Expanding into India presents significant opportunities for Singapore-based companies, but it also brings a complex set of regulatory and audit requirements. Navigating statutory audit mandates is essential to ensure financial transparency and maintain smooth business operations. Whether functioning through wholly owned subsidiaries, branch offices, or joint ventures, these companies must understand India’s audit framework to meet legal obligations effectively.

This article outlines the key audit essentials, statutory obligations, and practical checklist to guide Singapore businesses in ensuring financial compliance through quality audit services in India.

Statutory Audit in India: A Mandatory Requirement

A statutory audit in India is a mandatory audit conducted under Section 139 of the Companies Act, 2013. All companies registered in India, including subsidiaries of foreign companies such as those from Singapore, are required to get their accounts audited by a Chartered Accountant who is a member of the Institute of Chartered Accountants of India (ICAI).

The statutory audit entails a thorough examination of the company’s financial records, including books of account, bank statements, invoices, contracts, tax returns, and supporting documentation. Its primary objective is to ensure that the financial statements present a true and fair view of the Indian entity’s financial position and performance.

A clear understanding of the audit’s scope and timelines is crucial for compliance, avoiding penalties, and facilitating smooth repatriation of profits and tax filings.

The Importance of Audit Services in India for Singapore-Based Companies

For Singaporean investors and parent companies, compliance is not just about fulfilling local laws—it is about building credibility, protecting investments, and gaining valuable insights. Engaging the right audit services in India for Singapore businesses provides several benefits:

Regulatory Compliance: Statutory audits help ensure adherence to key Indian laws such as the Companies Act, Income Tax Act, FEMA, and GST regulations, reducing the risk of legal and financial penalties.

Financial Accuracy: Audits validate that the Indian entity’s financial records are accurate, consistent, and aligned with actual business performance, enabling reliable reporting and decision-making.

Stakeholder Confidence: Audited financial statements play a vital role in strengthening stakeholder confidence by providing a transparent view of a foreign company’s financial health—building trust with Indian authorities, investors, shareholders, lenders, and business partners.

Fraud Detection & Risk Management: Statutory audits help uncover errors, fraud, and financial irregularities early, enabling timely corrective action and reducing operational risks.

Types of Audits Relevant to Singapore-Based Firms in India

Statutory Financial Audit

Applicable to all Indian entities, including wholly owned subsidiaries, joint ventures, and branch offices of Singaporean companies. This audit ensures the financial statements give a true and fair view of the company’s financial position.

Tax Audit

As per Section 44AB of the Income Tax Act, a tax audit is mandatory if:

• Businesses: A tax audit is mandatory if the total sales, turnover, or gross receipts exceed ₹1 crore in a financial year. However, if the cash transactions (both receipts and payments) are limited to 5% or less of the total transactions, the threshold increases to ₹10 crore. or
• Professionals: For professionals, a tax audit is required if gross receipts exceed ₹50 lakh in a financial year.

This applies to foreign companies with operational presence in India if these financial thresholds are crossed.

Transfer Pricing Audit

Required for Indian entities having international transactions or specified domestic transactions with associated enterprises, such as their Singapore parent companies or affiliates. The company must:

• Submit Form 3CEB (certified by a Chartered Accountant)
• Prepare and maintain a detailed Transfer Pricing Study Report
• File both by 31st October of the relevant assessment year under Section 92E of the Income Tax Act

Internal Audit

Mandatory under Section 138 of the Companies Act, 2013 for companies that meet specified criteria, such as:

• Listed companies
• Unlisted public companies with:
  • Turnover ≥ INR 200 crore
  • Or outstanding loans/deposits ≥ INR 100 crore
• Private companies with:
  • Turnover ≥ INR 200 crore
  • Or borrowings from banks or public financial institutions ≥ INR 100 crore
    Singapore companies operating as private limited subsidiaries in India may fall under this threshold and need to comply. Internal audits ensure operational efficiency, risk control, and regulatory compliance.

GST Audit (Voluntary)

While the mandatory GST audit by a Chartered Accountant has been abolished from FY 2020-21 onwards, companies with significant turnover still conduct voluntary GST reconciliations and assessments to avoid mismatches and ensure accurate GST filings. This is especially relevant for foreign firms with complex cross-border transactions.

Secretarial Audit

Mandated under Section 204 of the Companies Act, 2013, secretarial audit is applicable to:

• Listed companies
• Unlisted public companies with:
  • Paid-up capital ≥ INR 50 crore, or
  • Turnover ≥ INR 250 crore
    If a Singapore-based company has set up an unlisted public company in India that crosses the above thresholds, it must undergo secretarial audit conducted by a Practising Company Secretary. This audit ensures compliance with corporate governance laws, filing requirements, and secretarial standards.

Cost Audit

Required under Section 148 of the Companies Act, 2013 and the Companies (Cost Records and Audit) Rules, 2014, cost audits apply only to certain specified industries such as:

• Telecommunication
• Pharmaceuticals
• Cement
• Automotive
• Construction
  If the Indian subsidiary or joint venture of a Singapore company operates in these sectors and crosses specified turnover thresholds (usually INR 35 crore or more in revenue), cost audit by a Cost Accountant becomes mandatory.

Audit Checklist for Singapore Companies in India

An effective audit checklist for Singapore companies in India helps streamline the audit process and avoid last-minute compliance issues. Here is a consolidated checklist:

Pre-Audit Preparations

• Appoint a statutory auditor at the annual general meeting.
• Maintain accurate and updated books of accounts.
• Prepare financial statements in accordance with Schedule III of the Companies Act.
• Ensure proper reconciliation of TDS, GST, and other indirect taxes.

Compliance Documentation

• Board meeting and general meeting minutes.
• Statutory registers such as register of members, directors, and shareholding.
• Agreements and contracts with vendors, customers, and group companies.
• Transfer Pricing documentation if applicable.

Tax and Financial Filings

• Ensure timely filing of Income Tax Returns, TDS returns, and GST returns.
• Maintain supporting documentation for tax deductions, exemptions, and refunds.
• Calculate and provide for deferred tax liability/assets.

Group Reporting Alignment

• Convert Indian financials to Singapore FRS or IFRS for group consolidation.
• Provide management reports and MIS in line with the parent company’s reporting framework.

Common Challenges and How to Overcome Them

Complex Indian Regulatory Landscape

Foreign companies often struggle with frequent changes in laws and multi-layered compliance frameworks. The solution lies in partnering with experienced professionals like BCL India, who specialize in supporting foreign firms navigate Indian regulations seamlessly.

Transfer Pricing Complexity

Transactions between Indian subsidiaries and Singapore parents must comply with India’s transfer pricing laws. Inadequate documentation can lead to penalties and tax adjustments. A robust transfer pricing study and timely filing of Form 3CEB are essential.

Currency and Taxation Differences

Accounting for foreign exchange fluctuations, repatriation of profits, and tax deducted at source (TDS) on cross-border payments requires expert guidance. Tax optimization structures must be reviewed and approved by audit professionals.

Cultural and Operational Misalignments

Audit expectations and business practices may differ between Singapore and India. Ensuring that both head office and Indian team understand mutual expectations is key for effective collaboration.

Summing It Up

Singapore-based companies operating in India must treat audits not merely as a statutory requirement but as a strategic business function. Timely audits enhance transparency, build stakeholder trust, and ensure compliance. From statutory audits to transfer pricing and group reporting, each element supports the financial health of Indian entities. Partnering with experienced professionals ensures that audit services for Singapore businesses are accurate, compliant, and strategically aligned with their growth objectives.

Whether your business is entering India for the first time or scaling up operations, having a clear understanding of audit essentials will prepare you to succeed in one of the world’s most dynamic economies.