A foreign organisation interested in setting up and organisation in India has the option to open a Foreign Branch Office in India. For setting up a branch office in India approval from Reserve Bank of India is required.Permission to set up a branch office is granted by the Reserve Bank of India. A Branch office of a foreign company upon approval from the RBI must be compulsorily registered under the (Indian) Companies Act, 1956.
Upon registration under the Companies Act, 1956 the branch office can carry on its business activities in the same way as a domestic company. Unlike a liaison office a branch office can generate revenue from the sales in the local market and repatriate the profits to the foreign parent company.
Activities Permitted for Foreign Branch Office in India
A branch office so approved and registered can carry on the following activities:
- 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 agents in India.
- Rendering services in Information Technology and development of software in India.
- Rendering technical support to the products supplied by the parent/ group companies.
- Foreign airline/shipping company
A branch office cannot carry on any manufacturing activities. Manufacturing activities can be carried on only through the means of a company incorporated in India.Branch Offices established with the approval of RBI, may remit outside India profit of the branch, net of applicable Indian taxes and subject to RBI guidelines.A branch office of a foreign company is taxed at higher rates of corporate income tax than a domestic company.
We provide full branch office setup solution to our clients which include liaison with Reserve Bank of India and Registrar of Companies for getting necessary approvals and registration with various legal authorities, if required.