INR reporting requirement for USA subsidiary of Indian company

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Hello Everyone,

I need guidance on reporting requirements for an Indian company having a foreign subsidiary.

We have an Indian company, and under this Indian company we have a USA subsidiary company. The USA subsidiary maintains its books in USD, and USD is its primary/default currency.

Our CA has suggested that for the USA subsidiary, we should also report/maintain all transactions in INR because of Indian regulatory requirements.

I want to understand the correct compliance position:

  1. Under the Companies Act, 2013, Schedule III, AOC-1, Ind AS / AS, FEMA or ODI rules, is it mandatory for a foreign subsidiary to maintain or report transaction-level INR details?
  2. Or is it sufficient to maintain the USA subsidiary’s books in USD and translate the trial balance / financial statements into INR for Indian parent company consolidation and statutory reporting?
  3. For consolidation in India, what is the usual practical approach followed by companies?
    • Monthly INR-translated TB
    • Year-end translated financial statements
    • Dual-currency transaction-level reporting
  4. If transaction-level INR reporting is required, which specific section, rule, form, or accounting standard requires it?

My current understanding is that Section 129(3), Schedule III, AOC-1, and Ind AS 21 / AS 11 mainly require consolidation and INR presentation/translation. However, I am not able to identify any direct requirement to maintain every USA transaction in INR also.

Requesting members to share practical guidance and relevant legal/accounting references.

Replies (2)
Quick Summary
Foreign subsidiary can maintain books in functional currency like USD. Indian laws do not require transaction level INR reporting. INR translation is needed only for consolidation and reporting by the Indian parent under applicable standards.

No, it is generally not mandatory for a USA subsidiary to maintain every transaction in INR under Companies Act, Schedule III, AOC-1, Ind AS/AS, FEMA or ODI rules. The USA subsidiary can maintain its books in USD, being its functional/default currency, and the Indian parent should translate the trial balance / financial statements into INR for consolidation and statutory reporting.

If anyone states that transaction-level INR books are mandatory, they should quote the exact section/rule/standard requiring it. In normal cases, the requirement is for INR presentation/translation for Indian parent reporting, not dual-currency transaction-level accounting by the foreign subsidiary.

Thank you for your help. This gives me more clarity.

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