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Registration of Branch Office by Foreign Company

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Overview

Any foreign entity can expand its business in India. But before commencing any business, they need to set up a branch office. A branch office is a part of the foreign company that operates similar activities to the parent company. If any overseas company wants to set up a branch office in India, it has to register as a branch office. Any foreign entity that wishes to operate in India has to seek the approval of authorities

In India, the Reserve Bank and the foreign exchange approve the branch office registration.

All the foreign entity has to submit the documents that display the activities of the foreign company. With the Branch office registration, a foreign entity can enjoy all the liberties to run a business in India. However, the branch offices are restricted from manufacturing activities. If any foreign entity wants to manufacture any thin, they have to sub-contract these activities to an Indian Manufacturer.  

Permissible Activities of Branch Offices in India; 

it is now mandatory to furnish your Pan and Aadhar card details on the income tax department's official website. 

1) A Branch office can conduct import and export of goods. 

2) They can offer services such as professional and consultant services

3) All the branch offices can conduct research activities in the field in which the parent company is involved

4) A branch office can boost financial collaboration on behalf of the parenting company

5) If a branch company works as a spokesperson of the parent company and operates as a trading agent

6) A branch office can deliver IT services and develop interfaces in India

7) A branch office can indulge them in offering technical support for the product offered by parent company

8) They can perform as a representative for the international shipping or Airline Company. 

Eligibility to set up a Branch office In India

For establishing a branch office in India, it is essential that a foreign company 

1) Must have net-worth of more than $1, 00,000

2) The entity must also hold a profitability record from the last five years 

3) the foreign entity must conduct the following acts such as 

A) conducting import and export of goods

B) offering services such as professional and consultant services

C) conduct research activities in the same field as of the parent company

D) boost financial alliance on behalf of the nurturing company

E) works as a representative of the foreign entity

F) providing IT services and developing software

G) offering technical support for the product offered by a foreign entity

H) a representative for the foreign shipping or Airline Company

Document Required

1) Annexures needed from the foreign company:

  • Certificate of Incorporation of the business
  • Articles of Association (AOA)
  • Memorandum of Association (MOA)
  • Details about all the directors and key executive of the entity
  • Details of all the stakeholders of the foreign entity
  • Attested certificate of net-worth by an accredited public accountant
  • Audited financial statement of the last five years
  • Banker's report from the native country that states their relation

2) Annexures needed for the company's registered address. 

  • Five copies of passport of the authorized person
  • Five passport size photographs 
  • Business visa copy with the immigration stamp of arrival on the Visa
  • Two copies of National identity
  • Recent address proof; it may include electricity bill, phone bill, bank statement, water bill
  • Power of attorney in the name of accounts receivable
  • the resolution of the board appointing the AR

Time Lines

  • Purchase the Service
  • Upload / send the Documents
  • Discussion with expert
  • Filing of application with registrar authorities
  • Receipt of Registration Certificate
  • Confirmation to client

Critical things to consider before filing for Branch office registration 

If any foreign entity wants to open a branch office in Indi, they have to meet certain criteria. One of which is that the name of the Branch office must match the name of the parent company. Below is a list of other such things that a foreign entity must keep in mind:

Taxation in India:

If you are appealing for a branch office registration, you must be aware that the income tax applicable to the profits of the branch office is 40%. Surcharges are also applicable. In cases of import and export of goods, the GST is imposed. 

Name:

The parent company and the Branch office must have a similar name

Profit remittance:

The amount of profit that the Branch office earns is remissible from India to the parent company. But it is only possible after the clearance of the tax and accounts.

Net Worth:

If any foreign entity wants to register as a branch office in India, it must have a net worth of more than $ 1,00,000. They should also have a profit track record of the past five years. 

Drafting of documents:

Once the complete set of the documents are available, the next part is drafting the documents. The drafting is done for the signature purpose by the applicant and the signatory. Following are the documents needed while drafting:

1) A copy of board resolution that permits opening of the branch office in India

2) A declaration that states the eligibility of FDI and source of fund

3) A report that states the nature of the activity the branch office will conduct

4) Declaration about the location of the activity of the BO

5) Form FNC

6) Letter of comfort from the holding company

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