Branch office incorporation in India

Branch office implies an establishment set up by parent company to perform the similar business operations at different locations. One of the common strategies of the Companies to expand their business at the national or international level is to set up branches, at different places. Branches are a part of the parent organization, which are opened to perform the same business operations as performed by the parent company to increase their reach. On the other hand, Subsidiary Company is understood as the company whose controlling interest is fully or partially held by another Company.

Legal forms in which a foreign company can set up its establishment in India are :

For establishment of Branch office of foreign Company in India,we have to follow provisions of two Acts :

Point of Difference	Branch Office	Subsidiary Company
Approving Authority	Reserve Bank of India and Ministry of Corporate Affairs	Ministry of Corporate Affairs
Registration Requirements	Net Worth of Foreign company must be above $100000 The Foreign Head Office shall have a profitable track record of 5 years	Minimum No. of Directors: 2 in case of Private and 3 in case of Public; Minimum No. of shareholders: 2 in case of Private and 7 in case of Public; Registered Office: The Registered office shall be situated within India in any State; Name: The name of the Subsidiary Company may or may not be same as of its Holding Company.
Registration in India	Companies incorporated outside India engaged in different activities can setup a BO in India with specific approval of Reserve Bank of India (RBI).	An incorporated entity formed and registered under Companies Act, 2013. It is generally a private limited company for a closely held shareholding. It is distinct and legal entity apart from its shareholders.
Liabilities	Liabilities extend to Parent Organization.	Liabilities limited to Subsidiary Company.
Reports to	Head office	Holding Company or Shareholders
Business Activities	Branch conducts the same business as of parent organization	Subsidiary may or may not conduct same business as parent organization
Separate Legal Entity	Yes, as far as MCA filings and Taxation are concerned.	Yes
Ownership	The parent organization has 100% ownership interest in the branch	The parent organization has more than 50% ownership interest in the subsidiary
Whether invoicing from India allowed?	Yes	Yes
Renewal of registration required?	Generally, no but in some cases RBI gives approval for 2-3 years.	No
Exchange Control	Outflow: Remittance of profits after payment of tax Inflows: Allowed as transfer from HO	Outflow: allowed as Dividend, Royalty, service or technical fee Inflows: Allowed as Equity or Loans
Whether expatriates allowed working on payrolls of rolls of Indian entity?	Yes	Yes
Can any number of projects be executed?	Yes	Yes
Prior Approval from Reserve Bank of India	Yes	No
Payment of Dividend to its shareholders	No	Yes
Submission of Annual Certificate with RBI	Yes	No
Conducting Board Meeting and Members Meeting on yearly basis	No	Yes
Annual Compliances with ROC and Income Tax	Yes	Yes

Branch office

pros

geographic expansion
simple establishment
less compliance cost
easy maintenance

cons

limited scope of business
not a legal entity
liabilities borne by parent company
restrictive business activities

Subsidiary company

pros

separate legal entity
simple establishment
could also be engaged in different activity as that of its holding company

cons

easy maintenance
minimum capital required
higher compliance cost
limited freedom of management

Branch office on 'Stand Alone basis" in India

Stand Alone Branch Offices are isolated and restricted to the Special Economic Zone (SEZ) alone and no business activity/transaction is allowed outside the SEZs in India, which include branches/subsidiaries of its parent office in India.
No approval is necessary from RBI for a company to establish a branch/unit in SEZs to undertake manufacturing and service activities subject to specified conditions.

Liaison Office/Representative Office

A Liaison Office could be established with the approval of the government of India. The role of Liaison Office is limited to collection of information, promotion of exports/imports and facilitate technical/financial collaborations.
Liaison office cannot undertake any commercial activity directly or indirectly.

Project Office

Foreign companies planning to execute specific projects in India can set up a temporary project/site offices in India for carrying out activities only relating to that project. The Government of India has now granted general permission to foreign entities to establish project offices subject to specified conditions.

Features of Branch Office of Foreign Company in India

The name of indian Branch office shall be same as parent company.

The governing body for the Branch office License is Reserve Bank of India.

It is suitable for foreign Companies looking to setup a temporary office in india and not interested or not planning to have long term plans for the indian operations.

Normally, the Branch Office should be engaged in the activity in which the parent company is engaged.

The Branch office does not have any ownership; it is just extension of the exiting company in the foreign country. Spreading its business to diverse locations and thus increasing the customer base.

All the expanses of the Branch office are met by the head office, if it does not have the revenue from indian operations.

Important Points to Consider Before Applying for Branch Office Registration

A foreign company can freely operate in India by registering a branch by obtaining approval of the reserve bank of India through AD category 1 Banker and further registration of the foreign company with the ROC. Such a branch office is treated as a foreign entity and is subject to higher Income Tax @ 40%.

The eligibility requirements for registration of a branch of a foreign corporation is explained in the below section, the application to establish is filed with to the AD Category 1 Bank, provided the applicant foreign entity is having sound financial track record of the past 5 years and in case the applicant is a subsidiary and not eligible, then the parent company or group company may remove the defect by issuing a Letter of Comfort (LOC).

Net Worth Requirement

The foreign parent company must have a profitable track record of five years in a row with a net worth of more than $ 1,00,000/- duly supported by financial statement.

Profit Remittance Allowed

The profits of the branch office are freely allowed to be remitted from India to its parent company after payment of applicable taxes, after the audit if books of A/c.

Name of Branch Office

The name must be the same as that of the foreign parent company, and for each new office of such a branch office, a fresh approval is required from RBI with justification.

Taxation in Indian profits

The income tax on the profits of the branch office of foreign entities in India is 40% plus surcharges as applicable. GST is applicable to the supply of goods or services.

Prohibited activities by the Branch

Retail Trading activities of any nature is not allowed for a Branch Office in India

A Branch Office is not allowed to carry out manufacturing or processing activities in india, directly or indirectly

Profits earned by the Branch Offices are freely remittable from India, subject to payment of applicable taxes.

Conditions for setting up a branch office

Foreign Company can open branch office in India due to several reasons; Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to set up Branch Offices in India with specific approval of the Reserve Bank. Such Branch Offices are permitted to represent the parent / group companies and undertake the following activities in India subject to few Conditions

Businesses that would like to set up a branch office in India need to meet the following conditions:

The applicant company must be a body corporate incorporated outside India;
The name of the Indian branch office must be the same as the parent company (if the branch office does not have revenue from India operations, its expenses must be met by the head office);
The net worth of the branch office must not be less than US $100,000; and
The parent company should have a profit making record in the immediately preceding five financial years in the home country.

In cases where the applicant foreign entity does not meet the financial criteria, the parent company may issue a Letter of Comfort (LoC), given the company satisfies the prescribed criteria for net worth and profit.

Procedure by which Branch Offices are permitted to remit profit outside India

Branch Offices are permitted to remit outside India profit of the branch net of applicable Indian taxes, on production of the following documents to the satisfaction of the Authorized Dealer through whom the remittance is affected:

a. A Certified copy of the audited Balance Sheet and Profit and Loss account for the relevant year;

b. A Chartered Accountant’s certificate certifying –

The manner of arriving at the remittable profit
That the entire remittable profit has been earned by undertaking the permitted activities
That the profit does not include any profit on revaluation of the assets of the branch.

Documents Required For Branch Office Setup in India to be submitted to Authorized Dealer Category-I Banks

Document from Mother/Parent Company

Copy of certificate of incorporation attested by notary public of the country of registration. If the certificate happens to be in a language other than English, same me be translated, notarized and attested by Indian Embassy / Consulate in the home country.

Memorandum of Association (MOA) and Articles of Association (AOA)

List of Details in respect of Directors/Key Executives

Details of shareholders of the applicant company

Net worth certificate attested by Certified Public Accountant (CPA). Also, Certificate by Chartered Accountant highlighting the profit / loss details financial year wise.

Audited financial statement of the last Five preceding years

Banker’s Report from the applicant’s banker in the host country

Request letter from the principal officer of the parent company stating the proposed activity and facts about the company to RBI.

Duly filled-in FNC-1 -Three copies

Details (Name, Address, Phone number and e-mail id) of authorized person in the home country.

Details of bankers in the country of origin along with account number

Commitment to the effect that it will remain open to opinion sought from its banker by Reserve Bank of India.

Expected funding level

Details related to local address and number of persons likely to be employed

Applicants who do not satisfy the criteria of eligibility but are subsidiaries of other company, must submit letter of comfort from the parent company.

Documentation for the Company Registered Address

Colour Photo - 5

Passport - 5 Copy

Business Visa Copy with Immigration Stamp of arrival

National Identity Card - 5 Copy

Latest Address Proof (Bank Statement/ Electricity/ Water Bill/ Phone Bill)

Letter of authority from the parent company in favor of Local Representative / Board Resolution Appointing the Authorised Representatives i.e. Board Resolutions authorizing concerned person to file form FNC

Power of Attorney in the name of AR (Authorised Representatives )

Procedures for Setting up a Branch Office in India by a Foreign Company

Approval from RBI– Permission for setting up branch offices is granted by the Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai (note – Not by the RBI offices in respective state capitals)

Track Record of the company -Reserve Bank of India considers the track record of the applicant company, the activity of the company proposing to set up office in India as well as the financial position of the company while scrutinizing the application. (Note – for setting up a company, there are no criteria of checking the track record or financial position of the parent company)

The applications from such entities in Form FNC (Annex-1) will be considered by Reserve Bank under two routes: The application in the prescribed form (Form FNC) should be submitted to the RBI through the Authorized Dealer bank.

Currently as per the RBI Requirement the application for the branch office and BRANCH office is submitted through the Authorized dealer. The authorized dealer means the various institution having banking licenses.
The application in the prescribed form (Form FNC) should be submitted to the RBI.

Things Required To Be Done Along With Approval From RBI:

Acquiring property in India - Branch Offices of a foreign entity are permitted to acquire property for their own use and to carry out permitted/incidental activities but not allowed to buy for the purpose of renting it out Entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, Bhutan or China are not allowed to acquire immovable property in India even for a Branch Office. These entities are allowed to lease such property for a period not exceeding five years.
Annual Reporting by Branch Office to various departments - File an Annual Activity Certificate (AACs) with RBI from the Auditors, as at end of March 31st, along with the audited Balance Sheet on or before September 30thof that year, stating that the Branch Office has undertaken only those activities permitted by Reserve Bank of India. (In case the annual accounts of the Branch Office are finalized with reference to a date other than March 31st, the AAC along with the audited Balance Sheet may be submitted within six months from the due date of the Balance Sheet.)
In form FC-3 - Filling of accounts along with the list of all principal places of business in India established by foreign company
In form FC-4 - File annual return with Registrar of Companies (ROC) – In form FC-4- Normal ROC Fees ₹ 6,000/- (Rupees Six Thousand)
Getting Annual Accounts audited.
File return and pay applicable taxes along with Annual Activity Certificate (AAC) with Income Tax department.

Maintenance of Books of Account
A copy of the report as per the prescribed format to DGP of concerned state
Periodic Reporting by Branch Office - It will also need to inform ROC of certain changes as and when there is made.
In form FC-2 -

Intimating any change in constitution of Foreign Company to RBI & ROC
Intimating any change in Directors of Foreign Company to RBI & ROC
Intimating each and every change in the Branch office to RBI & ROC
No additional place of business can be started unless approval is taken from RBI.
No addition activity can be started unless approval is taken from RBI.

Repatriation of funds - Profits earned by the Branch Offices are freely remittable from India, subject to payment of applicable taxes
Other Business Licenses Applicable To Branch Office -

Permanent account number – PAN number
Tax deduction number – TAN number
Shop & establishment Registration
Service Tax Registration – if the Branch provides any services in India
VAT & CST Registration – If the Branch carries out trading activities in India

Companies Act: Procedure after Getting the RBI Approval

Every branch office registered with RBI shall get itself registered with the Ministry of Corporate Affairs; it is a registration by the branch office as an establishment of foreign company in India. On such registration a CIN i.e. Corporate Identity Number is allotted by the Registrar of Companies.

The following documents shall be filled with the Registrar of Companies:-

Form FC-1 - Charter, statutes or memorandum and articles of association or other Instrument constituting or defining the constitution of the company. If the above documents are not in English then the translated version of the documents.

Director(s) details – individuals
Director(s) details – bodies corporate
Reserve bank of India approval letter
Secretary(s) details
Power of attorney or board resolution in favor of the authorized representative(s).

Companies have to file annually and periodically documents as mention above.

Closure of Branch Office - Generally the Branch office licenses is given for three years, if at any time the Company plans to close the Branch office setup in India it shall file the necessary documents with the Authorized Dealer, and the application for the closure shall be forwarded by the Authorized Dealer. Copy of the Reserve Bank’s permission/ approval from the sectoral regulator(s) for establishing the Branch Office (BO) / Local Office (LO)

Auditor’s certificate -

indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets;
confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Office have been either fully met or adequately provided for; and
Confirming that no income accruing from sources outside India (including proceeds of exports) has remained un- repatriated to India.

No-objection / Tax Clearance Certificate from Income-Tax authority for the remittance/s - Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance. A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India. Any other document/s, specified by the Reserve Bank while granting approval.

Drafting of Government Forms and Legalization of Documents

After we receive the complete set of basic documents we shall draft following documents for signature by the applicant company and the authorized signatory

Board Resolution approving the opening of the branch office in India
Declaration from the applicant on FDI eligibility and source of fund
Declaration about the nature of the activity, the location of the activity of proposed BO and nature of the activity, the location of activity of the applicant company.
Form FNC 1 -Three copies
Letter from the principal officer of the Parent company to RBI
Letter of Comfort form holding company intending to support the operation in India
Two copies of the (English version) Certificate of Incorporation, Memorandum & Articles of association (Charter Document) of the parent company duly attested by the Indian embassy or notary public in the country of registration
Certification of Incorporation – Translated & Duly Notarized and Certified by Indian Consulate
The Latest audited Balance sheet and annual accounts of parent company duly Translated notarized for past Three years. & Certified by Indian Consulate & Directors
Name, Address, email ID and telephone number of the authorized person in Home Country.
Details of the Individuals / Company holding more 10% of Equity
Structure of the Organization with respect to Shareholding pattern

Details of Bankers of the Organization the Country of Origin along with the bank account number.
Commitment from the Organization to the effect that it will be open to report / opinion sought from its banker by the Government of India / Reserve Bank of India
Details relating to address of the proposed local office, number of persons likely to be employed, number of Foreigners among such employees and address of the head of the Local office, if decided
Details of Activity carried out in Home Country by the applicant organization in brief about the product and services of company in Brief.
Bankers Certificate
Latest Proof of identity of all the Directors – Certified by Consulate and Banker in Home Country
Latest Proof of address all of Directors – Certified by Consulate and Banker in Home Country
Complete KYC of Shareholders holding more than 10% Equity in the Applicant Company
Duly Signed Bank Account Opening Form for Indian Bank

All documents which are originating from a foreign country or which is signed/executed in a foreign country shall be legalized either through Indian Embassy or to be apostilled as per the Hague Convention

Other Incorporation Requirements for Branch Office

Every Branch office registered with RBI shall get itself registered with the Ministry of Corporate Affairs; it is a registration by the Branch office as an establishment of foreign company in India. On such registration a CIN i.e., Corporate Identity Number is allotted by the Registrar of Companies. The following documents shall be filled with the Registrar of Companies:

Form 44
Charter, statutes or memorandum and articles of association or other Instrument constituting or defining the constitution of the company(In the manner provided under Rule 16, 17 of the Companies (Central Government's) General Rules and Forms, 1956)
If the above documents are not in English then the translated version of the documents
Director(s) details - individuals
Director(s) details - bodies corporate
Reserve bank of India approval letter
Secretary(s) details
Power of attorney or board resolution in favor of the authorized representative(s)

Key points to be considered

Registration of branch office is a separate registration.
No form is available on MCA portal for registration of branch office of a private limited company.
Hence, there is no need to register a branch with the MCA.
All the transactions and business activities will be carried out in the name of the company only.
Every place of business must have a board containing its name and address of the registered office.
The board must also be in a local language if the language used is not in general use of that locality

Points to consider while starting a branch office

Need for a branch office

One must consider whether there is really a need for opening a branch office or not. It depends on the nature of the business. For example, if there is a retail business, then it is needs to expand a business. But if the business is to provide online consultancy then it is quiet not required.

Cost and taxes

The cost involved in setting up a branch office must be projected in advance to take firm decisions. Further, one must know how it will affect in terms of taxes and additional compliance.

Market analysis

One must analyze the market where the company is planning to start the branch office. It must consider the factors such as area, existing competitors, the need for the product or service, culture of the society, etc.

Location

The place of an office plays an important role. The location must be preferred considering accessibility, competition, availability of staff.

Note: A company can open as many branches as required and expand its business. For opening a branch office there is no need to inform MCA which is mandatory for changing the registered office of a company. But it is necessary to take local registrations and inform authorities as required by law.

Branch office registration in India

➡ ➡

Application for Digital Signature of Authorised Signatory for all the promoters.

➡ ➡

Filing of Application in the prescribed form - FNC to the RBI through AD Bank (Authorized Dealer). The AD Bank plays a crucial role as all the communication to the RBI has to be routed through them. The permission once granted remains valid for six months and you may apply for the extension of the same if required.

➡ ➡

Verification of KYC from Banker of Parent Company - After FNC Form is filed with the AD Bank, a request for verification of documents is sent to the banker of the foreign company. This process is also known as swift based verification. After receipt of confirmation of the documents from the foreign banker, the next process of approval is proceeded with. The RBI/AD Banker may seek clarification or any additional document which need to be submitted.

➡

Approval of RBI for Branch Office Registration in India - There is a specific policy of approving the establishment of a branch office by the AD Banker itself and only cases where the automatic route is not available the cases are forwarded for prior approval of the RBI. The process of approval after swift verification is of a week.

➡ ➡

Registration of Branch Office with the ROC - After approval of the RBI for the establishment of the branch office in India, an application for registration of branch office of the foreign company is filed in form FC-1 within 30 days of such approval. In case there are Indian directors the DIN number of such director is needed, and the digital signature of the authorized signatory is required to e-file statutory forms with the ROC for their approval.

➡ ➡

Branch Office Incorporated

➡ ➡

GST Registration & IEC - By this time the Branch Office would have received the Bank Account and cheque book, we would need a copy of the check for making application for GST Registration and Import Export Code for the Branch Office of the foreign Company

➡ ➡

Registration with State Police - Finally, the branch office needs to register it with the state police (In the office of the superintendent of Police). The application must be accompanied by the RBI approval and KYC of all authorized persons in India and the foreign company.

PAN Card, Tax Deduction Number & Bank A/c Opening - Income Tax Department allots a unique 10 Digit alphanumeric number as a permanent account number, also known as PAN Number. To comply with TDS provisions, every taxpayer needs to obtain a Tax Deduction Account Number. These identification numbers are essential for compliance with the tax rules. The bank account of the branch office can be opened after allotment of Pan Number by the Income Tax Department

➡ ➡

PAN Card, Tax Deduction Number & Bank A/c Opening - Income Tax Department allots a unique 10 Digit alphanumeric number as a permanent account number, also known as PAN Number. To comply with TDS provisions, every taxpayer needs to obtain a Tax Deduction Account Number. These identification numbers are essential for compliance with the tax rules. The bank account of the branch office can be opened after allotment of Pan Number by the Income Tax Department

➡ ➡

Registration with State Police - Finally, the branch office needs to register it with the state police (In the office of the superintendent of Police). The application must be accompanied by the RBI approval and KYC of all authorized persons in India and the foreign company.

➡ ➡

GST Registration & IEC - By this time the Branch Office would have received the Bank Account and cheque book, we would need a copy of the check for making application for GST Registration and Import Export Code for the Branch Office of the foreign Company

Branch Office Incorporated

Post Incorporation Procedural Requirements

After Incorporation, the following requirements are also necessary for a branch office:

Permanent account number - PAN
Tax deduction number - tan number Shop & establishment
Registration GST Registration if the Branch provides any services in India

Annual Compliance Activities required for a Branch Office

Maintenance of Books of Account

Getting Annual Accounts audited

Filling of Annual Activity Certificate with RBI

Filling of Annual Return and Balance sheet with Registrar of Companies

Intimating any change in constitution of Foreign Company to RBI & ROC

Intimating any change in Directors of Foreign Company to RBI & ROC

Intimating each and every change in the Branch office to RBI & ROC

No additional place of business can be started unless approval is taken from RBI.

Branch office on 'Stand Alone basis" in India

Stand Alone Branch Offices are isolated and restricted to the Special Economic Zone (SEZ) alone and no business activity/transaction is allowed outside the SEZs in India, which include branches/subsidiaries of its parent office in India.

No approval is necessary from RBI for a company to establish a branch/unit in SEZs to undertake manufacturing and service activities subject to specified conditions.

Project Office

Foreign companies planning to execute specific projects in India can set up temporary project/site offices in India for carrying out activities only relating to that project. The Government of India has now granted general permission to foreign entities to establish project offices subject to specified conditions.

Liaison Office/Representative Office

A Liaison Office could be established with the approval of the government of India. The role of Liaison Office is limited to collection of information, promotion of exports/imports and facilitation of technical/financial collaborations

Liaison office cannot undertake any commercial activity directly or indirectly.

Closure of a Branch Office in India

Generally a branch office licenses is given for three years. If at any time a Company plans to close the branch office setup in India it shall file the necessary documents with the RBI through its Authorized Dealer.

The application for the closure generally includes the followings:

Copy of the Reserve Bank's permission/ approval from the sectoral regulator(s) for establishing the BO / LO.
Auditor's certificate: i) indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets; ii) confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Office have been either fully met or adequately provided for; and iii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained un- repatriated to India.
No-objection / Tax Clearance Certificate from Income-Tax authority for the remittance/s.
Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance.
A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India.
Any other document/s, specified by the Reserve Bank while granting approval.

Conclusion

Choosing a good home partner is the most important tool to the success of any joint venture.

Once an associate is selected, normally a memorandum of understanding (MoU) or a letter of intent is signed by the parties – stressing the foundation of the future joint venture agreement.

An MoU and a joint venture agreement must be marked after consulting a chartered accountant firm well versed in the Foreign Exchange Management Act; Indian Income-tax Act, 1961; the Companies Act, 2013; international laws and applicable Indian rules, regulations, and procedures.

Terms and conditions should be properly assessed before signing the contract. Negotiations need an understanding of the cultural and legal background of all the involved parties. The JV union should obtain all the required governmental approvals and licenses within a specified period.

Foreign companies no longer require a no-objection certificate (NOC) from the Indian associate for investing in the sector where the joint venture operates.

Overseas firms in existing joint ventures can function independently in the same business segment. Previously, they needed prior approval from their Indian partners.

Companies in India are grouped into two categories – companies owned or controlled by foreign investors, and companies owned and controlled by Indian residents.

This is an understanding whereby an independent legal entity is created in accordance with the agreement of two or more parties.

The associated parties undertake to provide money or other resources as their contribution to the capital or assets of the corporate entity.

This structure is ideal for long-term, broad-based joint ventures, and include joint venture companies and joint venture limited liability partnerships (LLPs).

Frequently Asked Questions

1. What are the features of Branch Office of Foreign Company in India?
- The name of Indian Branch office shall be same as parent company.
- The governing body for the Branch office License is Reserve Bank of India.
- It is suitable for foreign Companies looking to setup a temporary office in India and not interested or not planning to have long term plans for the Indian operations.
- Normally, the Branch Office should be engaged in the activity in which the parent company is engaged.
- The Branch office does not have any ownership; it is just extension of the exiting company in the foreign country.
- All the expenses of the Branch office are met by the head office, if it does not have the revenue from Indian operations
2. What are the business licenses may require / applicable on a Branch office of Foreign Company in India?
Business Licenses Applicable To Branch Office
- Permanent account number – pan number
- Tax deduction number – tan number Shop & establishment
- Registration Service Tax Registration – if the
- Branch provides any services in India
- VAT & CST Registration – If the Branch carries out trading activities in India.
3. What can be remitting out of India by a Branch Office of Foreign Company in India?
The branch offices may remit outside India profit of the branch, net of applicable Indian taxes and subject to RBI guidelines. They need not retain any profits as reserves in India. But in certain cases, where income is deemed to have originated in India and such income includes royalties, fees for technical services, interest and capital gains including capital gains from share of capital in India, branch offices may repatriate profits to their Head Office without obtaining prior approval from RBI.
4. What are the Compliances for Branch office of a Foreign Company in India?
After establishment of by branch office
- A Branch Office shall submit a report containing information in a prescribed form within five working days of the Liaison Office becoming functional to the Director General of Police (DGP) of the state concerned in which Branch Office/LO/PO has established its office; if there are more than one office of such a foreign entity, in such cases to each of the DGP concerned of the state where it has established office in India;
- A copy of report thus filed as above shall also be filed with AD by the Branch Office concerned.
5. How to close a Branch Office of a Foreign Company in India?
Activity for closure branch office of a foreign company in India generally the Branch office licenses is given for three years, if at any time the Company plans to close the Branch office setup in India it shall file the necessary documents with the Authorized Dealer, and the application for the closure shall be forwarded by the Authorized Dealer.
- 1 - Copy of the Reserve Bank's permission/ approval from the sectorial regulator(s) for establishing the BO / LO.
- 2 - Auditor’s certificate -
- indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets;
- confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Office have been either fully met or adequately provided for; and
- Confirming that no income accruing from sources outside India (including proceeds of exports) has remained un- repatriated to India.
- 3 - No-objection / Tax Clearance Certificate from Income-Tax authority for the remittance/s.
- 4 - Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance.
- 5 - A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India.
- 6 - Any other document/s, specified by the Reserve Bank while granting approval.
6. What are the conditions for opening a branch office in India?
The branch office of an outside organization can be opened if the candidate remote company has a reputation of profit generation for as far back as 5 years and it is monetarily solid. At the point when we state monetarily stable with regards to a branch office foundation in India of a remote organization, we mean total assets of USD 1,00,000 or its comparable. The budget summary properly verified by the legal inspector of the parent organization is required.
7. What are the countries for which Branch office registration cannot be done under the automatic route and can be established only after prior approval is received from the RBI?
- Pakistan
- Bangladesh
- Sri Lanka
- Afghanistan
- Iran
- China
- Hong Kong
- Macau
- Or any kind of application for opening of a branch office in Jammu and Kashmir, North East Region and Andaman and the Nicobar Islands.

8. What is Income Tax rate for a branch office of a foreign company?
A branch office of a remote parent organization isn't treated as a different and particular substance in India and for all expense purposes; the Indian government charges the benefits of such elements at higher rates. Starting at now the Income Tax on the benefit of a remote organization is 40% as opposed to the assessment pace of 30% on an Indian organization.
9. What are the allowed activities for a branch office in India of a foreign entity?
- It can conduct import & export of goods
- Provide professional and consultant services
- To conduct research activity in all those spheres where parent company is already actively involved
- Boosting technical/financial collaboration on behalf of the parent company
- Working as a representative of a parent company in India and performing work of a buying/selling agent
- Delivering IT services and developing software in India
- Indulging in the service of technical support for the products supplied by the parent company
- To work as an approved representative for a foreign shipping or airline company in India
10. What documents are required for forming branch office in India?
Documents Required From Parent Company
- Certificate of Incorporation
- Memorandum of Association
- Articles of Association
- Complete details of Directors and Key Executives of the company
- Complete details of the shareholders of the applicant company
- Net worth certificate attested by Certified Public Accountant (CPA)
- Last five preceding year’s audited financial statement
- A report from applicant’s banker in the host country
Documents Required For the Company Registered Address
- 5 copies of passport
- 5 passport size photographs
- A copy of Business Visa with Immigration Stamp of arrival on it
- 5 copies of National Identity Card
- Latest Address Proof (Electricity Bill/ Phone Bill/ Water Bill/ Bank Statement)
- Power of Attorney in the name of AR
- Board Resolution appointing the AR
11. What is the eligibility criterion for registering branch office in India?
- The net worth of the foreign parent company should be above $ 1,00,000
- The company must have a profitability track record of the past five years.
12. What are the important points to consider before applying for branch office registration in India?
- Net Worth Requirement
- Profit Remittance Allowed
- Name of Brach Office
- Taxation in India
13. Can the certificate of registration be cancelled?
A branch office is an area, other than the head office, where a business is led. Most branch workplaces comprise of little divisions of various parts of the organization, for example, HR, advertising, and accounting.
14. Is a branch legal person?
A Branch is a progressively autonomous substance that conducts business in its own name yet acts on behalf of the organization. A Branch isn't lawfully independent from the remote parent organization as is likewise dependent upon the local laws administering the outside parent organization.
15. What is drafting of government forms and documents?
On receiving the complete set of authentic documents the next step is to draft following documents for signature purpose by the applicant company and the authorized signatory
- Board Resolution allowing the starting of branch office in India
- A declaration given by the applicant on the eligibility of FDI and source of fund
- A declaration regarding the nature of the activity that business will conduct, the location of the activity of proposed BO
- A declaration regarding the nature of the activity of the applicant company along with the location of activity of the applicant company
- Form FNC
- A letter of comfort from holding company

Branch Office

Branch office incorporation in India

Branch office

pros

cons

Subsidiary company

pros

cons

Branch office on 'Stand Alone basis" in India

Liaison Office/Representative Office

Project Office

Features of Branch Office of Foreign Company in India

Important Points to Consider Before Applying for Branch Office Registration

Net Worth Requirement

Profit Remittance Allowed

Name of Branch Office

Taxation in Indian profits

Prohibited activities by the Branch

Conditions for setting up a branch office

Procedure by which Branch Offices are permitted to remit profit outside India

Documents Required For Branch Office Setup in India to be submitted to Authorized Dealer Category-I Banks

Document from Mother/Parent Company

Documentation for the Company Registered Address

Procedures for Setting up a Branch Office in India by a Foreign Company

Things Required To Be Done Along With Approval From RBI:

Companies Act: Procedure after Getting the RBI Approval

Drafting of Government Forms and Legalization of Documents

Other Incorporation Requirements for Branch Office

Key points to be considered

Points to consider while starting a branch office

Need for a branch office

Cost and taxes

Market analysis

Location

Branch office registration in India

Post Incorporation Procedural Requirements

Annual Compliance Activities required for a Branch Office

Maintenance of Books of Account

Getting Annual Accounts audited

Filling of Annual Activity Certificate with RBI

Filling of Annual Return and Balance sheet with Registrar of Companies

Intimating any change in constitution of Foreign Company to RBI & ROC

Intimating any change in Directors of Foreign Company to RBI & ROC

Intimating each and every change in the Branch office to RBI & ROC

No additional place of business can be started unless approval is taken from RBI.

Branch office on 'Stand Alone basis" in India

Project Office

Liaison Office/Representative Office

Closure of a Branch Office in India

Conclusion

Frequently Asked Questions

Documents Required From Parent Company

Documents Required For the Company Registered Address