Rules 4 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A foreign company with a place of business in India must account for that business. Rule 4 says what the financial statement contains, which documents go with it (including three statements on related parties, repatriated profits and fund transfers) and when it is delivered. Rule 5 says who audits it. This article states them as amended up to G.S.R. 491(E) dated 12 August 2024 (in force 9 September 2024) per the MCA e-book; later amendments should be checked. Form FC-3, the form used with the financial statement, is named in rule 6 and explained in our article on rules 6 to 8. For the filings, see our foreign company filing service.
A foreign company prepares a financial statement of its Indian business operations in line with Schedule III or as near as possible, with the latest consolidated financial statements of the parent and three statements: related party transactions, repatriation of profits and transfer of funds. The documents are delivered to the Registrar within six months of the close of the financial year; the Registrar may extend this by not more than three months for special reason on written application. The accounts are audited by a practising Chartered Accountant in India (or a firm or LLP of practising chartered accountants).
Rule 4(1): the financial statement and what goes with it
Every foreign company prepares a financial statement of its Indian business operations, in accordance with Schedule III or as near thereto as may be possible, for each financial year, including:
- the documents required to be annexed under Chapter IX of the Act (Accounts of Companies);
- copies of the latest consolidated financial statements of the parent foreign company, as submitted by it to the prescribed authority in the country of its incorporation under the law in force there; and
- other documents required to be annexed under sub-rule (2).
Two provisos apply to item 2. If the documents are not in English, a certified translation in English is annexed. And where the Central Government has exempted or specified different documents for any foreign company or class of foreign companies, the documents so specified are submitted. For translations and certification, see our article on rules 9 to 12.
Rule 4(2): three statements to attach
| Statement | Contents as printed |
|---|---|
| (a) Related party transactions | (i) the name of the person in India deemed a related party (within section 2(76)) of the foreign company, of its subsidiary or holding company, or of any firm in which they are partners; (ii) nature of relationship; (iii) description and nature of transaction; (iv) amount during the year with opening, closing, highest and lowest balance and provisions made; (v) reason for the transaction; (vi) material effect on both parties; (vii) amount written off or written back in respect of dues; (viii) a declaration that the transactions were carried out at arm's length; (ix) any other details needed to understand the financial impact. |
| (b) Repatriation of profits | (i) amount repatriated during the year; (ii) recipients; (iii) form of repatriation; (iv) dates; (v) details if repatriated to a jurisdiction other than the beneficiary's residence; (vi) mode; (vii) approval of the Reserve Bank of India or any other authority, if any. |
| (c) Transfer of funds (including dividends) | For any fund transfer between the place of business in India and any other related party of the foreign company outside India (including its holding, subsidiary and associate company): (i) date; (ii) amount transferred or received; (iii) mode; (iv) purpose; (v) approval of the RBI or any other authority, if any. |
These are disclosure statements; the rule does not say how any figure is to be computed. The declaration in (a)(viii) is a statement of fact by the company, so the company should have the transfer pricing or other support on file before signing it. For tax questions, see our income-tax guides.
Rule 4(3): six months, with a three-month extension
The documents referred to in the rule are delivered to the Registrar within six months of the close of the financial year of the foreign company to which they relate. A proviso says the Registrar may, for any special reason, and on written application by the foreign company, extend the period by not more than three months. The proviso lets the Registrar extend; it does not entitle the company to an extension, so the application should state the reason and be made before the six months end. The Registrar to whom documents are delivered is the one with jurisdiction over New Delhi (rule 8), covered in our article on rules 6 to 8.
Rule 5: audit
Sub-rule (1). Every foreign company gets its accounts for its Indian business operations, prepared under section 381(1)(a) and rule 4, audited by a practising Chartered Accountant in India or a firm or limited liability partnership of practising chartered accountants. The Explanation says "Chartered Accountant", "firm" and "limited liability partnership" have the meanings given in the Act and the Limited Liability Partnership Act, 2008.
Sub-rule (2). The provisions of Chapter X (Audit and Auditors) and the rules under it, as far as applicable, apply with the necessary changes to the foreign company. The rule does not list which provisions apply; that depends on the Act and the Companies (Audit and Auditors) Rules. Our post on section 381 covers the Act's side.
Example
Helix Analytics Ltd., incorporated abroad, runs a branch in India with a financial year ending on 31 March. It prepares accounts of the Indian branch in the Schedule III style, attaches its parent's latest consolidated financial statements (with an English translation, as they are in another language), and the three statements. A practising chartered accountant in India audits the branch accounts. The documents are due to the Registrar within six months of 31 March. If an unforeseen reason prevents that, the company applies in writing to the Registrar for an extension of up to three months.
Need help with foreign company accounts and FC-3?
The Indian branch accounts, the parent's consolidated statements, the three statements and the audit have to be ready together. For help, see our foreign company filing service, or read our guide on the FC-3 accounts filing.
Key takeaways
- Accounts of the Indian business follow Schedule III or as near as possible.
- The parent's latest consolidated financial statements are annexed, with a certified English translation if needed.
- Three statements go with them: related party transactions (with an arm's length declaration), repatriation of profits and transfer of funds.
- Six months from the close of the financial year to deliver; the Registrar may extend by up to three months.
- The audit is by a practising Chartered Accountant in India, or a firm or LLP of such accountants.
Read next
- Rules 1 to 3: FC-1 and particulars of directors
- Rules 6 to 8: places of business, FC-4 and delivery
- FC-3: foreign company annual accounts filing guide
- Section 381: accounts of a foreign company
Disclaimer: Based on the Companies Act, 2013 rules named above as consolidated in the MCA e-book (consulted on 3 October 2026), with the later notifications the article names. Later amendments, fees, forms and the Companies Act, 2013 provisions referred to should be checked. This article is general information, not legal advice; check the official text before acting.