SET UP A BRANCH OFFICE, LIAISON OFFICE OR PROJECT OFFICE IN INDIA

A Branch office (BO) in India is an extension of a foreign company that is opened and registered in India. This allows the foreign company to do business in India while still being its own separate company.

A liaison office, also known as a representative office, helps foreign investors or corporations explore business in India. It supports and streamlines the parent company's operations. Liaison office also acts as a vital communication link between clients in India, including customers and vendors, and the parent company's overseas location.

A Project Office (PO) in India represents a foreign company executing a specific project. It is only allowed to engage in activities related to the execution of the project and is prohibited from conducting any other business activities.

bcshettyco taxation

To open these offices in India, the foreign company has to follow the rules and regulations of the Reserve Bank of India (RBI) and the Ministry of Corporate Affairs (MCA).

Setting up a business in India offers many benefits for foreign companies wanting to grow and find opportunities in a rapidly growing economy. Companies establish offices to tap into India's vast market potential, access a skilled workforce, and leverage the country's favorable business environment.

ELIGIBILITY FOR OPENING OFFICE IN INDIA

Eligibility for opening a liaison office in India

icon

The company must have consistently made profits in its home country for the past three financial years.

icon

The company must have a minimum net worth of USD 50,000 or its equivalent.

icon

If the applicant does not meet the criteria but is a subsidiary, they can submit a Letter of Comfort from their parent company, which must meet the eligibility criteria.

Eligibility for opening a Branch office in India

icon

The applicant should be a body corporate outside of India.

icon

The company must have a consistent track record of profitability in the home country for the previous five financial years.

icon

The company's net worth should be not less than USD 100,000 or an equivalent amount.

icon

The name of the Indian branch office should be the same as the parent company.

icon

If the applicant is not financially strong and is a subsidiary of another company, they can submit a Letter of Comfort from their parent company, as long as the parent company meets the specified net worth and profit criteria.

Eligibility for opening a Project office in India

icon

The company must secure a contract from an Indian company to execute a project in India.

icon

The project should be funded through inward remittance from abroad or funded by a bilateral or multilateral International Financing Agency.

icon

If the above criteria are not fulfilled, the foreign entity must seek approval from the Reserve Bank of India (RBI) Central Office.

Activities not permitted for
Branch Office (RBI)

icon

Retail trading activities are not permitted for a Branch Office in India.

icon

Manufacturing or processing activities cannot be carried out by a Branch Office, either directly or indirectly in India.

STEP-BY-STEP PROCESS TO SET UP A BRANCH OFFICE, LIAISON OFFICE OR PROJECT OFFICE IN INDIA

1. Conducting Feasibility Studies

2. Securing RBI Permission

3. Registering in the MCA Portal

4. PAN Card, Tax Deduction Number, and Opening Bank Account

5. Appointing an Auditor for GST and Import-Export Code Registration

Before setting up a branch office, it’s crucial to conduct a feasibility study to understand the market potential, competition, and regulatory environment in India. This helps in making informed decisions and planning strategies effectively.

TAX IMPLICATIONS ON BRANCH OFFICE, LIAISON OFFICE OR PROJECT OFFICE IN INDIA

1. Income below INR 10 million for a foreign company's branch office is subject to a tax

2. Income below INR 100 million for the branch office is taxed at a rate of 42.43%.

3. If the income of the branch office exceeds INR 100 million, the applicable tax rate is 43.68%.

4. Transfer Pricing under section 92B of Income Tax act is applicable for transaction between Branch office and its Head office overseas

DOCUMENTS REQUIRED FOR SETTING UP A BRANCH OFFICE, LIAISON OFFICE OR PROJECT OFFICE IN INDIA

icon Official approval from the company's board.

icon Certified incorporation proof of the parent company.

icon Accompanying letter explaining the purpose of the branch office.

icon A formal application submitted to the RBI.

icon Memorandum of Association (MOA) and Articles of Association (AOA).

icon Details of the company's history, nature of business, and key stakeholders.

icon Names and details of the company's directors and shareholders.

icon Director's declaration confirming compliance with legal requirements.

ANNUAL COMPLIANCES FOR BRANCH OFFICE, LIAISON OFFICE AND PROJECT OFFICE

1. Initial Registrations: All three types of offices, i.e., Branch Office, Liaison Office, and Project Office, are required to obtain initial registrations like Permanent Account Number (PAN), Import Export Code (IEC), GST registration and professional tax number.

2. Annual Filings: Annual compliances include filing the income-tax return with the Income-tax Authorities, filing the Annual Activity Certificate (AAC) with the Reserve Bank of India (RBI), and filing audited accounts of the office along with the global accounts of the parent company with the Registrar of Companies (ROC) within the prescribed time limits.

3. Tax Audit: All three offices are mandatorily required to get a tax audit done under section 44AB of the Income Tax Act, 1961, if its turnover exceeds the prescribed threshold limit of one crore rupees.

4. Monthly and Quarterly Filings: In addition to annual filings, there are monthly and quarterly compliances related to withholding tax (TDS), goods and service tax regime in India. These compliances need to be followed by the Branch Office, Liaison Office, and Project Office. These filings need to be done within the specified timeframes.

WHY CHOOSE BC SHETTY & CO TO SET UP YOUR BRANCH OFFICE, LIAISON OFFICE OR PROJECT OFFICE IN INDIA?

1. Expertise and Experience: We at BC Shetty and Co. have a wealth of experience and expertise in helping foreign companies establish their presence in India. Our team of professionals understands the complexities of Indian regulations and can guide you through the process smoothly.

2. Tailored Solutions: We understand that every business has different needs, and we provide customized solutions that cater to your specific requirements. Whether you are a small startup or a large corporation, we can help you with a range of services from legal, financial, or operational assistance.

3. Multi-Disciplinary Team: At BC Shetty & Co., we have a team of experts in various fields. It includes accounting, legal, and tax consultancy, who work together to provide comprehensive services that meet all your needs. Our team will ensure that all regulatory compliance is met, and you can focus on growing your business in India.

Contact us today to learn how we can help you in setting up your branch office in Bangalore!

FREQUENTLY ASKED QUESTIONS

Opening a branch office offers you a greater level of control over your business. You can easily expand your business reach and gain access to new markets. You are also offered multiple tax benefits.

Usually, it takes around 2 months for the process to complete. However, it depends on the approval process and the type of branch office that you would want to open.

Here are some of the documents required to set up a branch office:

  • Certificate of Incorporation of the parent company
  • Memorandum and Articles of Association.
  • Power of Attorney from the parent company
  • Latest audited balance sheet and annual accounts of the parent company
  • Banker’s Certificate

The chartered accountants at BC Shetty have the required experience in setting up a branch office. The experts will take all your requirements into account and help you in setting up your branch office without you having to worry about the same.

The experts at BC Shetty will take care of every aspect of branch office registration. Right from helping you acquire the necessary documents to navigating the approval process, everything will be taken care of by us on your behalf.

Receive our news monthly by email

Once a month we'll send you an email packed full of essential business news and handy tax tips to help save you money.

Copyright B.C Shetty & Co. © 2024. All Rights Reserved. Privacy Policy , Terms and Conditions