An Indian subsidiary that bills its foreign parent or group companies for services is a service exporter, and from 1 October 2026 it files a monthly Export Declaration Form with its AD bank. Intra-group invoices are declared exactly like third-party ones: one Part 2B row per invoice, filed within 30 days from the end of the invoice month, with full value realised within 9 months. What makes subsidiaries different is the billing pattern: cost-plus invoices, year-end true-ups and a parent that may be tempted to pay "when convenient".
Key takeaways
- Group service centres, captive development units and global capability centres billing a foreign parent should assume the EDF applies.
- Cost-plus or monthly service-fee invoices each become a Part 2B row on the EDF of their invoice month.
- Transfer pricing true-ups change the value of past invoices. Plan in advance how credit and debit notes will be shown to your bank.
- Group payment habits do not change FEMA timelines. Realisation is still 9 months from each invoice date.
- For GST, check the condition that supplier and recipient are not merely establishments of a distinct person. A subsidiary and a branch are treated differently.
Why subsidiaries sometimes think the EDF is not for them
Finance teams at Indian subsidiaries often see intra-group billing as an internal transfer, closer to a journal entry than a sale. Under FEMA it is a service export like any other. The parent is a recipient located outside India; the subsidiary is a supplier in India; the money must come in and be matched.
Software development centres had SOFTEX in the past. That is gone, and software and other services now go on the same single EDF. A captive engineering centre, a shared-services unit doing finance and HR, and a research team billing for R&D services all follow the same route. If the subsidiary is an SEZ unit, it files with the SEZ Development Commissioner instead of the bank.
Common intra-group billing models
| Model | How the invoice works | EDF considerations |
|---|---|---|
| Cost-plus monthly | Actual costs plus an agreed mark-up, invoiced monthly | One row per month; amounts vary month to month |
| Fixed fee with annual true-up | Fixed monthly fee, adjusted at year end to arm's-length result | True-up creates credit or debit notes against earlier rows |
| Project-based | Invoices per project or milestone | One row per invoice; may involve several group entities |
| Multiple group recipients | Separate invoices to parent, regional hubs, sister companies | Each recipient and country on its own row |
Our article on intra-group cross-charges and cost-plus billing goes deeper into how mark-ups affect invoice values.
Worked example: a GCC billing three group entities
Aravalli Tech Services Pvt Ltd, Gurugram, is a subsidiary of a German industrial group. It provides software engineering and finance shared services to three group entities on a cost-plus basis.
October 2026 invoices:
| Row | Recipient | Country | Service | Currency | Amount | SAC |
|---|---|---|---|---|---|---|
| 1 | Parent AG | Germany | Software engineering | EUR | 485,000 | 998314 |
| 2 | Parent AG | Germany | Finance shared services | EUR | 62,000 | 998222 |
| 3 | US Inc | USA | Software engineering | USD | 138,000 | 998314 |
| 4 | Asia Pte Ltd | Singapore | IT support | SGD | 41,000 | 998313 |
Together these come to roughly ₹6.7 crore for the month.
The October EDF, due 30 November 2026, needs care, since rows 1 and 3 are software and rows 2 and 4 are other services. Ask your bank how it wants a mixed Software/Services month presented, because field 1.1 asks for a single type of export (Goods, Services or Software). Some exporters file two EDFs in such a month.
Every row is above ₹10 lakh, so closure in EDPMS needs invoice, payment evidence and matching instructions for each. Aravalli's treasury team sends the bank a matching schedule whenever the parent pays several invoices in one remittance.
Year-end true-ups and the EDF
At the end of the financial year, the transfer pricing team may find the subsidiary earned more or less than the arm's-length range. The usual fix is a debit note (more money due from the parent) or a credit note (refund or reduction).
From an EDF point of view:
- A debit note increases the amount the parent owes. Ask your bank whether it should be declared as a fresh row in the month it is raised or linked to the original invoices.
- A credit note reduces what is realisable on earlier invoices. Tell the bank, with the credit note, when you ask it to close those entries at the lower value.
There is no single published method for every bank, so agree the approach with your AD bank before the year-end adjustments are booked. This is general information, not legal or tax advice; transfer pricing and FEMA interact in ways your CA should review.
Realisation discipline inside a group
Parents sometimes pay subsidiaries quarterly, or net intra-group balances in a group treasury cycle. FEMA does not bend to group convenience. Each invoice must be realised within 9 months of its date, and the AD bank can extend only on a reasoned request.
If your group wants to set off receivables against amounts the subsidiary owes the parent, that is a separate FEMA matter. Read our piece on set-off of export receivables against import payables and talk to your bank before anyone books a netting entry.
GST: the distinct-person condition
For export of services to be zero-rated under Section 16 of the IGST Act, Section 2(6) requires, among other conditions, that the supplier and recipient are not merely establishments of a distinct person. An Indian subsidiary is a separate legal entity from its foreign parent, which is why subsidiary-to-parent billing is commonly treated as export. A branch or liaison office of a foreign company is a different case. Confirm your structure with your CA.
Most subsidiaries export under LUT (Form GST RFD-11) with the wording "Supply meant for export under LUT without payment of IGST" on each invoice. The EDF does not change GST or income-tax obligations.
Frequently asked questions
Does an Indian subsidiary billing its parent need to file the EDF?
Yes, assume so. Intra-group service invoices to a foreign parent or group company are service exports under the 2026 regulations. File one EDF per month with your AD bank, or with the Development Commissioner if you are an SEZ unit.
Can one EDF cover invoices to several group companies?
Yes. One EDF per month can cover service exports to one or more recipients. Each invoice, whether to the parent or a sister company, is its own row in Part 2B with its own country.
How do transfer pricing true-ups affect the EDF?
True-ups usually create credit or debit notes against earlier invoices. Agree with your AD bank how these will be declared and how affected EDPMS entries will be closed, ideally before you book the adjustment.
Can the parent pay once a year?
FEMA requires full realisation within 9 months of each invoice date for services (12 months for rupee invoices). Annual payment would breach that for most invoices unless the bank grants extensions on a reasoned request.
Should a GCC file software and services on the same EDF?
Field 1.1 asks for the type of export, and a month may contain both. Ask your AD bank whether it prefers one form or separate Software and Services forms for that month.
Bottom line
For an Indian subsidiary, the EDF turns intra-group billing into a monthly, bank-visible record, so clean invoices and timely group payments matter. Build your monthly form with the free EDF form generator and plan year-end adjustments with your bank early.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.