LIAISON OFFICE OR REPRESENTATIVE OFFICE IN INDIA
PROJECT OFFICE IN INDIA
BRANCH OFFICE OF THE FOREIGN COMPANY IN INDIA
LIAISON OFFICE OR REPRESENTATIVE OFFICE IN INDIA
A Liaison office is also called Representative office is a place of business to act as a channel of communication between the Principal place of business or Head Office by whatever name called and entities in India but which does not undertake any commercial / trading / industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel
A LIAISON OFFICE CAN UNDERTAKE THE FOLLOWING ACTIVITIES IN INDIA
- Representing in India the parent company or group companies
- Promoting export or import from or to India
- promoting technical or financial collaborations between parent or group of companies and companies in India
- Acting as a communication channel between the parent company and Indian companies
PROJECT OFFICE IN INDIA
The RBI has granted general permission for foreign companies to establish a Project Office in India, subject to the condition that they have secured a contract from an Indian company to execute a project in India
Project is funded directly by inward remittance from abroad.
Project is funded by a bilateral or multilateral financing agency.
Project has been cleared by an appropriate authority.
Company awarding the contract has been granted a term loan by a public financial institution or bank for the project.
BRANCH OFFICE OF THE FOREIGN COMPANY IN INDIA
Foreign companies can also set up a Branch office (BO) in India with the approval of the RBI, by registering with the ROC and by doing other business registrations. A branch office can perform all the tasks that are permissible for a Liaison office, and in addition they can provide consultancy or technical assistance on their products or services in India. They can import and export goods as well as act as a buying or selling agent in India. But, the Branch Office cannot carry out production or processing of products in India either directly or indirectly Normally, The Branch Office should be engaged in the activity in which the parent company is engaged. Profits earned by the Branch Offices are freely remittable from India, Subject to payment of applicable taxes..
PERMITTED ACTIVITIES FOR BRANCH OFFICE
1.Export or 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 for Foregin Company Registration
Once a name for the company is decided, the following steps have to be taken by the applicant
PAN Card, Tax Deduction Number & Bank A/c Opening
Income Tax Department allots a unique 10 Digit alphanumeric number as a permanent account number, also known as PAN Number. To comply with TDS provisions, every taxpayer needs to obtain a Tax Deduction Account Number. These identification numbers are essential to do compliance with the tax rules. The bank account of the branch office can be opened after allotment of Pan Number by the Income Tax Department..
Filing of Application with RBI through AD Bank
The application for registration of a office of a foreign company is filed in FNC to the reserve bank of India through AD Bank (Authorised Dealer). The AD Bank plays a crucial role as all the communication to the RBI has to be routed through them. We have excellent relationship with many banks in India, which certainly help in applying to the RBI and Follow up
Verification of KYC from Banker of Parent Company
After FNC Form is filed with the AD Bank, a request for verification of documents is sent to the banker of the foreign company. This process is also known as swift based verification. After receipt of confirmation of the documents from the foreign banker, the application is submitted to the RBI for their approval. The RBI may seek clarification or any additional document which need to be submitted.
Approval of RBI for Office Registration in India
For approval of the establishment of a office in India the Reserve Bank of India is the authority, which is also the central bank of India. The decision of RBI is on the case to case basis, and there is no standard rule which applies in all cases. After approval RBI allots a unique number to the office known as UIN. Usually, RBI decides within 2-4 months subject to its assessment being satisfactory.
Registration of office of Foreign Company with the ROC
After approval of the RBI for the establishment of the office in India, an application for registration of such office of the foreign company is filed within 30 days to the ROC. In case there are Indian directors the DIN number of such director is needed, and the digital signature of the authorised signatory is required to e-file statutory forms with the ROC for their approval..
PAN Card, Tax Deduction Number & Bank A/c Opening
Income Tax Department allots a unique 10 Digit alphanumeric number as a permanent account number, also known as PAN Number. To comply with TDS provisions, every taxpayer needs to obtain a Tax Deduction Account Number. These identification numbers are essential to do compliance with the tax rules. The bank account of the office can be opened after allotment of Pan Number by the Income Tax Department..
Other Registration and Licenses
After the office is operational, there are various other compliance related activities, which depends on the nature of the business and the state-specific laws, which apply to all entities doing commercial activities. For example registration under shops and establishment act, Goods and Services Tax (GST), Professional Tax Act, Provident Funds Act, Employee State Insurance Act (ESIC), etc.
F.A.Q
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How can Foreign companies establish a place of business in India?
Any foreign company can establish its place of business in India by filing eForm FC-1 (Information to be filed by foreign company).Note: The eForm needs to be digitally signed by authorized representative of the foreign company. There is no need to apply and obtain DIN for Directors of a foreign company. However, it is mandatory to register the DSC of the authorized representative of the foreign company via associate DSC service available at MCA portal.
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Can a foreign company be a shareholder of the subsidiary company in India with 100% shares?
"Yes a foreign Company can become a Parent company of the Indian Subsidiary holding 100% shares. Indian Laws allow you to retain 100% ownership by subscribing shares of Indian company."
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Is there any limitation or special requirement for company name
The name must be unique and must not be resembling with any other company already registered in India. However, we can insist on getting the similar name as that of a parent company.
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What is Income Tax rate for a Branch office of a Foreign Company?
A branch office of a foreign mother company is not treated as a separate and distinct entity in India and for all tax purposes, the Indian government taxes the profits of such entities at higher rates. As of now the Income Tax on the profit of a foreign company is 40% in contrast to the tax rate of 30% on an Indian company.
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Who approves the setting up of a liaison office?
The RBI is empowered to approve the establishment of a liaison office in India, under master direction dated January 01, 2016 for the establishment of a place of a foreign corporation the powers have been delegated to any AD Category 1 Banker
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