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