The accounting is rarely the hard part. The calendar is
An Indian subsidiary of a US group does not usually have a US GAAP problem. It has a reporting problem that happens to be expressed in US GAAP. The statutory accounts remain under Ind AS and are audited in India on the Indian statutory timetable. On top of that sits a reporting pack prepared to the parent's framework, to the parent's materiality, on the parent's close calendar, reviewed by the parent's auditor, and due before the Indian books have finished closing. Almost every difficulty in this arrangement comes from that overlay rather than from any accounting standard.
- Which US requirements actually reach an Indian subsidiary and which stop at the parent
- Why materiality set in the United States produces work that looks disproportionate in India
- The two ledger designs that work, and the one that does not
What reaches you, and what stops at your parent
This is the first thing worth establishing, because Indian finance teams routinely prepare for requirements that were never going to apply to them, and occasionally miss one that does.
Generally stops at the registrant
Filing obligations with the Securities and Exchange Commission, segment reporting, earnings per share, the auditor's attestation on internal control over financial reporting, and the disclosure requirements that attach to being a public business entity. These are obligations of the entity that is registered, not of every entity in its group.
Generally reaches you
The recognition and measurement requirements applied in the reporting pack, the group's materiality thresholds, the close calendar, the group auditor's requests, the internal control expectations the parent places on components in scope, and any documentation the parent needs to support its own certifications.
The distinction that catches people. Whether your Indian entity is a public business entity for US GAAP purposes is a defined question with a specific answer, and it is not simply whether the entity is listed. It governs which effective dates apply to your pack and whether certain disclosures are required at all. The answer is no, for a typical Indian subsidiary, and the reason is narrower than most people assume. Criterion (a) of the definition catches an entity whose financial statements or financial information are included in another entity's SEC filing, which looks fatal. But the definition closes by saying that an entity meeting it solely on that basis is a public business entity only for the purposes of the financial statements that are filed or furnished with the SEC. So where the subsidiary does no more than feed a consolidation reporting package to the parent, and no separate financial statements of the subsidiary are filed, it is not a public business entity for its own standalone accounts. It is an "all other entity" and takes the deferred effective dates.
The Codification says this in terms, and the two defined terms should not be run together. The Master Glossary's definition of an SEC filer closes: "Financial statements for other entities that are not otherwise SEC filers whose financial statements are included in a submission by another SEC filer are not included within this definition." A subsidiary swept into its parent's filing does not thereby become an SEC filer itself.
There is a trap here that catches Indian readers specifically. A separate limb of the definition catches an entity whose securities are not subject to contractual transfer restrictions and which is required by law to prepare US GAAP financial statements and make them publicly available. Filing financial statements with the Registrar of Companies under section 137 of the Companies Act 2013, which then become publicly inspectable, superficially resembles that. It is not, and it fails on both limbs independently: what is filed with the Registrar is Ind AS or the older Accounting Standards, not US GAAP; and a private limited company's articles must restrict the transfer of its shares under section 2(68), so the securities limb fails as well. Either failure alone is enough.
When the answer changes. If the subsidiary's own separate financial statements are filed with the SEC, typically as an acquired business or as an equity method investee, it is a public business entity, but only for those statements. The same entity can be one thing in the statements that go into the parent's annual report and another in the standalone accounts it gives its bank for the same period. That is the intended result rather than an anomaly.
What actually governs your work is a different question. Three layers have to be kept apart: the group reporting layer, where the parent's effective dates and disclosure requirements apply to the reporting package whatever your own status; the standalone US GAAP layer, where you are an "all other entity"; and the statutory Ind AS layer, which none of this touches. For most Indian finance teams the first layer is the one that determines the work, and the public business entity question never becomes load-bearing.
Why the pack asks for things that look disproportionate
Group materiality is set against the consolidated numbers, then allocated to components. An Indian subsidiary that is small in group terms receives a component materiality that can be a small fraction of what its own statutory auditor applies. The consequence is a schedule of adjustments that would be immaterial in the Indian accounts and are not immaterial in the pack, and a set of analyses at a level of granularity the Indian ledger was never designed to produce.
This is not a mistake by anyone. It is the arithmetic of consolidation. But it is worth explaining to an Indian finance team that has concluded the parent is being unreasonable, and it is worth raising with the parent where the cost of the granularity genuinely exceeds its value. Component materiality is negotiable more often than component finance teams assume.
Three ways to run two frameworks, one of which fails
Ind AS ledger plus a documented reconciliation. Usually right.
One book of account maintained under the statutory framework, with a standing schedule of adjustments to reach the group basis. Cheap, auditable in both directions, and the reconciliation itself becomes the documentation of every policy difference. Works well where the number of differences is stable.
Dual ledger in one system. Right where volume justifies it.
Parallel ledgers or a secondary valuation area within the same ERP, so both bases are maintained transactionally rather than reconciled periodically. Materially more expensive to set up, materially cheaper to run each close, and the right answer for an entity of size with many recurring differences.
Spreadsheet maintained by one person. Fails, eventually.
The pack is produced from a workbook that only its author understands, whose logic is undocumented, and which contains the accumulated adjustments of several years. It works, sometimes for a long time, and then that person leaves, or the auditor asks for the derivation of an adjustment first made four years ago. Almost every remediation engagement we take on in this area starts here.
What being foreign-owned does not change, and what it does
The reporting pack sits on top of a full set of Indian obligations that are unaffected by having a foreign parent.
Statutory accounts and audit
An Indian company prepares financial statements under the Companies Act 2013 and has them audited in India, regardless of who owns it. The applicable framework is Ind AS or the older Accounting Standards depending on which class the company falls into, which is a threshold test rather than a choice.
Transfer pricing
Transactions with the parent and with other group entities are related party transactions with documentation and reporting obligations attached, now to be worked through under the Income-tax Act 2025 which took effect on 1 April 2026. The thresholds did not change. The forms did, and that is what will affect your calendar. Master File Part B is still triggered only where consolidated group revenue exceeds INR 500 crore and the Indian entity's international transactions exceed INR 50 crore, or INR 10 crore where they relate to intangible property. Part A still has no threshold and is filed by every constituent entity. Country-by-Country reporting still applies above consolidated group revenue of INR 6,400 crore.
What changed is the numbering, because the Income-tax Rules 2026 cut the forms from 399 to 190. Form 3CEB becomes Form 48, and it is a materially heavier document: benchmarking detail, comparables, the range and comparability adjustments must now be disclosed in the form itself rather than held in the transfer pricing study. Master File moves from 3CEAA to Form 56 and from 3CEAB to Form 57; the Country-by-Country forms move from 3CEAC, 3CEAD and 3CEAE to Forms 58, 59 and 60.
Watch the transition, because it is the thing most likely to trip a November filing. The old forms continue to apply for FY 2025-26 on the same due dates. The new numbering applies from tax year 2026-27. So the cycle falling due in November 2026 is still on the old forms.
One genuinely new option is worth knowing about if your related-party flows are stable: the Act introduces an elective three-year block determination of arm's length price, where a determination made for a base year applies to similar transactions for the two following years.
Audit trail and record keeping
Indian rules on maintaining an edit log in accounting software apply to the company's own books. A group reporting pack produced outside those books does not discharge that obligation, and does not substitute for it.
Exchange control
Foreign investment into the Indian entity, and any payment out of it by way of dividend, royalty or service fee, carries its own reporting under the exchange control framework. This is separate from both the accounting and the tax, and it is the one most often discovered late.
Where this sits
US GAAP Advisory
The overview page, with every guide listed and the situations each one answers.
Converting to US GAAP
Guide 2. Where US GAAP and Ind AS or IFRS genuinely part company, and what that does to the numbers.
Revenue, Leases and Stock Compensation
Guide 3. ASC 606, ASC 842 and ASC 718, the three topics an Indian subsidiary meets first.
Business Combinations, Consolidation and Goodwill
Guide 4. ASC 805, ASC 810 and ASC 350, including the variable interest model and the private company alternatives.
US Listing Readiness
Guide 5, in preparation. Foreign private issuer status, filer categories, internal control over financial reporting, and what the SEC has proposed to change.
Send an enquiry
If your group pack is late every quarter, the cause is usually structural rather than a matter of effort. Describe the current process and we will tell you which of the three designs above you are actually running. A partner replies within one business day.
This page is general information, not professional advice. US GAAP, the rules of the Securities and Exchange Commission, and the Indian law that sits alongside them all change frequently, and several of the United States positions described on these pages were at proposal stage rather than settled when this page was written. The Income-tax Act 2025 replaced the 1961 Act with effect from 1 April 2026. Take professional advice before acting on anything on this page. We are happy to be that adviser, but we do not act on a web page, ours or anyone else's, without one.