Branch Office in India

A branch office is a suitable business model for foreign companies looking to establish a temporary presence in India. The branch office serves as an extension of the head office business and carries on the same business and activity as that of its parent company.

Most businesses use this mode to learn more about the Indian market. Accordingly, businesses that are looking to expand into Asia or diversify their Asia presence should consider whether a branch office meets their market entry requirements

Conditions for setting up a branch office

Businesses that would like to set up a branch office in India need to meet the following conditions:
• The applicant company must be a body corporate incorporated outside India;
• The name of the Indian branch office must be the same as the parent company.
• The net worth of the branch office must not be less than US $100,000
• The parent company should have a profit making record in the immediately preceding five financial years in the home country.

In cases where the applicant foreign entity does not meet the financial criteria, the parent company may issue a Letter of Comfort (LoC), given the company satisfies the prescribed criteria for net worth and profit.

Permitted Activity Of Branch Office 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 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.

Closure Of Branch Office

Branch office licenses is given for three years, if at any time the Company plans to close the Branch office setup in India it shall file the necessary documents with the Authorized Dealer, and the application for the closure shall be forwarded by the Authorized Dealer.

Copy of the Reserve Bank’s permission/ approval from the sectoral regulator(s) for establishing the BO / LO.

Auditor’s Certificate-
I) Indicating the manner in which the remittal amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets.
ii) confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Office have been either fully met or adequately provided for; and
iii) confirming that no income accruing from sources outside India (including proceeds of exports) has remained un- repatriated to India.

No-objection / Tax Clearance Certificate from Income-Tax authority for the remittance/s.

Confirmation from the applicant/parent company that no legal proceedings in any Court in India are pending and there is no legal impediment to the remittance.

A report from the Registrar of Companies regarding compliance with the provisions of the Companies Act, 1956, in case of winding up of the Office in India.

Any other document/s, specified by the Reserve Bank while granting approval.

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Branch Office in India

What activities can a branch office perform in India?

The branch office are often opened by any foreign company. The activities it can undertake are mentioned below:

• 1 Export/Import of products
• 2 Rendering consultancy services
• 3 Carrying out research work, during which the foreign parent company is engaged.
• 4 Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
• 5 Representing the parent company in India and acting as buying/selling agents in India.
• 6 Rendering services in Information Technology and development of software in India.
• 7 Rendering technical support to the products supplied by the parent/ group companies.
• 8 A branch office cannot perform manufacturing activities on its own but can subcontract these to any manufacturer based in India. Branch Offices can remit the profits to its parent company after paying taxes on an equivalent (RBI).

Who is that the approving authority for branch office?
Reserve bank of India is that the nodal authority to urge the permission to start out a branch office in India

How much time does it fancy setup a branch office in India?
The Branch office could also be registered in 45–60 days

What are the pre requisites to start out a branch office in India?

• 1 The name of Indian Branch office should be same as that of a parent company.
• 2 The Branch is simply extension of the exiting company within the foreign country.
• 3 All the expenses of the BRANCH office are met by the top office, if it doesn’t have the revenue from Indian operations.
• 4 The foreign parent company getting to setup a Branch office should have a profitable diary during immediately preceding 5 years.
• 5 The Net worth of the foreign company should be quite or adequate to USD 100,000. The networth certificate should be
• 6 A branch office is is suitable for foreign companies looking to setup a short lived office in India and not interested or not getting to have future plans for the Indian operations; except banking, shipping and airlines etc. mentioned above.

Documents required for forming a Branch Office in India
The application for forming a branch office is to tend to the bank in India. The bank then submits the appliance to RBI for approval.

The following documents are required to open a branch office in India:

• A Indian resident who are going to be liable for branch operations and can be susceptible to make the tax payments and regular compliances Form FNC 1 (Three copies)
• 1 Letter from the principal officer of the Parent company to RBI.
• 2 Letter of authority from the parent company in favor of Local Representative.
• 3 Letter of authority/ Resolution from parent company for fixing BRANCH office in India.
• 4 Comfort letter from the parent company meaning to support the operation in India.
• 5 Two copies of English version of the Certificate of Incorporation, Memorandum & Articles of association (Charter Document) of the parent company duly attested by the Indian embassy or notary within the country of registration.
• 6 Certification of Incorporation — Translated & Duly Notarized and properly authenticated.
• 7 The Latest audited record and annual accounts of parent company duly Translated notarized for past Three years and properly authenticated
• 8 Name, Address, email ID and phone number of the authorized person in Home Country.
• 9 Details of Bankers of the Organization the Country of Origin along side the checking account number
• 10 Commitment from the Organization to the effect that it’ll be hospitable report / opinion sought from its banker by the govt of India / Federal Reserve Bank of India
• 11 Expected funding level for operations in India.
• 12 Details concerning address of the proposed local office, number of persons likely to be used , number of Foreigners among such employees and address of the top of the Local office, if decided
• 13 Details of Activity administered in Home Country by the applicant organization in short about the merchandise and services of company in short .
• 14 Bankers Certificate from the bank of the parent company about the small print of parent company and duration of banking with parent company
• 15 Latest Proof of identity of all the administrators — Properly Certified by Banker in Home Country and duly authenticated
• 16 Latest Proof of address all of Directors — Properly Certified by Banker in Home Country and duly authenticated
• 17 Details of the Individuals / Company holding more 10% of Equity
• 18 Structure of the Organization and its Shareholding pattern
• 19 Complete KYC of Shareholders holding quite 10% Equity within the Applicant Company
• 20 Resolution for Opening up checking account with the Banker
• 21 Duly Signed checking account Opening Form for Indian Bank
• 22 The application for BRANCH office Licenses is approved by the RBI, but as per the recent changes the applications for BRANCH office are routed through the Authorized Dealers (AD). thanks to this the timeline for fixing the BRANCH office has increased tremendously. Further the documentation required for an equivalent has also increased to an excellent extent.

Post Incorporation Procedural Requirements
After Incorporation, the subsequent registrations also are necessary for a branch office:

• 1 Permanent account number — PAN
• 2 Tax deduction number — tan number Shop & establishment
• 3 Registration GST Registration if providing services to Indian Customers
• 4 What are the compliances after the Branch Office is made in India?

Every year a branch office is required to undertake the subsequent activities:

• 1 Book Keeping
• 2 Audit
• 3 Annual activity Certificate with RBI
• 4 Filling of financials with Registrar of Companies

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