- Documentation Support (includes drafting)
- Filing of FNC Form to RBI through AD Bank
- Digital Signature for the Authorised Signatory
- Registration of Foreign Company with ROC
- Registration with Local Police
- PAN & TAN Number for the Company
- Bank Account Opening Support
- GST Registration
- Imort Export Code (IEC)
- Government fee & Taxes on Actual Basis
Branch Office of a Foreign Company
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).
Important Conditions for Setting up a Branch office
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: 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.
List of Documents for Branch Office Registration
|A. Document From Mother/Parent Company||B. Documentation for the Company Registered Address|
Preparation & Documentation for Registration of Branch Office
Check Eligibility for Branch Office Registration in India: The establishment of place of business in India for a foreign company/corporation is governed by the Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016. For the purpose of setting up a Branch Office following is the most important qualifications
- The networth of foreign head office must be above $ 100,000
- The applicant company should have profitability track record of Five Years.
Only Eight kinds of activities are permitted for the branch office, please refer - Permittd Activities for Branch Office for details
Drafting of Government Forms and Documents: After we receive the complete set of basic documents we shall draft following documents for signature by the applicant company and the authorised 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
- Letter of Comfort form holding company
Legalisation of Documents: 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.
Process & Timeline for Branch Office Registration in India
Step - 1:
Application for Digital Signature of Authorised Signatory
A digital signature is the equivalent of physical or paper signature under the information technology act. As per new process all applications to the registrar of companies are filed in digital format which need to be authenticated by the digital signature of the proposed shareholders and directors as the case may be. The filing process starts with the issue of digital signature for all the promoters.
Step - 2:
Filing of Application with RBI through AD Bank
The application for registration of a branch office of a foreign company is filed in the prescribed form - FNC to the RBI through AD Bank (Authorised Dealer). The AD Bank plays a crucial role as all the communication to the RBI has to be routed through them. We have an excellent relationship with many banks in India, which certainly help in obtaining the approval fast. The permission once granted remain valid for six months and you may apply for the extension of the same if required.
Step - 3:
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.
Step - 4:
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.
Step - 5:
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 authorised signatory is required to e-file statutory forms with the ROC for their approval.
Step - 6:
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.
Step - 7:
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 authorised persons in India and the foreign company.
Step - 8:
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
Frequently Asked Questions
What is permitted/allowed activities for a branch office in India of a foreign entity?
A branch office of a foreign company, a body corporate incorporated outside India, including a firm or other association of individuals is permitted to any activities which are allowed or permitted for the furtherance of the parent company objectives in compliance with RBI notification. Click to see the List of permitted activities for a Branch Office in India.
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?
- Sri Lanka,
- Hong Kong,
- Or any application for opening of a branch office in Jammu & Kashmir, North East Region and Andaman and the Nicobar Islands.
What is Income Tax rate for a Branch office of a Foreign Company?
A branch office of a foreign mother company is not treated as a separate and distinct entity in India and for all tax purposes, the Indian government taxes the profits of such entities at higher rates. As of now the Income Tax on the profit of a foreign company is 40% in contrast to the tax rate of 30% on an Indian company.
What are the conditions /requirements for opening a Branch in India?
The branch office of a foreign company can be opened if the applicant foreign corporation has a track record of profit generation for the past 5 years and it is financially sound. When we say financially sound in the context of a branch office establishment in India of a foreign company, we mean net-worth of USD 1,00,000 or its equivalent. The financial statement duly attested by the statutory auditor of the parent company is required.
What Documents are required for forming a Branch Office in India?
Following documents are required for registration of branch office of the foreign company:
- Certificate of Incorporation or business license of parent company
- Charter issued to the foreign company by the government
- Memorandum of Association or Articles (Rules of the Company)
- A declaration from the foreign corporation (parent company) that the parent company shall meet any shortfall in meeting the expenses of branch office
- Five years historical Financial Statement of the parent company duly attested by its auditors
- A certificate from the auditors of the parent company that the net worth of the parent co is more than $ 1,00,000
- The identity and address proof of the responsible person to do compliance for the branch office in India.
- Premises proof, where the branch office shall be registered
- A No objection certificate from the owner of the premises of the registered office.
- In case the document is in the foreign language, then a certified translation thereof must be filed.
- All the document having foreign origin shall be legalised as per Hague convention or by the Indian embassy, high commission.
What are Other Incorporation Requirements for Branch Office Registration in India?
After approval of the RBI for establishing a branch office in India by a foreign company is obtained the same need to be registered with the ROC within 30 days by filing form FC-1 with the digital signature of the authorised person and following documents as annexure
- A certified copy of the charter, statutes or memorandum and articles, of the company or other instrument constituting or defining the constitution of the company and, if the instrument is not in the English language, a certified translation thereof in the English language;
- The full address of the registered or principal office of the company;
- A list of the directors and secretary of the company containing such particulars as may be prescribed;
- The name and address or the names and addresses of one or more persons resident in India authorized to accept on behalf of the company service of process and any notices or other documents required to be served on the company;
- The full address of the office of the company in India which is deemed to be its principal place of business in India;
- Particulars of opening and closing of a place of business in India on earlier occasion or occasions;
- A declaration that none of the directors of the company or the authorized representative in India has ever been convicted or debarred from the formation of companies and management in India or abroad; and Any other information as may be prescribed.
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