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The set up and regulation of Branch Office are governed by Foreign Exchange Management Act, 1999 and the Regulations issued by Reserve Bank of India time to time. Branch Office are generally set up by foreign entities engaged in manufacturing and trading activities to represent the parent company/group company in India.
Company desirous for Setting up a Branch Office in India are required to show a profit making track record during the immediately preceding 5 financial years in the home country and net worth of not less than USD 100,000 or its equivalent.
Permitted activities for a Branch Office in India of a person resident outside India are given below:
The applications for establishment of Branch Office in a sector in which 100% FDI is allowed are routed through designated AD Category I Bank. The application are submitted to AD Category-I bank (AD Bank) in Form FNC along with the prescribed documents mentioned in the Form and the LOC (wherever applicable), as per the guidelines issued by the Reserve Bank of India.
Before issuance of approval letter, AD Bank forwards a copy of Form FNC along with the details of the approval proposed to be granted by it to the General Manager, Reserve Bank of India, CO cell, New Delhi for allotment of Unique Identification Number (UIN) to each branch office.
An applicant that has received a permission for setting up of a Branch Office shall inform the designated AD Bank as to the date on which the Branch Office has been set up which shall not be later than 6 months from the date of the approval letter.
A Branch Office can approach any AD Bank in India to open a Bank Account for its operations in India. The permissible credits in bank account are generally fund received from head office through normal banking channels for meeting the expenses of the office and any legitimate receivables arising in the process of its business operations. While the permissible debits are the expenses incurred by the Branch Office and towards remittance of profit/winding up proceeds.
Permissible Activities
Branch Office can undertake all types of profit making activity to promote business of its parent company.
Expenses of Branch office
Branch office is a representative of the foreign parent company, therefore expenses of such office may be met by the Head Office through inward remittances received in Convertible Foreign Exchange if it fails to make sufficient profits from Indian operations.
Bank Account
A Branch Office may approach any AD Category-I bank in India to open an account for its operations in India.
Remittance of Profit
Profits earned by the Branch Offices are freely remittable from India, subject to payment of applicable taxes on production of prescribed documents to the satisfaction of the AD Category-I bank
Extension of fund and non-fund based facilities
AD Category I Bank may extend Fund/Non Fund facilities to Branch Office on the basis of Board approved policy, business prudence and compliance to extant rules/regulations stipulated by DBR, RBI
Closure of Branch Office:
Requests for closure of Branch Office and for remittance of winding-up proceeds needs to be submitted to designated AD Category - I bank along with prescribed documents.
Track record
The non-resident entity applying for Branch Office in India should have a profit making track record during the immediately preceding five financial years in the home country and net worth of not less than USD 1,00,000 or its equivalent.
Application for establishment of Branch Office
The applications for establishment of Branch Office in a sector in which 100% FDI is allowed are routed through designated AD Category I Bank. The application is required to be submitted to AD Category-I bank (AD Bank) in Form FNC along with the prescribed documents mentioned in the Form and the LOC (wherever applicable), as per the guidelines issued by the Reserve Bank of India.
Before issuance of approval letter, AD Bank forwards a copy of Form FNC along with the details of the approval proposed to be granted by it to the General Manager, Reserve Bank of India, CO cell, New Delhi for allotment of Unique Identification Number (UIN) to each branch office.
An applicant that has received a permission for setting up of a Branch Office shall inform the designated AD Bank as to the date on which the Branch Office has been set up which shall not be later than 6 months from the date of the approval letter.
Permissible debits and credits from bank account
The permissible credits in bank account are generally fund received from head office for meeting its expenses and any legitimate receivables arising in the process of its business operations. While the permissible debits are the local expenses of the office and remittance of profit/winding up proceeds.
Annual Activity Certificate
Branch office are required to submit Annual Activity Certificate (AAC) as at the end of March 31 each year along with the prescribed documents to the designated AD Category -I bank as well as Director General of Income Tax (International Taxation), New Delhi.
Registration with Registrar of Companies
A foreign company establishing a branch office in India is required to file Form FC-1 with the Registrar of Companies within 30 days of the establishment of its place of business in India.
From Foreign Entity
At Companies Next, we have a dedicated team of professionals for providing quality services with accuracy and within given timelines. We provide a complete transparent and online platform for registration of your Branch Office.
Foreign Individuals seeking interest to start their operations in India can open a Foreign Representations in the form of Liaison Office, Branch Office and Project Office in India. Further, an incorporated entity can also be formed such as Wholly Owned Subsidiary, Joint Venture and Limited Liability Partnership.
Company desirous for setting up a Branch Office in India are required to show a profit making track record during the immediately preceding 5 financial years in the home country and net worth of not less than USD 1,00,000 or its equivalent.
Approval of RBI for establishing Branch Office is required in following cases:
UIN is a unique identification number allotted by Reserve Bank of India, before issuance of approval letter by AD Category I Bank to each Branch office.
Branch office are also required to obtain Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN), Service tax Code and other statutory registrations as may be applicable. Periodic compliances include TDS Return, Service Tax Return, Income Tax Return, Annual Activity Certificate, PF/ESI returns etc. as may be applicable.
Requests for closure of Branch office and for remittance of winding-up proceeds needs to be submitted to designated AD Category - I bank along with prescribed documents.
An individual seeking interest to start their business operations in India as a representative of its already existing foreign company without creating a subsidiary company can open a Branch Office in India by approaching AD Category –I Bank along with the application in Form FNC and requisite documents.
The following activities are permitted for a Branch Office in India:
Branch office are required to submit Annual Activity Certificate (AAC) as at the end of March 31 each year along with the prescribed documents to the designated AD Category -I bank as well as Director General of Income Tax (International Taxation), New Delhi.
Request for opening an additional office to be submitted to the AD Category I bank in a fresh Form FNC. The documents mentioned in Form FNC need not be re-submitted, if there are no changes to the documents already submitted earlier. Further, if the number of offices exceeds 4 (i.e. one Branch office in each zone viz. East, West, North and South), the applicant has to justify the need for additional offices and shall require prior approval of RBI.
