Branch Office of Foreign Company in India

Topics Covered –

What is Branch Office of Foreign Company?

Foreign Company can set up a Branch Office in India which is a representative office to undertake certain permitted business activities. Thus, it is not a separate legal entity and its main objectives are to do the market research and to improve the business growth of the parent company in India.

What are the benefits of Branch Office of Foreign Company in India?

Parent Company can directly control the operations of the Branch Office situated in India.
It has to fulfill less legal compliances as compared to incorporating a new company.
Branch Office can easily be wound up as there are not many requirements for the same.
Parent Company can do the market research and thus can easily examine whether it is required to incorporate a wholly owned subsidiary in India or not.
It helps to know the needs of the Vendors and Customers.
Unlike Liaison Office, Branch Office can commercially trade the business of the parent company in India. Thus, the branch office can generate the revenues in India to maintain itself.
Branch Offices of Foreign Companies are taxed separately under different Branch Office Tax Regime.

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What are the pre-requisites for establishing Branch Office of Foreign Company in India?

The Foreign Exchange Management Act, 1999 and the Foreign Exchange Management (Establishment in India of a branch office or liaison office or a project office or any other place of business) Regulations, 2016 prescribe following two eligibilities for establishing a Branch Office of Foreign Company in India –

The net worth of the parent company shall not be less than US$1,00,000 or its equivalent.
The Parent Company shall have profitable operations or profitable track record of immediately preceding 5 years in the home country.

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What are the permitted activities for Branch Office of Foreign Company in India?

Regulation 4(b) & Schedule I of the Foreign Exchange Management (Establishment in India of a branch office or liaison office or a project office or any other place of business) Regulations, 2016 –

Import or Export of Goods.
Consultancy or Professional Services.
Conducting a Market Research work in India about the business in which the parent company is engaged.
Promoting financial or technical collaboration of parent company with Indian Companies or of Indian Companies and Overseas Group Company.
Representing the parent Company in India.
Acting as a selling or buying agent of parent company in India.
Undertaking Information Technology (IT) Services and Software Development services in India.
Representing foreign Shipping or Airline Company in India.
Giving Technical Support to the products supplied/exported in India by the parent company.

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What are the documents required for Branch Office Registration?

From Parent Company

Incorporation Certificate of Foreign Company
Memorandum of Association
Article of Association
Details of Shareholders, Directors and Key Executives
Audited Financial Statement of last 5 preceding Financial years
Net worth Certificate attested by Certified Public Accountant
Banker’s Report

From Authorized Signatory

Board Resolution appointing Authorized Signatory
Power of Attorney in the name of Authorized signatory
5 Colored Photographs
5 Copies of Passport
5 Copies of National Identity Card
Business Visa
Address Proof

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What is the process of Registration of Branch Office of Foreign Company in India?

1. Obtain DSC of Authorized Signatory

The first and foremost step to register a Branch office of Foreign Company is to obtain Digital Signature Certificate of Authorized signatory as all the applications to the ROC are filed in digital format which are required to be digitally signed by the shareholders and directors as the case may be.

Apply for Digital Signature Certificate

2. File Application before RBI – Form FNC

Thereafter, the applicant shall file a Form FNC before the RBI through Authorized Bank for the registration of Branch Office.

Apply for Filing Form FNC

3. KYC Verification from Banker of Parent Company

Once the FNC Form is filed, the next step is to request for documents verification to the banker of the parent company. This process is called as Swift Based Verification.

Then the Foreign Banker will send the confirmation of documents.

Apply for KYC Verification

4. Approval of RBI

Subsequently, the RBI shall scrutinize the registration application as per the prescribed policies. Thus, RBI shall

*RBI’s approval is mandatory when the automatic route is not available.

Apply for RBI’s approval

5. Apply before ROC – Form FC-1

Once the approval of RBI is received then the applicant has to file Branch Office Registration Form that is Form FC-1 with the Registrar of Companies under the Ministry of Corporate Affairs within 30 days from the date RBI’s approval.

Subsequently, ROC shall scrutinize and check all the documents and application and then if he is satisfied with the application then it shall register the Branch Office of the foreign company in India.

File Form FC-1

6. Obtain PAN and TAN

Thereafter, the applicant shall obtain Permanent Account Number (PAN) and Tax Deduction or Collection Account Number (TAN) from the Income Tax Department in order to fulfill the Tax Compliances.

Apply for PAN and TAN

7. Open the Bank Account

Open the Bank Account in the name of the Branch Office which shall be used for all the monetary transactions of the Branch Office.

Apply for opening Bank Account

8. Register with the State Police

Next step is to register the Branch Office with the State Police in the office of Superintendent of Police. This application shall be accompanied with RBI’s approval and the KYC’s of all authorized persons of both the parent company and of the branch office.

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9. Get GST Registration and Import Export Code Registration

Lastly, the Branch Office must obtain GST Registration and Import Export Code Registration.

Apply for GST & IEC Registration

Conclusion

Registration of Branch Office of Foreign Company in India is a tough task as it involves various important factors and aspects which are to be kept in mind while completing the registration process and starting the business.

Thus, seek assistance from your Trustworthy Advisor Manthan Experts and start your Branch Office of Foreign Company with ease.

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