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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Taxman gets more teeth to track non filers of Income Tax

Aimed at further arming the taxman to go after those who do not file their income tax returns (ITRs), a new database of multiple addresses of such erring assessees has been set up by the department.

For more info visit company formation in Gurgaon

A new technology enhancement by the systems wing of the department has been added to the ‘Non Filers Management System’ electronic database, the address used by a person or his associate in the ITR or Annual Information Return filed by him.

Source: Hindustan Times, New Delhi, 15th Feb. 2016

Why your Startup should be an LLP (Limited Liability Partnership) - Incorporation of company in India

A Limited Liability Partnership (LLP) is a Partnership in which some or all partners have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence. This is an important difference from that of an unlimited partnership. In an LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation. In some countries, an LLP must also have a form of limited liability similar to that of the shareholders of a corporation. In some countries, an LLP must also have at least one "General Partner" with unlimited liability. 

Salient features of an LLP 

An LLP is a body corporate and legal entity separate from its partners. It has perpetual succession. 

Being the separate legislation (i.e. LLP Act, 2008), the provisions of Indian Partnership Act, 1932 are not applicable to an LLP and it is regulated by the contractual agreement between the partners. 

Every Limited Liability Partnership shall use the words "Limited Liability Partnership" or its acronym "LLP" as the last words of its name. 

Every LLP shall have at least two designated partners being individuals, at least one of them being resident in India and all the partners shall be the agent of the Limited Liability Partnership but not of other partners. 

Need for LLP 

For a long time, a need has been felt to provide for a business format that would combine the flexibility of a partnership and the advantages of limited liability of a company at a low compliance cost. The Limited Liability Partnership format is an alternative corporate business vehicle that provides the benefits of limited liability of a company but allows its members the flexibility of organizing their internal management on the basis of a mutually arrived agreement, as is the case in a partnership firm. 

This format would be quite useful for small and medium enterprises in general and for the enterprises in services sector in particular. Internationally, LLPs are the preferred vehicle of business particularly for service industry or for activities involving professionals. An LLP is similar in some ways to a standard Partnership, except that the individual members have lower liabilities to any debts which may arise from running the business. There are more administrative duties involved compared to the Partnership business structure. 

In fact, an LLP is more similar to operating a Limited Company. In terms of liability, the Limited Liability Partnership is itself liable for debts run up in running the business, rather that the individual members of the LLP. As a result, LLP's are only recommended for profit running businesses. The rights and responsibilities of all members would usually be laid out in a "Deed of Partnership". The LLP would typically select a "Designated Member" who would be responsible for maintaining communications with Companies House, preparing accounts and acting for the LLP if for some reason it is dissolved further down the line. 

For company Laws and company incorporation visit link  Company Incorporation in India

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Tax implications of setting up overseas subsidiaries - subsidiary company in India

There is a rising trend that many start-ups incorporate their ultimate holding companies abroad, especially in Singapore for various reasons with tax being one of the top 3 factors for such decisions. 

Some of them have restructured the holding structures after few months of direct Indian holding to accommodate requests from investors and VCs. Apart from ease of regulatory environment in the case of overseas companies, the tax implications in such scenarios could be a grey area and potentially a serious cause of concern if not managed amicably. 

A typical overseas structure could be:

Let's now try and understand the tax implications of the above mentioned typical structure:  - Capital gains on sale of shares of Singapore Holding Company (SHC): This seems to be one of the biggest reasons for such a structure especially where the funds investing are registered overseas. In the case of Singapore, Mauritius, Dubai or similar jurisdictions, there is no domestic tax on capital gains hence the shareholders may not be subject to tax on sale of shares in SHC.  However consequent to recent amendments in Income tax law, if SHC derives more than 50% of its value from assets in India and that the sale value exceeds Rs. 10 crores, then proportionate capital gains shall still be subject to tax in India irrespective of domestic tax laws in the country of incorporation of SHC.  The case for concern in this scenario is the conflict of interpretation between Double Taxation Avoidance Agreements (DTAA) and Income tax law - since as per DTAA this transaction would continue to be taxed only in Singapore (where capital gains is taxed @ 0%) and as far as Indian laws are concerned, DTAA always prevails over domestic taxation laws.  - Royalty income of SHC: Royalty earned and received by SHC from Indian Selling Company (ISC) would be subject to withholding taxes in India @ 10% provided:  o Tax residency certificates (TRC) of SHC is made available to ISC and o SHC has an Indian PAN  Where one or both the above conditions are not fulfilled the withholding tax rates could be anywhere between 20-40%.  Applicability of Transfer Pricing Rules: Any transaction with an Indian entity with its related person overseas shall fall within the ambit of transfer pricing rules. Accordingly all the transactions which are subject to transfer pricing shall be made at fair market values (technically known as arm's length price [ALP]).  Hence royalties paid by ISC and software development charges received by ISD shall be subject to transfer pricing. Detailed commercial contracts and invoices need to be prepared for these transactions. There are elaborate rules and regulations provided for determining alp which need to be adhered. Non-compliance could lead to serious penalties and tax levies. It is noteworthy to mention that India is one of the popular jurisdictions globally for high value transfer pricing litigations. - Taxability of Dividends distributed by ISC and ISD: Indian companies are subject to corporate tax @ 30% plus surcharge (7/12%) and cess @ 3% depending on their income levels. Post tax profits, when distributed are subject to 15% distribution plus surcharge and cess. However dividends distributed by ISC and ISD to SHC are not subject to any further tax in India since dividends from Indian companies are fully exempt in India.  For more information on tax implications You can consult any tax consultancy in Mumbai. They provide support from Company registration to filing e-returns. For company Laws and company incorporation visit link Company Incorporation in India steps Read more at: http://economictimes.indiatimes.com/articleshow/48261621.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst