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A branch office is an extension of a foreign company's operations within India. Setting up a Branch Office in India is especially beneficial for foreign companies looking to explore the Indian market and expand market presence. This type of company structure offers physical presence, brand visibility, and local access—all without the long-term obligation of forming a separate Indian company.
Stratrich Consulting offers expert advice and support to foreign companies looking to establish a Branch Office in India. Our experts possess in-depth knowledge of Indian regulations and procedures that can swiftly guide you through the registration process.
Setting up a Branch Office in India has become a strategic move for many international companies due to the following advantages:
Companies can expand their reach to the vast consumer base of the Indian market by establishing a Branch Office.
Branch Office has a simpler, more straightforward registration process compared to other business structures and legal entities.
Branch Office offers a perfect structure for companies looking to enter the Indian market, as it helps in building strong brand awareness and credibility. This also facilitates more efficient communication with customers.
A Branch Office is more cost-effective than setting up a full-fledged subsidiary or new company.
A Branch Office does not require full operational autonomy to manage operations.
Branch Offices are eligible for tax exemptions, reduced rates and other financial advantages.
Companies get a better understanding of the regulatory environment, cultural nuances, and market trends while exploring the Indian market.
A Branch Office can be established in India, provided the following criteria is met:
A Branch Office in India is required to carry out the same trading activities as its parent company. It is, however, not permitted to carry out manufacturing activities but can outsource manufacturing related activities to an Indian manufacturer.
The first step in setting up a Branch Office in India is to apply to the Reserve Bank of India (RBI) through an Authorised Dealer (AD) bank. The AD Bank is an intermediary between the applicant and the RBI. The application should include all the necessary documents, such as a board resolution from the parent company approving the establishment of the branch, a copy of the parent company's certificate of incorporation, and details about the expected activities of the branch office.
The parent company is required to provide Know Your Customer (KYC) information from its banking institution. These records typically include a letter of recommendation, bank statements, and other relevant financial information. The AD Bank reviews these documents to verify their authenticity and assess the financial standing of the parent company.
In some cases, the business activities of the branch office do not align with RBI's procedure. This requires prior permission from the RBI, which can be secured by providing a comprehensive and detailed justification.
After the RBI’s approval of the Branch Office, the next step is to register with the Registrar of Companies (ROC) in the specific state where the office will be located. This can be done by filing Form 44 through the Ministry of Corporate Affair’s online portal. To complete this registration, the applicant must submit the required documents, pay the applicable fees, and provide supporting documentation, including the RBI permission letter, the parent company's certificate of incorporation, and the company's articles of association and memorandum.
The Branch Office needs to acquire a Permanent Account Number (PAN) from the Income Tax Department for conducting financial transactions and ensuring compliance with tax regulations. The Branch Office should also obtain a Tax Deduction Number (TAN) and open a bank account in India to facilitate its financial operations.
If the Branch Office engages in the sale of goods or provision of services, it is required to register for the Goods and Services Tax (GST). Additionally, if the branch office plans to import or export goods, it must obtain an Import Export Certificate (IEC) code from the Directorate General of Foreign Trade (DGFT).
Stratrich Consulting specialises in assisting foreign companies and investors in entering the Indian market and establishing their business operations. We provide the following services for setting up a Branch Office in India:
A Branch Office is an extension of a foreign company. It has the same business activities as the parent company.
Any foreign company can open a Branch Office in India provided it complies with Reserve Bank of India (RBI) guidelines.
The Branch Office does not have a separate legal status and is an extension of the foreign entity headquartered outside India.
A Branch Office is allowed to carry out the following activities:
The registration process of a Branch Office takes about 4-6 weeks, assuming all documents are in order.
Yes, but only through activities approved by the RBI.
The Branch Office (BO) in India is subject to income tax on its net earnings as per corporate tax rates:
In certain cases, Minimum Alternate Tax (MAT) rates apply as follows:
Additional tax requirements include:
Yes, the Branch Office is allowed to hire local as well as foreign employees. The Indian labour laws are applicable (the Branch Office needs to comply with PF, TDS, professional tax, and employee contracts).
An application of a foreign entity for opening of a Branch Office in India shall require prior approval of Reserve Bank of India in the following cases:
The closure of a Branch Office in India involves the below steps:
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