Scope and Potential of the Indian Market
Importance of Setting up a Branch Office in India
Overview of Indian Economy
Industry-wise Business Opportunities in India
Legal Aspects of Establishing a Branch Office in India
Allowed Types of Business such as Branch, Liaison or Project Office
Branch Office Vs Liaison Office
Obtaining Necessary Permissions and Licences
- Approval from RBI: Obtaining prior approval from the Reserve Bank of India (RBI) is a mandatory step in establishing a branch office in India. This involves applying Form FNC to the RBI through an Authorised Dealer (AD) Bank. In many cases, approval is granted under the automatic route, assuming the application is from an eligible entity and all accompanying documents are in order. The automatic route facilitates a smoother approval process for eligible entities looking to set up a branch office in India.
- Registration with ROC: Following the receipt of permission from the Reserve Bank of India (RBI) to establish a branch office, the foreign company registration application is submitted to the Registrar of Companies (ROC) using the FC1 Form. This formalises the foreign company’s presence in India and ensures compliance with regulatory procedures. The registration process signifies a crucial aspect of the branch office setup, aligning the foreign company with the legal framework governing corporate entities in India.
- Business Licences: Post-incorporation, obtaining specific business licences is crucial. These may include registration with the labour department under the respective Shop and Establishment Act of the state, Professional Tax Registration, if applicable and GST Registration, which is necessary for Goods and Services Tax compliance.
Taxation of Branch office in India
Annual Activity Report Filing to RBI
Annual Return to ROC
Q1: What are the eligibility criteria for establishing a branch office in India?
The foreign corporation must have a profitable track record of five years, a net worth of USD 1,00,000, and no direct or indirect business in India to qualify. These criteria are essential for compliance with regulations from the RBI & the Companies Act of 2013.
Q2: What types of business entities can a foreign company establish in India?
Foreign companies can choose from different types, such as a Branch Office, Liaison Office, or Project Office. A Branch Office enables full-fledged business activities, a Liaison Office serves as a local representative, and a Project Office is a temporary setup for specific projects.
Q3: What is the difference between a Branch Office and a Liaison Office?
A Branch Office engages in various activities, including trading and services, while a Liaison Office focuses on promotions and liaisons without direct involvement in sales. The choice depends on the business’s objectives and engagement level in the Indian market.
Q4: What permissions are required for setting up a branch office in India?
Reserve Bank of India (RBI) approval is mandatory. Foreign companies must file an application in Form FNC through an Authorised Dealer (AD) Bank. Approval is often granted under the automatic route for eligible entities.
Q5: What licences are required post-incorporation of the branch office?
After obtaining permission from the RBI, the foreign company needs to register with the Registrar of Companies (ROC) using the FC1 Form. Additionally, business licences such as registration with the labour department, Professional Tax Registration, and GST Registration are crucial.
Q6: What is the taxation structure for a branch office in India?
The taxation structure includes Corporate tax, Tax Deducted at Source (TDS), Goods and Service Tax (GST), and Professional Tax. As a foreign company operating through a branch office, income taxation is applied. Bilateral tax treaties between India and other nations may offer specific deductions.
Q7: What is the process for filing the Annual Activity Report with RBI?
The Annual Activity Report involves preparing and submitting an Annual Activity Certificate (AAC) to the Director-General of Income Tax (DIT). This report outlines the branch office’s operations and finances throughout the fiscal year.
Q8: How often must a branch office file a return with the ROC (Registrar of Companies)?
The branch office must file Form FC-3 with the RoC within 60 days from the end of the financial year. Additionally, Form FC-4 must be submitted annually, providing information on the annual accounts and financial statements.
Q9: Can a branch office engage in trading activities in India?
A Branch Office enables full-fledged business activities, including trading and providing services. It allows foreign companies to directly participate in the Indian market, adapting to local preferences.
Q10: How can SetIndiabiz assist in the branch office setup process?
SetIndiabiz specialises in guiding foreign companies through setting up a Branch Office in India. Services include documentation advice, application filing with RBI, follow-up, representation drafting if necessary, and ongoing support in accounting, taxation, IPR protection, and compliance.