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Branch Office in India

Opening of Branch Office  in India by Foreign Entity

Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Office in India. A branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer.
For opening of Branch Office in India, An application in the prescribed form is required to be made to the RBI. The applications will be considered by the Reserve

 

Bank under two routes:

• Reserve Bank Route - Where principal business of the foreign entity falls under sectors where 100 per cent Foreign Direct Investment (FDI) is permissible under the automatic route.

• Government Route - Where principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category are considered by the Reserve Bank of India (RBI) in consultation with the Ministry of Finance, Government of India.

 

The RBI has prescribed  following criteria for sanctioning Branch Offices of foreign entities :

The foreign entity must be a profit making track record during the immediately preceding five financial years in the home country and its Net Worth should not be less than US 100,000 or its equivalent. Net worth is = total of paid-up capital and free reserves, Less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name.

 

Regular Compliances

1. Branch offices have to file an Annual Activity Certificate (AACs) from the Auditors, as at end of March 31, Along with the audited Balance Sheet on or before September 30 of that year, In case the annual accounts of the Branch Office are finalized with reference to a date other than March 31, The AAC along with the audited Balance Sheet may be submitted within six months from the due date of the Balance Sheet.
2. Branch Office are also required to furnish copy of the Annual Activity Certificate (AAC) to Director General of Income Tax (International Taxation alongwith audited financial statements including receipt and payment account.

 

Permitted Activities for Branch Office:

Branch Offices are permitted to represent the parent/group companies and undertake the following activities in India:

  • Export/Import of goods.
  • Rendering professional or consultancy services.
  • Carrying out research work, In areas in which the parent company is engaged.
  • Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
  • Representing the parent company in India and acting as buying/selling agent in India.
  • Rendering services in information technology and development of software in India.
  • Rendering technical support to the products supplied by parent/group companies.
  • Foreign airline/shipping company.

Normally, The Branch Office should be engaged in the activity in which the parent company is engaged. Profits earned by the Branch Offices are freely remittable from India, Subject to payment of applicable taxes.

 

 


 

Contact PKP

 

Contact Person : Mr. Prakash Gupta

 

Email -  info@pkpconsult.com, pkpconsult1977@gmail.com

 

Telephone Numbers : +91-11-23382207/ 23388753

 

Mobile Number : +91-9811031841


 

 

Prakash K Prakash PKP Consult +91-9811031841 pkpconsult1977@gmail.com