Income-tax Act 2025 replaced the 1961 Act with effect from 1 April 2026. The liquidation distribution rule in Section 46 now lives in Section 68 of the new Act [VERIFY: confirm the final section number in the Income-tax Act 2025 as enacted; the Bill mapped Section 46 to Clause 68], and other familiar section numbers have moved with it. The substance described above is unchanged, but every withholding certificate and assessment from FY 2026-27 onwards will cite the new Act.

If the company has surplus but you have chosen strike off, the surplus must be extracted before filing, typically as a dividend (with the same withholding) or through a capital reduction under Section 66 of the Companies Act 2013, which needs NCLT approval and its own timeline. Buyback has been through two regime changes: proceeds were taxed as dividend in the shareholder’s hands between 1 October 2024 and 31 March 2026, and from 1 April 2026 they are taxed as capital gains again, which makes buyback workable for partial extraction. Company law caps each buyback at 25% of paid-up capital and free reserves, so it cannot empty the company on its own. Subsidiaries with meaningful surplus usually still pick voluntary liquidation: the extraction is built into the process and has no cap.

FEMA and the actual remittance

The remittance of liquidation proceeds to the foreign parent is made through the AD Category-I bank under the Foreign Exchange Management (Remittance of Assets) Regulations 2016. The bank will ask for the liquidator’s or auditor’s certificate on how the remittable amount was arrived at, confirmation that all liabilities have been met or provided for, a no-objection or tax clearance from the income tax department, and confirmation that no legal proceedings are pending. The remittance itself rides on Form 15CA with a 15CB certificate from a chartered accountant covering the withholding position.

Close the FEMA loop after the money moves: final FLA return, closure of the entity’s records in the RBI FIRMS system through the AD bank, and an ECB-2 closure report if the company ever borrowed externally. If the Indian entity held overseas investments, the ODI disinvestment reporting closes through the same bank.

Route 3: closing a branch, liaison or project office

If your India presence is a branch office, liaison office or project office rather than an incorporated subsidiary, the Companies Act closure routes above do not apply. The closure runs through the designated AD Category-I bank under FEMA 22(R)/2016 and the RBI’s Master Direction on establishment of BO/LO/PO.

The application to the AD bank includes:

• Copy of the original RBI or AD bank approval for establishing the office, plus any sectoral regulator approval
• Auditor’s certificate showing how the remittable amount was arrived at, supported by a statement of assets and liabilities, confirming that all liabilities in India including gratuity and employee benefits have been met or provided for, and that no income from sources outside India remains un-repatriated
• No-objection or tax clearance from the income tax authorities
• Confirmation from the parent that no legal proceedings are pending in any Indian court and there is no impediment to remittance
• Report from the Registrar of Companies on the closure of the foreign company’s place of business, filed under the Companies (Registration of Foreign Companies) Rules 2014

The AD bank allows the remittance of the winding up proceeds and reports the closure to the RBI. For a branch office, remember that the BO was a taxable presence in India: file the final return, close the assessment trail, and obtain the tax NOC before expecting the bank to remit. Liaison offices are lighter because they cannot earn income, but the annual activity certificate trail must be complete. Project offices close on completion of the project through the same bank route.

Once the document pack is complete, bank-side processing typically runs 8 to 16 weeks. The pack is the hard part, not the bank.

What happens if you just stop filing

Some parents quietly abandon the Indian entity instead of closing it. This is the most expensive option on the menu.

Late filing of annual forms accrues an additional fee of ₹100 per day per form with no upper cap. After the company fails to file financial statements or annual returns for three consecutive financial years, every director is disqualified for five years under Section 164(2), which also poisons their directorships in other Indian companies. The ROC can strike the company off on its own motion, but a suo moto strike off gives directors none of the protection of a planned exit: liabilities survive under Section 248(7), the company can be restored for up to 20 years, and the parent’s name sits in the public record next to a defaulting entity. For a foreign group that may want to re-enter India, or whose other entities bank and raise capital here, that record is a real cost.

Timelines and costs at a glance

Item	Strike off	Voluntary liquidation	BO/LO/PO closure
Government fee	₹10,000 (STK-2)	NCLT and filing fees	Nil (bank charges apply)
Professional cost (typical market range)	₹0.5 to 1.5 lakhs	₹3 to 8 lakhs including liquidator and valuer	₹1 to 3 lakhs
Core timeline	3 to 6 months	90/270 days liquidator-side, 9 to 15 months end to end	2 to 4 months after documents ready
Surplus repatriation	Not through the process; extract before filing	Built into the process	Built into the process
Finality	Dissolution by ROC notice; restorable up to 20 years	NCLT dissolution order	RBI-reported closure

Professional cost ranges are market estimates for straightforward cases and move with complexity, asset count and litigation history.

Where exits get stuck

Five patterns from mandates we have run.

FEMA history surfaces late. A missed FC-GPR or FLA return from years ago is found by the liquidator or AD bank mid-process. Regularisation comes first, everything else waits. Audit the FEMA file before you start, not after.

The income tax no-objection. The Section 178 intimation and the tax clearance for remittance are where months disappear, especially if there is an open assessment, a pending refund, or unreconciled TDS credits. Get the tax file current and chase refunds before commencement.

Receivables and small balances. A struck-off or dissolving company cannot chase debtors. Collect receivables, write off the dead ones with board approval, and empty the balance sheet before the process starts.

Director paperwork across time zones. Strike off needs notarised and apostilled documents from every director. With directors across three countries, this alone has added a month to filings. Start the signature pack early.

Choosing strike off to save money. If the company has assets, surplus cash or any creditor history, strike off either fails scrutiny or leaves liability hanging. The cheaper route is the one that actually closes.

FAQs on Closing Indian Subsidiary

Can a foreign parent company close its Indian subsidiary?
Yes. The parent, as shareholder, approves the closure and the Indian entity executes it through strike off under Section 248 of the Companies Act 2013 or voluntary liquidation under Section 59 of the IBC. RBI approval is not separately required for the closure itself; FEMA compliance is handled through the AD bank.

How long does it take to close a company in India?
Strike off typically takes 3 to 6 months through C-PACE. Voluntary liquidation typically takes 9 to 15 months end to end, including the NCLT dissolution order and repatriation.

What does it cost to close an Indian subsidiary?
The government fee for strike off is ₹10,000. All-in professional costs typically run ₹0.5 to 1.5 lakhs for a strike off and ₹3 to 8 lakhs for a voluntary liquidation, depending on complexity.

What is the difference between strike off and winding up?
Strike off is an administrative removal of a defunct, nil-asset company from the register. Winding up, in the voluntary form under Section 59 of the IBC, is a full process with a liquidator, claims, distribution of surplus and an NCLT dissolution order. If there are assets or surplus to repatriate, winding up is the route.

Can a struck off company be revived?
Yes. The NCLT can restore a struck off company on an application by the company, a member, creditor or workman for up to 20 years under Section 252. Director and officer liability also survives strike off under Section 248(7).

How do we repatriate the remaining funds to the parent?
In a voluntary liquidation, the liquidator distributes surplus to shareholders after settling claims, withholding Indian tax on the deemed dividend portion, and the AD bank remits the proceeds under the Remittance of Assets Regulations against Form 15CA/15CB and a tax no-objection. In a strike off, funds must be extracted before filing, usually as a dividend or capital reduction.

Is RBI approval needed to close the subsidiary?
No separate RBI approval is needed for closing a wholly owned subsidiary. FEMA compliance runs through the AD Category-I bank, which reports the closure and processes the remittance. Branch and liaison office closures are also routed through the AD bank under the RBI’s framework.

How do we close a branch office of a foreign company in India?
Apply to the designated AD Category-I bank with the auditor’s certificate on the remittable amount and liabilities, the income tax no-objection, a no-litigation confirmation, the ROC closure report and the original establishment approval. The bank remits the winding up proceeds and reports the closure to the RBI.

What happens if we simply stop filing instead of closing?
Late fees of ₹100 per day per annual form accrue without cap, directors face five-year disqualification under Section 164(2) after three years of non-filing, and the ROC can strike the company off suo moto with director liability fully intact.

Does the new Income-tax Act 2025 change the tax on liquidation?
The substance is unchanged. The liquidation distribution rule moves from Section 46 of the 1961 Act to Section 68 of the Income-tax Act 2025, effective from 1 April 2026, so documents from FY 2026-27 onwards cite the new Act.

Closing a chapter properly

A clean India exit is mostly decided before the first form is filed: FEMA history reconciled, tax file current, employees settled, balance sheet emptied to match the route chosen. Done in that order, strike off and voluntary liquidation are predictable processes, not open-ended ones.

Treelife runs India entity closures end to end for foreign parents: route selection, the pre-filing cleanup, liquidator coordination, the tax and FEMA leg of repatriation, and branch or liaison office closures through the AD bank. If you are weighing an India exit, write to us with the entity’s last two years of financials and its FEMA filing history, and we will tell you which route fits and what it will take.