Branch Office Of Foreign Company in Kolkata

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Frequently Asked Qustion

What are the conditions /requirements for opening a Branch in India?
What is Income Tax rate for a Branch office of a Foreign Company?
What are Other Incorporation Requirements for Branch Office Registration in India?

Branch Office Of Foreign Company

By opening a branch office, a Foreign company can conduct business activity in India with the prior approval of RBI, provided:

  • The company should be engaged in manufacturing or trading activities,
  • Profit in the immediately preceding five financial years is necessary,
  • The net worth of not less than USD 100,000 in its home country.

There are huge opportunities in India as a Foreign Company even in the E-commerce Sector where govt recently allow 100% FDI in the E-commerce Sector.

Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in India for the following purposes:

  • 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 is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer. 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 Permission for setting up branch offices is granted by the Reserve Bank of India (RBI).

India is moving towards reforming its tax policies and systems so as to facilitate globalization of economic activities. The corporate tax rate for foreign companies is 40%. The net tax rate is far lower than this on account of various deductions and exemptions available under the tax laws. Tax holidays are available in Special Economic Zones set up to make industry globally competitive. Infrastructure Sector Projects enjoy special tax treatment/holidays.


Important Conditions for FDI in a Company

Net Worth Requirement

The foreign parent company must have a profitable track record of five years in a row with a net worth of more than $ 1,00,000/- duly supported by financial statement.

Profit Remittance Allowed

The profits of the branch office are freely allowed to be remitted from India to its parent company after payment of applicable taxes, after the audit if books of A/c.

Name of Branch Office

The name must be same to that of the foreign parent company, and for each new office of such branch office, a fresh approval is required from RBI with justification.

Taxation in India

The income tax on the profits of the branch office of foreign entities in India is 40% plus surcharges as applicable. GST is applicable to the supply of goods or services.


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