Foreign Entities has an option for establishing a Branch Office, Liaison Office, Project Office or any other place of business in India, under FEMA Act, 1999.
Permitted Activity of Branch Office in India:
Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to set up Branch Offices in India and undertake the following activities in India;
- 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 a parent or overseas group companies.
- 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.
Prohibited Activities by the Branch Office in India:
Companies incorporated outside India are prohibited from doing the following activities through a branch office in India.
- Retail trading activities of any nature is not allowed for a Branch Office in India
- A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly.
- Profits earned by the Branch Offices are freely remittable from India, subject to payment of applicable taxes.
|Requirements||For Branch Office|
|Profit-making track record||immediately preceding 5 financial years|
|Net Worth||> USD 100,000 or equivalent|
*Net Worth [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 called].
Compliances for Branch office as per FEMA act, 1999 and Companies act, 2013
A person resident outside India desiring to establish a branch office in India shall submit an application; in the requisite form to RBI through an Authorized Dealer i.e. Category-I bank; and
- AD Category-I bank shall forward the copy of the requisite form with the details of the approval proposed to be granted by it to the General Manager, RBI cell for the purpose of Unique Identification Number to each BO.
- After Compliance with the extant KYC norms, RBI will grant approval to the foreign entity for setting up a BO in India.
- The validity of BO is generally for 3 years, except in the case of NBFC.
- After the establishment of a Brach office with RBI, the same shall get itself registered with the Ministry of Corporate Affairs by filing the requisite form with ROC. On such registration a CIN i.e. Corporate Identity Number and Panis allotted by the Registrar of Companies and afterward Companies Annual compliances to be done as per Indian Laws.
- The name of the Indian branch office shall be the same as a parent company.
- The Governing Body for the Branch Office License is RESERVE BANK OF INDIA.
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