Loan to Overseas Subsidiary

We have given a loan to our wholly owned ovreases subsidiary in US $. We have also taken a forward cover to mitigate the forex risk on the same day when we had provided the loan. For the year ended March 31, 2011 what should be the scheme of entries and disclosure needs to ebe made by us.


Matter Urgent, Please advise



Tax Consultant

loan given to subsidy 


subsidy ac    dr    123

   to bank a/c              123

it will reflect in ur balance sheet as loan or advance to subsidy

and for the subsidy it will be a liability

in case of forex matter u have take the closing rate of 31 march 2011

if any increase or decrease reflect it to p&l account



Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA

An Indian company can give loan to foreign company .

Loan can be extended to an overseas entity only if there is already existing equity participation by way of direct investment, within the overall ceiling of 400% of the Indian party's net worth as on the date of the last audited balance sheet.


You have to report by way of ODI form through online to RBI . The physical copy has to be given to your authorised dealer and he will file it the same through online.



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