A Foreign Company / Corporation can establish a branch in India by obtaining permission from the Reserve Bank of India (RBI) and subsequently registering it with the ROC and State Police. We have good relationships to deliver smooth services in India.
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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).
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.
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.
The directors/shareholders visiting India for signing documents must be on a Business Visa; otherwise, documents must be legalised/ attested.
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.
All documents which are required to be filed with FNC Form, like the certificate of incorporation, board resolutions, the articles of the foreign company and the documents of the authorised signatory of the foreign company need to be legalised either through Indian Embassy or to be apostilled as per Hague convention.
DSC is the equivalent of physical or paper signature in digital format. As the application for company registration is filed online with Digital Signatures of the director, hence the process starts with the issuance of the digital signature for all the directors/promoters. Photo, Passport and Address proof is to be submitted along with Form for the issuance of DSC.
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.
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.
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.
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.
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 to do 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.
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.
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.
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.
Following documents are required for registration of branch office of the foreign company:
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
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