BRANCH OFFICE

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Branch Office

India is one of the most ideal destinations for foreign investors looking to set up their businesses in India or to open a branch office in India for a fact that there are infinite business opportunities in India. India is blessed with a large labour pool and admirable levels of judicial transparency. It can leverage its territorial position to play a critical role in the global supply chains. With the idea of setting up a branch office in India, the representatives of the foreign company should receive approval from the Foreign Exchange Department, Reserve Bank of India (RBI). The approval should be done through AD category 1 Banker and further registration of the foreign company with the ROC.

Advantages of Branch Office

Input Tax credit
The branch office offers a greater level of control to the parent company. A branch office is known as a dependent type of company, which means that its activities are entirely managed by the parent company in terms of the decision-making process.
Composition scheme for small businesses
The branch office in India maintains the brand value of the parent company as it shall use the same name as that of the Parent company.

Procedure of Branch Office Registration

1
Application For Digital Signature Certificate Of Authorized Signatory

The process of filing an application to the registrar of companies is followed online to get a DSC. And to authenticate the process of application for digital signatures of the proposed shareholders and directors are required.

2
Filing Of Application With RBI Via AD Bank

An application to start a branch office is filed in FNC and it is filed to the Reserve Bank of India through AD Bank or Authorized Dealer. The Authorized Dealer bank has an important role as all the important communication to the RBI is carried through them.

3
Verification Of KYC From The Parent Company Banker

A request concerning the scrutiny of required documents is sent to the parent company’s banker. This process of sending requests for verification purpose is also called swift based verification. Once the documents are verified by the banker the application is forwarded for approval purpose. The RBI/AD are also allowed to ask for additional documents if required.

4
Approval Of RBI To Start A Branch Office Registration In India

The prescribed policy is followed to approve the branch office in India by the Authorized Dealer Banker itself. Priority is provided to the cases where an automatic route is not possible.

5
Registration Of Branch Office With ROC

Once the approval process is over, the RBI grants permission to establish the Branch Office in India. To complete the process, an application is filled and submitted in form FC-1 for branch office registration within 30 days of such approval by the foreign company. DIN is needed if any Indian director and the digital signature is required of the authorized signatory for the e-filing statutory forms purpose with the ROC.

6
PAN Card, Tax Deduction Number And Bank Account Opening

The Income Tax department of India grants a unique 10 digit number, which is known as a PAN number. Once the PAN number is received, the branch office can open its bank account. And it is mandatory for every taxpayer to receive the Tax Deduction Account Number to follow all the TDS norms.

7
GST Registration & IEC

On receiving the Bank Account and cheque book as the need arises for a copy of the check is required to file an application for GST registration and to receive Import Export Code.

Documents Required For Branch Office

Parent Company

As a proof of Identity:

  • Certificate of Incorporation (COI)
  • MoA and AoA of the company
  • List of Directors and Key Executives of the registered company
  • List of the shareholders of the applicant company
  • Net worth certificate signed by Certified Public Accountant (CPA)
  • Audited financial statements of the last five preceding years
  • A statement from applicant’s banker
Company Registered Address

As a proof of Identity:

  • Passport size photographs
  • National Identity Card
  • Passport
  • A Latest address proof such as electricity bill or phone bill or water bill or statement from the bank
  • Power of Attorney in the AR name
  • Board Resolution charging the AR

ELIGIBILITY CRITERIA

To be eligible to register in a branch office, you must meet the following criteria:

Simple and easy procedure
Financial track record of annual profits for the last five years in the original country of registration.
Input Tax credit
The net worth of $100,000 or more, or equivalent as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner.
Composition scheme for small businesses
If the branch office in India cannot meet the expenses, then all the revenue must be met by the head office in foreign.
Less Compliances
Proprietary concerns set up abroad are not allowed to establish Branch Offices in India.
Less Compliances
Any Branch Office established in India is prohibited from the activities like Retail trading activities of any nature and Manufacturing or processing activities, directly or indirectly.
Less Compliances
Indian Branch office’s name must be same as parent company’s name.

FAQs

Q. What is Branch Office?
Branch office in relation to a Company means:
-Any establishment described as a branch by the company; or,
-Any establishment carrying on either the same or substantially the same activity as that carried out by the head office of the company; or
-Any establishment engaged in production, processing or manufacturing.
Q. What is the Income Tax slab rate for a branch office of a foreign entity?
A branch office of a foreign organization isn't considered as different in India. Starting at now the Income Tax rate on the benefit of a foreign organization is 40% as opposed to the judgment pace of 30% on an Indian organization company.
Q. Is a branch office a legal substance?
A Branch is an increasingly autonomous substance which conducts business activities in its own name but acts on behalf of the parent company. A Branch isn't legally independent from the remote foreign organization but it works as per the local laws administering the outside foreign company.
Q. Are the Branch Office and Liaison Office the same?
A Liaison Office is like a representative office set up primarily to explore and understand the business and investment climate.
A branch office of a firm which is located somewhere other than the firm’s main office location. In other words, a branch office is simply another location and is still involved in the business activities of the firm.
Q. Can I Open a Bank Account in the Name of the Branch Office?
Branch Office after receiving approval from RBI can proceed further to open a Branch Office in India. Before opening a Bank Account in any bank like HDFC, ICICI, Axis bank etc., the branch office needs to obtain PAN Number.

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