Establishing Branch Office in India
Understanding establishment of Branch Office
A branch office can be established in India subject to approval from the Reserve Bank of India (RBI).
The parent company is required to obtain permission for establishing branch office in India from the Reserve Bank of India (RBI). Apart from registering itself with the Reserve Bank of India the branch office to be established in India shall also required to be registered with the Ministry of Corporate Affairs (MCA). The application to seek approval for establishment of branch office in India from Reserve bank of India (RBI) should be submitted through an Authorised Dealer Category-I bank.
If it is not opened within six months from the date of approval letter, the approval for establishing the office in India shall be cancelled unless a permission is obtained from the concerned Authorised Dealer Category-I bank for extension of time for setting up the office by a further period of six months. If any further extension of time is required for opening the branch office, prior approval of the Reserve Bank of India (RBI) should be obtained in respect of the same.
A branch office established in India is required to have the same name as that of its parent company.
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Subject to payment of applicable taxes, the profits earned by the branch offices can be remitted from India in accordance with RBI guidelines.
Activities that can be carried out by a branch office
- A branch office may be established by foreign manufacturing or trading companies with specific approval of Reserve Bank of India (RBI) to carry out the same activity in which the parent company is engaged which may be the following:
- 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
Further, it is restricted from entering into the following activities:
- Retail trading activities of any nature
- Manufacturing or processing activities in India, directly or indirectly.
Registrations required to provide services
The following additional registrations will have to be obtained in case of willingness to provide services in India
- Permanent Account Number (PAN)
- Tax Deduction and Collection Account Number (TAN)
- Shop & establishments registration
- GST Registration
The following annual compliances are required to be met by the branch office:
- Maintenance and auditing of books of accounts
- Filling of Annual Activity Certificate with RBI
- Filling of Annual Return and Balance sheet with Registrar of Companies
Changing the details of the branch office
An intimation will be required to be given to the Reserve Bank of India as well as the Registrar of Companies in the following circumstances:
- Any change in constitution of Foreign Company
- Any change in Directors of Foreign Company to RBI & RO
- Intimating each and every change in the BRANCH office to RBI & ROC
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