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What is Branch Office ? 

A Branch office just an extension of the Parent Companies office in India. Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to set up Branch Offices in India with specific approval of the Reserve Bank. Such Branch Offices are permitted to represent the parent / group companies and undertake the following activities in India:

  1. Export / Import of goods.
  2. Rendering professional or consultancy services.
  3. Carrying out research work, in areas in which the 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 agent in India.
  6. Rendering services in information technology and devel­opment of software in India.
  7. Rendering technical support to the products sup­plied by parent/group companies.
  8. Foreign airline / shipping company.

PROCEDURE INVOLVED

Permission for setting up branch offices is granted by the Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai. Reserve Bank of India considers the track record of the applicant company, existing trade relations with India, the activity of the company proposing to set up office in India as well as the financial position of the company while scrutinising the application. The application in Form FNC should be submitted to the Reserve Bank through the Authorised Dealer bank.

1. Submit application in Form FNC with the required documents

2. The applications from such entities in Form FNC will be considered by the Reserve Bank under two routes:

  • Reserve Bank Route - Where principal business of the foreign entity falls under sectors where 100 per cent Foreign Direct Investment (FDI) is permissible under the automatic route.
  • Government Route - Where principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category and those from Non - Government Organisations / Non - Profit Organisations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, Government of India.

3. Apart from the above, there are certain additional criteria by Reserve Bank of India which need to be fulfilled:

• Track Record - a profit making track record during the immediately preceding five financial years in the parent country.

• Net Worth [total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name].The total net worth should not be less than USD 100,000 or its equivalent.

 

Register Branch Office in India – FAQs

1. Whether Branch Offices are permitted to remit profit outside India?

Branch Offices are permitted to remit outside India profit of the branch net of applicable Indian taxes

2. What are the permitted activities of Branch Office?

As mentioned earlier, a branch office can undertake the following activities:

  1. Export / Import of goods.
  2. Rendering professional or consultancy services.
  3. Carrying out research work, in areas in which the 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 agent in India.
  6. Rendering services in information technology and devel­opment of software in India.
  7. Rendering technical support to the products sup­plied by parent/group companies.
  8. Foreign airline / shipping company.

Normally, the Branch Office should be engaged in the activity in which the parent company is engaged.

Note:

  1. Retail trading activities of any nature is not allowed for a Branch Office in India.
  2. A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly.
  3. Profits earned by the Branch Offices are freely remittable from India, subject to payment of applicable taxes.

3. Does a Branch Office have to pay Dividend Declaration Tax while remitting funds back to parent company?

No.

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