Separate Registration Requirement

• Each subsidiary must obtain a separate GST registration in every state where it operates.
  
• Even if wholly owned by the parent, it is treated as a distinct entity under GST law.
  
• Subsidiaries cannot use the GST registration of the parent or other group companies.
  
• Separate GSTINs ensure accountability and independent tax compliance.
  
• Branches of the subsidiary in different states must also register independently.
  

Taxability of Intercompany Transactions

• Transactions between the parent company and the subsidiary, or between subsidiaries, are taxable under GST.
  
• Supplies of goods or services, even without consideration, may be taxable if done between related or distinct persons.
  
• Inter-unit billing is necessary, and invoices must be raised with applicable GST.
  
• Input tax credit (ITC) can be claimed by the recipient subsidiary if all conditions are met.
  
• Failure to charge GST on such transactions may result in demand, penalties, and interest.
  

Input Tax Credit (ITC) Management

• Subsidiaries can claim ITC on goods and services used in the course of business.
  
• Proper documentation such as tax invoices, payment records, and vendor compliance is required.
  
• ITC is subject to matching with GSTR-2B and timely filing of returns.
  
• Any ineligible ITC must be reversed with interest.
  
• ITC cannot be cross-utilized between two subsidiaries unless they are part of the same registration (e.g., same state with multiple units).
  

Compliance and Return Filing

• Subsidiaries must file monthly or quarterly returns like GSTR-1, GSTR-3B, and annual GSTR-9.
  
• Non-filing or delay attracts late fees, interest, and blockage of ITC.
  
• Reconciliations between books, returns, and vendor filings are essential for accuracy.
  
• Compliance must be maintained even during periods of nil turnover.
  
• E-invoicing and e-way bill generation may be applicable based on turnover thresholds.
  

Impact on Pricing and Cash Flow

• GST impacts the pricing structure, especially for B2B subsidiaries, due to input credit mechanisms.
  
• Working capital is affected by GST payments before actual realization from customers.
  
• Credit availability on capital goods and services helps reduce tax burden over time.
  
• Subsidiaries in exempted sectors may face accumulated input taxes that cannot be claimed.
  
• Proper tax planning and compliance reduce costs and improve margins in the long term.