Form 5471 for US companies with an Indian subsidiary
The filer categories, the US GAAP and calendar-year work behind the numbers, the 2025 US tax law changes, how it differs from Form 5472, and the penalties.
Summary
- A US parent owning more than 50% of an Indian subsidiary files Form 5471 every year, usually as a Category 4 and 5 filer.
- The Indian accounts must be restated to US GAAP for the parent's calendar year, with US tax measures such as earnings and profits.
- Penalties start at $10,000 per form per year even with no tax due, and a missing form can keep the whole return open to assessment.
Form 5471 is the information return a US person files to report on a foreign corporation it owns or controls. A US parent attaches it to its income tax return and files both by the same date, including extensions. For a calendar-year company that is 15 April, or 15 October with a Form 7004 extension.
Which filer category applies
Form 5471 sorts filers into numbered categories, and the IRS's 2026 draft of the form adds a new one. A US company owning more than 50% of its Indian subsidiary usually falls into the two most demanding:
- Category 4: a US person that controls the foreign corporation, owning more than 50% of its vote or value. Its filers complete the most schedules, including Schedule M for related-party transactions.
- Category 5: a US shareholder of a controlled foreign corporation (CFC). An Indian subsidiary is a CFC if its 10% US shareholders together hold more than 50% of the vote or value on any day of its year. Exactly 50% is not enough.
Category 3, for a US person acquiring or disposing of a 10% stake, also catches the parent in the year it sets up or buys the subsidiary. Categories 1 and 2 cover section 965 history and US officers and directors.
What the form reports
- Income statement (Schedule C, in rupees and dollars) and balance sheet (Schedule F, in dollars), both restated to US GAAP
- Shares, shareholders and ownership changes (Schedules A, B and O)
- Related-party transactions, including with the US parent, at the year's average exchange rate (Schedule M)
- US tax measures such as earnings and profits (Schedule H) and tested income (Schedule I-1), in the subsidiary's functional currency
Those measures drive the parent's yearly CFC inclusion, and none comes straight from Indian books. The pricing behind Schedule M is covered in our US–India transfer pricing guide and should follow the intercompany services agreement.
The April to March problem
Indian companies keep books for a year ending 31 March. Section 898 of the Internal Revenue Code makes a CFC's US tax year match its majority US shareholder's, usually the calendar year. The figures therefore run January to December, three months from one Indian year and nine from the next.
Indian books in rupees, for a year to 31 March, are where the Form 5471 work starts.
The One Big Beautiful Bill Act of July 2025 repealed the old escape, a US year ending one month early on 30 November, for years beginning after 30 November 2025. If your subsidiary used it, ask your adviser how the transition rule applies.
What the 2025 US tax law changes
The same Act rewrote the CFC rules for tax years beginning after 31 December 2025. GILTI became "net CFC tested income", and the rules on who includes the income changed. The IRS's draft 2026 Forms 5471, 8992 and 8993 reflect this. For a calendar-year subsidiary, the 2026 form, filed in 2027, is the first under the new rules.
Form 5471 or Form 5472?
Form 5471 reports on a foreign corporation a US person owns. Form 5472 is filed by a US corporation in which one foreign person owns 25% or more of the vote or value, to report its related-party transactions.
A US parent can owe both if a foreign founder, investor or parent company holds 25% or more of it. The Form 5472 penalty is $25,000 per form per year, with no cap on further amounts after notice.
What a missed form costs
The section 6038 penalties apply whether or not any US tax is due.
What a missing or incomplete Form 5471 costs
| Failure | Consequence |
|---|---|
| Form not filed, or incomplete | $10,000 per form for each annual accounting period |
| Still not filed 90 days after an IRS notice | A further $10,000 for each 30 days or part of 30 days, up to a further $50,000 ($60,000 in all) |
| Form not filed, or incomplete | Foreign tax credits cut by 10%, plus 5% for each three months the failure continues more than 90 days after notice, reduced by the dollar penalties above |
| Form missing or materially incomplete | Time limit to assess the whole return stays open until three years after filing; with reasonable cause, only the related items |
FBAR covers the Indian accounts too
A US parent has a financial interest in the accounts of any corporation it owns more than 50% of. So its FBAR (FinCEN 114), required when foreign accounts total more than $10,000 at any point in the year, includes the Indian subsidiary's accounts. It is due on 15 April, with an automatic extension to 15 October.
Three checks before you file
- Match India's numbers. Schedule M should reconcile to the related-party figures in the Indian Form 3CEB for the overlapping months.
- Check the period. The figures should cover the US tax year, not the Indian year to 31 March.
- Check every entity. Each foreign corporation in the group needs its own form, including new ones. A dormant one still needs a form, though a summary filing may be allowed.
Questions
Who must file Form 5471?
US persons that own 10% or more of, or control, a foreign corporation, and in some cases its US officers and directors. That includes a US company owning more than 50% of an Indian subsidiary.
What are the Form 5471 filer categories?
Numbered categories that set which schedules a filer completes. A majority US parent is usually in Categories 4 and 5, and the IRS's 2026 draft adds a new one.
When is Form 5471 due?
With the US parent's income tax return, including extensions: 15 April for a calendar-year company, or 15 October if extended.
What is the penalty for not filing Form 5471?
$10,000 per form per year, plus up to a further $50,000 after an IRS notice. The parent's return can also stay open until three years after the form is filed, or only the related items if there was reasonable cause.
What is the difference between Form 5471 and Form 5472?
Form 5471 reports on a foreign corporation a US person owns or controls. Form 5472 is filed by a US corporation in which one foreign person owns 25% or more, for its related-party transactions.
Does a dormant subsidiary need a Form 5471?
Yes, though a summary filing of the first page may be allowed under Rev. Proc. 92-70. Confirm the dormancy conditions with your adviser.
To have the US and Indian filings checked against each other, book a Corridor Health Check with our US–India cross-border desk.
Current as at October 2026. General information, not tax advice. Check the current IRS instructions before filing: the final 2026 instructions usually appear in December or January.
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