Establishment of Branch Office in India
A Branch office is set up by foreign company in India to carry out the branch activity for its business. Permission to setup a branch office is granted by RBI. A branch office of a foreign company upon approval from the RBI must be compulsorily registered under the (Indian) Companies Act, 1956.
Upon registration under the Companies Act, 2013 the branch office can carry on its business activities in the same manner as a domestic company. Unlike a liaison office a branch office can generate revenue from the sales in the local market and repatriate the profits to the foreign parent company.
A Branch office is suitable for a foreign company to test and understand the Indian market with a strict control by the Reserve Bank of India, as it does allow the companies to do the activity which are mentioned in the application of Branch Office, Any Additional activity to be carried by the Branch office shall be illegal. Additional Activity can only be carried out only with prior approval of RBI.
Important Points to Setting up Branch Office in India
- Branch Office should be engaged in the activity in which the Parent Company is engaged.
- A foreign company intending to apply for a branch office in India must have a successful, profit making track record during the immediately preceding five years in the home country.
- Further the foreign parent company must have a Net Worth of USD 100,000 or its equivalent as per its latest Audited Balance Sheet or Account Statement certified by a CPA. Net worth is defined as total of paid-up capital and free reserves, less intangible assets.
- The proposed business activities should be falling under the list as permitted by the Reserve Bank of India (RBI) for a branch office.
- Branch Offices established with the approval of RBI, may remit outside India, the profits of the branch, net of applicable Indian taxes and subject to RBI guidelines.
- A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly and hence it is necessary to opt for the wholly owned subsidiary if the foreign company needs to carry on manufacturing activities in India.
- Retail trading activities of any nature is not allowed for a Branch Office in India.
A Branch office can carry on the following activities :
- Export/Import of Goods
- Rendering Professional or Consultancy Services.
- Carrying out research work 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 Airlines/Shipping Company.
How S.K. Agrawal & Co. Helps in Establishment of Branch Office in India?
- Obtaining approval of RBI for Establishment of Branch office in India.
- Getting Branch office registered with Registrar of Companies.
- Obtaining CIN of Branch Office
- Obtaining PAN / TAN and registration under Labour Laws.
- Maintenance of Financial books of Accounts of Branch office.
- Filing of Withholding Tax Returns/GST Returns on monthly/Quarterly basis.
- Annual Audit of Books of accounts.
- Issuance of Annual Activity Certificate (AAC).
- Getting all Statutory Compliances with regard to Labour laws within timelines.
- Reporting of Branch office on annual basis with concerned authorities like MCA, Police Department, Income Tax Department, AD Banker.
- Issuance of Various certificates as may be required by BO in regular course.
Service Area
We provide strategic and qualitative advisory services to all our clients from domestic to international organizations, small, medium and large sized enterprises, assisting them with their incorporation and quality management services so they can establish their business successfully globally. To help them deal with their tax issues, financial and legal requirements we provide all support for post incorporation services, so they are able to run their business seamlessly. We are based at New Delhi and Faridabad, but our wings are spread to serve clients across the globe. Customer Satisfaction, Quality of Service and our Turnaround time are the drivers of our enthusiasm and success. We are continuously serving our client at Faridabad, Delhi, Gurgaon (Gurugram), Noida (Gautam Budh Nagar), Sonipat, Panipat, Palwal, Jind, Karnal, Meerut, Hapur, Kolkata, Mumbai (Bombay), Pune, Bangalore, Nasik, Aurangabad, Nagpur, Ludhiana, Amritsar, Mohali, Hyderabad, Bareily, Kanpur, Agra ,Mathura, Baddi, Rudrapur, Haridwar, Siliguri, Jamshedpur,Hubli and many other Industrial Areas.