India's Eligibility Factors, Mandatory Documents, and Detailed Procedure for Setting Up a Branch Office Registration

India’s Eligibility Factors, Mandatory Documents, and Detailed Procedure for Setting Up a Branch Office Registration

Expanding a business across countries is an important milestone for any organization. India, being one of the world’s fastest-growing economies, offers huge opportunities for foreign companies to establish their presence. One of the most common ways for foreign companies to operate in India is through a Branch Office.

This article explains the eligibility criteria, required documents, and the complete registration process for setting up a Branch Office in India in simple, easy-to-understand language.

What Is a Branch Office in India?

A Branch Office is an extension of a foreign company that allows it to conduct business activities in India. It does not have a separate legal identity from its parent company. The branch office can carry out the same business activities as its head office but within the limits approved by the Reserve Bank of India (RBI) and the Ministry of Corporate Affairs (MCA).

A Branch Office helps a foreign company build a local presence, explore the Indian market, and manage operations such as imports, exports, or consultancy services.

Key Features of a Branch Office

  • The Branch Office acts as a representative of the parent company.
  • It cannot engage in manufacturing or retail trading activities directly.
  • All profits earned by the Branch Office are freely remitted to the parent company after payment of applicable taxes.
  • It must follow all Indian laws, including those related to taxation, employment, and foreign exchange.
  • Approval from the Reserve Bank of India (RBI) is required before starting operations.

Eligibility Criteria for Setting Up a Branch Office in India

To open a Branch Office in India, a foreign company must meet specific conditions set by the Reserve Bank of India (RBI). Below are the main eligibility requirements:

  1. Profit Track Record:
    The parent company must have a track record of profit-making during the immediately preceding five financial years in its home country.
  2. Net Worth Requirement:
    The foreign company must have a minimum net worth of USD 100,000 or its equivalent, verified by the latest audited balance sheet.
  3. Engaged in Similar Business:
    The activities of the Branch Office in India should be the same as those of its parent company abroad.
  4. Government or RBI Approval:
    Depending on the nature of business and sector, the foreign company may need prior approval from the RBI or the Government of India through the Foreign Investment Facilitation Portal (FIFP).
  5. No Manufacturing Activity:
    A Branch Office is not allowed to carry out manufacturing or production activities directly. However, it can subcontract such work to Indian manufacturers.

Permitted Activities for a Branch Office in India

A Branch Office can carry out only the activities approved by the RBI. Commonly allowed activities include:

  • Import and export of goods
  • Providing professional or consultancy services
  • Acting as a buying or selling agent for the parent company
  • Conducting research work related to the parent company’s business
  • Representing the parent company in India for various business purposes
  • Promoting technical or financial collaborations between Indian and foreign companies
  • Providing technical support for products supplied by the parent company
  • Acting as an Information Technology (IT) service or software development centre

Documents Required for Branch Office Registration in India

Proper documentation is crucial for getting approval from the RBI and MCA. Below is the list of essential documents required for registration:

From the Foreign Company:

  1. Certificate of Incorporation or Registration of the foreign company
  2. Memorandum of Association (MOA) and Articles of Association (AOA)
  3. Audited financial statements for the past five years
  4. Details of the company’s directors and key management personnel
  5. Board resolution approving the establishment of a Branch Office in India
  6. Power of Attorney or authorization letter in favor of the authorized representative in India

From the Indian Representative:

  1. Copy of passport, address proof, and contact details of the authorised person
  2. Proof of registered office address in India (rent agreement, electricity bill, NOC from owner)
  3. Bank account details and PAN card (once obtained)

All foreign documents must be notarised and either apostilled or attested by the Indian Embassy in the country of origin.

Step-by-Step Procedure for Branch Office Registration in India

Step 1: Determine Eligibility

Before applying, ensure the foreign company meets the profit track record and net worth requirements. The business activity should also be allowed under RBI guidelines.

Step 2: File an Application with the RBI

The application for setting up a Branch Office must be filed through an Authorised Dealer (Category-I) Bank in India. The bank forwards the application to the Foreign Exchange Department of the RBI for approval.

Step 3: RBI Approval

The RBI reviews the application and supporting documents. Once satisfied, it issues an approval letter specifying the permitted activities and conditions.

Step 4: Register with the Registrar of Companies (ROC)

After receiving RBI approval, the Branch Office must be registered with the Ministry of Corporate Affairs (MCA) under Section 380 of the Companies Act, 2013 by filing Form FC-1 along with the required documents.

Step 5: Obtain PAN and TAN

The Branch Office must apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.

Step 6: Open a Bank Account

A current account can be opened in the name of the Branch Office to handle business transactions in India.

Step 7: Register for Other Statutory Requirements

Depending on the nature of operations, the Branch Office may need to register for Goods and Services Tax Registration (GST), Professional Tax, and Import Export Code (IEC).

Post-Registration Compliance Requirements

After setting up a Branch Office, compliance with Indian regulations is mandatory. Key ongoing requirements include:

  • Filing annual activity certificates and financial statements with the RBI and ROC
  • Submitting Form 49C with the Income Tax Department
  • Maintaining proper books of accounts and audit reports
  • Renewing licenses or approvals if required
  • Informing the RBI and ROC of any changes in the parent company’s structure or management

Non-compliance may result in penalties, cancellation of approval, or legal action.

Taxation of Branch Offices in India

A Branch Office is treated as a foreign company for tax purposes in India. The main tax implications include:

  • Corporate Tax:
    The income earned in India is taxed at the rate applicable to foreign companies (currently around 40% plus surcharge and cess).
  • Repatriation of Profits:
    Profits after paying Indian taxes can be freely remitted to the parent company abroad.
  • GST and Other Taxes:
    The Branch Office must comply with GST, Professional Tax, and other applicable state or central taxes depending on its activities.

Advantages of Setting Up a Branch Office in India

  1. Market Expansion:
    Provides access to India’s large and diverse market.
  2. Low Initial Investment:
    Compared to a subsidiary company, a Branch Office requires less investment and documentation.
  3. Direct Business Operations:
    Allows foreign companies to engage directly in trade, consultancy, and service-related activities.
  4. Brand Visibility:
    Enhances brand reputation and customer trust in India.
  5. Easy Remittance of Profits:
    Profits can be sent back to the parent company without complex restrictions.

Limitations of a Branch Office

  • Cannot perform manufacturing or retail trading directly in India.
  • Requires prior approval from RBI and ongoing compliance with Indian regulations.
  • Liabilities of the Branch Office are directly linked to the parent company.

Final Understanding

Setting up a Branch Office in India is an effective way for foreign companies to establish their presence and explore business opportunities in one of the world’s fastest-growing markets. However, the process requires a clear understanding of RBI regulations, eligibility criteria, documentation, and compliance.

By following the correct procedure and maintaining transparency, a Branch Office can operate successfully and contribute to long-term business growth in India.

If you need expert help with Branch Office Registration in India, professional consultants like Groom Tax can assist with end-to-end documentation, RBI approval, and compliance support to make the process smooth and stress-free.

How Does Branch Office Registration Help Foreign Businesses Operate Legally in India

How Does Branch Office Registration Help Foreign Businesses Operate Legally in India?

India has become one of the world’s most attractive business destinations, offering a vast market, skilled workforce, and expanding investment opportunities. Many global companies choose to enter India through a Branch Office, as it allows them to undertake commercial activities while maintaining full foreign ownership.
This guide explains the complete process for setting up a branch office in India, along with documentation, eligibility, legal requirements, and timelines.

What Is a Branch Office in India?

Branch Office Registration

A Branch Office is a foreign company’s extension in India that carries out the same business activities as its parent company. It is not a separate legal entity but operates under the approval of the Reserve Bank of India (RBI) and must be registered with the Registrar of Companies (ROC).

A Branch Office is ideal for:

  • Companies wanting to expand operations in India
  • Firms looking to represent their products and services
  • Businesses that need to execute contracts, provide technical support, or promote parent company activities

Why Foreign Companies Choose a Branch Office in India

  • 100% foreign ownership permitted
  • Ability to perform profit-generating activities (unlike Liaison Office)
  • Freedom to invoice Indian customers directly
  • Low setup time and clear regulatory structure
  • Strong base to explore the Indian market before establishing a subsidiary

Who Can Set Up a Branch Office in India?

A foreign company interested in starting a company in India as a foreigner through a Branch Office must meet the following conditions:

  • The parent company must have a profit-making track record of at least 5 years.
  • It must have a net worth of USD 100,000 or more (or equivalent).
  • The proposed activities must fall within RBI-permitted categories.

Companies from FATF non-compliant countries or restricted sectors require additional scrutiny.

Activities Permitted for a Branch Office in India

Branch Offices can carry out:

  • Import/export of goods
  • Professional consultancy services
  • Research activities in the parent company’s domain
  • Providing technical support or services
  • Representing parent company in India
  • Acting as an authorized buying/selling agent
  • IT and software-related services
  • Execution of projects or contracts

Activities such as retail trading, manufacturing, and agriculture are not allowed.

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Step-by-Step Procedure for Registration of a Foreign Company in India (Branch Office)

Below is the complete procedure for registration of a foreign company in India through a Branch Office.

1. RBI Approval

Foreign companies must apply to the Reserve Bank of India (RBI) through the AD Category-I bank. The application includes the company profile, financial statements, and details of proposed activities.

2. Documentation and Verification

Documents required include:

  • Certificate of Incorporation
  • Memorandum & Articles of Association
  • Board Resolution for branch setup
  • Audited financial statements of the last 5 years
  • KYC of authorized representatives
  • Details of parent company’s business operations

All documents must be notarized and apostilled/consularized.

3. Registration with the ROC

After RBI approval, the Branch Office must be registered with the Registrar of Companies under the Companies Act, 2013.
This step creates its legal presence in India for compliance and taxation.

4. PAN, TAN, and Bank Account

The Branch Office must obtain:

  • PAN (Permanent Account Number)
  • TAN (TDS Account Number)
  • Bank account under the BO name

5. GST Registration (If Applicable)

If the Branch Office will supply goods or services, GST registration becomes mandatory.

6. Operational Setup

After compliance, the office can begin invoicing, hiring employees, entering contracts, and carrying out approved business operations.

Timeline and Cost for Branch Office Registration in India

  • RBI Approval: 3–4 weeks
  • ROC Registration: 1–2 weeks
  • Overall Setup Time: Approximately 30–45 days

Costs may vary depending on documentation, attestation, professional fees, and government charges.

Compliance Requirements After Setting Up a Branch Office

A Branch Office must follow these ongoing compliances:

  • Annual filing with ROC
  • Filing of income tax return
  • Statutory audit of accounts
  • Filing of Activity Certificates with the RBI
  • GST returns (if registered)
  • TDS compliances
  • FEMA regulations for foreign remittances

Branch Office vs Subsidiary Company: Which Is Better?

CriteriaBranch OfficeSubsidiary Company
Ownership100% foreign ownership allowed100% foreign ownership allowed
Legal StatusDirect control by the parentSeparate legal entity
TaxationHigher tax rateStandard corporate tax
ControlContract execution, technical support, and tradingIndependent management possible
Best ForContract execution, technical support, tradingLong-term investment, operations, scaling

A Branch Office is ideal for companies needing a quick entry into India without forming a separate company.

Why Choose Groomtax for Branch Office Registration in India?

Groomtax specializes in foreign company registration in India, offering complete assistance from documentation to compliance. Our experts handle:

  • RBI approval
  • ROC registration
  • Documentation & attestation
  • PAN/TAN/GST
  • Legal compliance and advisory
  • Full setup support
  • Financial and tax planning

With strong experience in regulatory processes, we provide a smooth, end-to-end solution for global companies entering India.

Conclusion

Setting up a Branch Office in India is one of the most efficient ways for foreign companies to enter the Indian market. Understanding the legal requirements, documents, and compliance is essential to avoid delays and ensure smooth operations.
With expert guidance, the entire process can be completed within a few weeks, enabling you to unlock India’s vast business potential.

Delhi vs Other States Why Online Company Registration is Easier Here

Delhi vs Other States: Why Online Company Registration is Easier Here

Starting a new business in India can be an exciting yet challenging experience. One of the first and most important steps in this journey is company registration. Many entrepreneurs and startups often ask a common question: “Where should I register my company?”

While there are many good options across India, Delhi has emerged as one of the best and most efficient places for online company registration. Compared to other states, Delhi offers faster processing, better accessibility, and smoother digital services.

In this blog, we’ll explore why online company registration in Delhi is easier than in other states, what makes the process seamless, and how you can benefit from it.

1. Understanding Online Company Registration in India

Before diving into Delhi’s advantages, it’s important to understand what online company registration means.

Online company registration is the digital process of legally incorporating a business entity under the Ministry of Corporate Affairs (MCA), Government of India. This process allows entrepreneurs to start a business without visiting government offices physically.

Some of the most common types of companies registered online include:

The entire process involves applying through the MCA portal, obtaining Digital Signature Certificates (DSC), and getting Director Identification Numbers (DIN) before receiving the Certificate of Incorporation.

2. Why Delhi Leads in Online Company Registration

When it comes to online business registration, Delhi stands out as the most preferred location in India. Let’s understand the major reasons behind it.

a) Efficient Digital Infrastructure

Delhi has one of the most advanced digital infrastructures in the country. From high-speed internet to well-established online verification systems, the city ensures smooth digital interaction between businesses and government departments.

The local authorities and professional service providers are highly experienced in handling MCA e-filing, GST registration, PAN, and TAN applications, making the process faster and more accurate.

b) Quick Approval Timelines

Entrepreneurs in Delhi often experience faster approval of company registration applications compared to other states. The Registrar of Companies (ROC) in Delhi is well-staffed and technologically advanced, ensuring that most online applications are processed quickly, often within a few working days.

In comparison, some states face delays due to a limited workforce or slower digital coordination between departments.

c) Access to Skilled Professionals

Delhi is home to a large number of qualified Chartered Accountants (CAs), Company Secretaries (CS), and legal experts who specialize in company registration and business compliance.

These professionals offer affordable online assistance, ensuring that even first-time entrepreneurs can register their companies easily and correctly.

Having access to expert help means fewer errors in filing and a higher success rate in approval.

d) Availability of MCA and RBI Regional Offices

Delhi hosts the Ministry of Corporate Affairs headquarters and several Reserve Bank of India (RBI) regional offices. This geographical advantage makes coordination between departments smoother, especially for businesses that require foreign investment approvals, branch setups, or RBI permissions.

As a result, companies registering in Delhi can handle compliance issues more efficiently than those located in other regions.

e) Central Location and Business Ecosystem

Delhi’s strategic central location gives it a unique advantage. It connects to nearby states like Haryana, Uttar Pradesh, and Punjab, making it a commercial hub for North India.

Many startups prefer Delhi because they can register their company there but operate in surrounding regions, benefiting from Delhi’s business ecosystem, government support, and access to investors.

3. Comparing Delhi with Other States

Let’s look at how Delhi performs against other major states when it comes to online company registration:

AspectDelhiOther States (like Maharashtra, Karnataka, Tamil Nadu)
Approval SpeedFast (3–5 working days)Moderate to slow (5–10 days)
Digital SupportHighly efficientVaries from state to state
Professional AssistanceEasily availableLimited in smaller cities
Government CoordinationStrong (Central departments located nearby)Slower due to regional divisions
Ease of Doing BusinessHighModerate
Startup EcosystemDeveloped and supportiveDeveloping in most regions

Delhi’s advantages are clear — faster processing, better expert access, and improved online connectivity.

4. Benefits of Registering a Company in Delhi

Here are some practical benefits of registering your company online in Delhi:

Faster Incorporation

Due to efficient ROC services and streamlined digital systems, you can get your Certificate of Incorporation in less time.

Professional Guidance

Many online platforms and experts based in Delhi offer end-to-end support — from name approval to post-registration compliance.

Networking Opportunities

Delhi has a strong network of startups, investors, and incubators, giving new businesses a competitive edge.

Access to Central Government Schemes

As the national capital, Delhi provides direct access to several central government startup initiatives, MSME programs, and tax benefits.

Since most major government departments, legal bodies, and financial institutions have their offices in Delhi, handling documentation and verification becomes more convenient.

5. Common Challenges in Other States

While other states like Maharashtra, Karnataka, and Gujarat are also business-friendly, they sometimes face challenges such as:

  • Longer approval time due to high application volume
  • Regional differences in digital document verification
  • Limited access to experienced professionals in smaller cities
  • Slower inter-departmental communication

These factors can delay the overall registration process and create additional compliance hurdles.

6. How to Register a Company Online in Delhi

Here’s a step-by-step outline for registering your company online in Delhi:

  1. Choose the Business Structure – Decide whether you want to register a Pvt. Ltd., LLP, OPC, or other types.
  2. Get DSC and DIN – Obtain Digital Signature Certificate (DSC) and Director Identification Number (DIN) for the proposed directors.
  3. Name Approval – Apply for company name approval through the MCA portal.
  4. Prepare Incorporation Documents – Draft MOA (Memorandum of Association) and AOA (Articles of Association).
  5. Filing on MCA Portal – Submit SPICe+ (INC-32) form online along with documents.
  6. Payment and Verification – Pay the prescribed fees and wait for verification.
  7. Certificate of Incorporation – Once approved, you’ll receive your incorporation certificate with CIN (Corporate Identification Number).

The entire process is digital, and with professional help, it can be completed in just a few days.

7. Why Entrepreneurs Prefer Delhi for Business Registration

Apart from convenience, Delhi offers entrepreneurs:

  • A startup-friendly environment
  • Strong infrastructure and logistics
  • Availability of affordable co-working spaces
  • Access to venture capital and funding opportunities
  • Easy access to regulatory offices for faster compliance

These benefits make Delhi a preferred destination for both domestic and foreign entrepreneurs planning to set up their business presence in India.

8. Conclusion

When it comes to online company registration, Delhi clearly has an edge over other states. Its efficient digital systems, quick approval process, experienced professionals, and proximity to central government offices make it the most convenient and reliable location for entrepreneurs.

If you’re planning to start your business in India, choosing Delhi for company registration can save you time, reduce paperwork, and give you access to the best business ecosystem in the country.

For seamless and expert-assisted online company registration in Delhi, you can trust Groom Tax, your trusted partner for business incorporation, compliance, and taxation services in India.

How Liaison Office Registration Supports Foreign Investment in India

How Liaison Office Registration Supports Foreign Investment in India

India has become one of the most attractive destinations for global investors. With a strong economy, skilled workforce, and business-friendly policies, many foreign companies are eager to establish their presence in the country. However, not all businesses are ready to start full-scale operations immediately. This is where Liaison Office registration plays a crucial role.

A Liaison Office (LO) acts as a communication channel between a foreign company and Indian businesses or authorities. It helps foreign investors understand the Indian market, explore opportunities, and build networks before making large investments. Let’s explore how registering a Liaison Office supports foreign investment in India.

1. What is a Liaison Office in India?

A Liaison Office is a representative office of a foreign company in India. It does not carry out commercial, trading, or industrial activities directly. Instead, it acts as a bridge to promote business relationships, collect information, and coordinate with Indian companies.

According to Reserve Bank of India (RBI) guidelines, a Liaison Office is allowed to:

  • Represent the parent company in India
  • Promote import and export activities
  • Facilitate communication between the head office and the Indian parties
  • Promote technical or financial collaborations

The Liaison Office cannot generate income in India. All its expenses must be met through funds received from the parent company abroad.

2. Why Foreign Companies Establish Liaison Offices in India

Foreign companies often choose to set up Liaison Offices as the first step before starting full business operations in India. Here’s why it is beneficial:

a) Market Research and Understanding

India’s market is large and diverse. Before investing heavily, foreign businesses prefer to analyse consumer behaviour, local regulations, and industry trends. A Liaison Office helps collect real-time data and insights directly from Indian partners.

b) Building Strong Business Relationships

Having a physical presence in India allows companies to build trust and credibility with Indian suppliers, clients, and government bodies. It also simplifies communication and helps in forming long-term collaborations.

A Liaison Office offers a simpler structure compared to a branch or subsidiary. It does not involve complex tax filings or commercial operations, making it easier for new investors to enter the market.

d) Cost-Effective Entry Option

Setting up a Liaison Office is less expensive than forming a full company. It allows foreign investors to evaluate India’s business environment without large financial commitments.

The establishment and operation of Liaison Offices in India are governed by the Foreign Exchange Management Act (FEMA), 1999 and regulated by the Reserve Bank of India (RBI).

A foreign company must seek prior approval from the RBI before setting up a Liaison Office in India.

The Foreign Direct Investment (FDI) policy also plays a key role in determining the sectors in which foreign entities can open offices. In some industries, automatic approval is available, while others require government permission.

4. Eligibility Criteria for Liaison Office Registration

To establish a Liaison Office in India, a foreign company must meet specific eligibility criteria, including:

  • A profit-making track record during the immediately preceding three financial years.
  • A net worth of at least USD 50,000 or its equivalent.
  • The business activities should fall under sectors where 100% FDI is permitted.
  • The parent company should have a sound financial reputation.

Meeting these requirements ensures that only genuine and financially stable foreign entities establish Liaison Offices in India.

5. Step-by-Step Process for Liaison Office Registration in India

Here is a simplified breakdown of the Liaison Office registration process:

Step 1: Application to RBI

The parent company must apply to the Reserve Bank of India through the Authorised Dealer (AD) Category-I Bank, along with required documents like the incorporation certificate, audited accounts, and the parent company profile.

Step 2: Verification and Approval

RBI verifies the application and may seek clarifications. If all requirements are met, it grants permission to open a Liaison Office in India.

Step 3: Registration with ROC

After RBI approval, the company must register the Liaison Office with the Registrar of Companies (ROC) under the Companies Act, 2013, as a foreign company.

Step 4: PAN and Bank Account

The Liaison Office must obtain a Permanent Account Number (PAN) from the Income Tax Department and open a bank account in India to receive funds from the parent company.

Step 5: Office Setup and Compliance

Once the office is operational, the company must ensure ROC annual filings and regular compliance with RBI and ROC requirements.

6. How Liaison Office Registration Supports Foreign Investment

Now, let’s understand the real impact of Liaison Office registration on boosting foreign investment in India.

a) Creates a Gateway for Global Businesses

Liaison Offices act as the first point of contact for international businesses looking to explore opportunities in India. They help investors understand regulatory environments, business practices, and cultural dynamics before committing to large-scale investments.

b) Encourages Strategic Partnerships

By being present in India, foreign companies can form strategic alliances with local businesses. These collaborations often lead to joint ventures, technology transfers, and future investments.

c) Builds Investor Confidence

The process of Liaison Office registration ensures that only reliable and compliant companies operate in India. This transparency builds confidence among both foreign investors and Indian authorities.

d) Promotes Knowledge and Technology Transfer

Through liaison activities, companies share technical expertise, innovation, and management practices, contributing to India’s economic growth and skill development.

e) Strengthens Bilateral Trade Relations

When foreign companies open Liaison Offices, they promote trade between their home country and India. This supports exports, imports, and business collaborations across industries.

7. Compliance Requirements for Liaison Offices

Once established, a Liaison Office must follow certain compliance rules in India, such as:

  • Submitting Annual Activity Certificates (AAC) to the RBI and Income Tax Department.
  • Filing Annual Return of Foreign Company with the ROC.
  • Maintaining proper books of accounts and records.
  • Ensuring renewal of RBI approval every three years.

Compliance not only keeps the Liaison Office legally safe but also builds a trustworthy image for the parent company.

8. Common Challenges and Solutions

Foreign companies often encounter challenges during registration, including difficulties in understanding legal formalities and communication gaps with authorities. To overcome these issues, it’s best to seek assistance from professional consultants who specialise in foreign company registration in India.

Experienced professionals ensure that all documents are correctly prepared and submitted, making the process smooth, timely, and compliant with Indian laws.

9. Future of Foreign Investment Through Liaison Offices

India’s economic reforms, digital initiatives, and improved ease of doing business make it an ideal destination for global investors. Liaison Offices will continue to play a vital role in connecting international businesses with Indian markets.

With government initiatives like “Make in India” and “Invest India”, more foreign companies are expected to explore this route for their initial expansion phase.

What This Means for Foreign Investors

In today’s global economy, India stands as a major investment hub. Setting up a Liaison Office offers foreign companies a safe and structured way to understand India’s business environment before making larger commitments. It helps promote trade, knowledge exchange, and strategic partnerships, all of which contribute to strengthening India’s foreign investment ecosystem.

If you are a foreign business planning to enter the Indian market, registering a Liaison Office is the best starting point to build a trusted and long-term presence.

At the end:

For smooth, stress-free, and compliant Liaison Office registration in India, you can rely on Groom Tax, your trusted partner for business setup and regulatory compliance solutions.

How Foreign Companies Can Start Operations in India Through a Branch Office

How Foreign Companies Can Start Operations in India Through a Branch Office

India is one of the fastest-growing markets in the world, offering huge business potential for international companies. Many global brands are entering India to expand their operations, sell products, and offer services. But before doing so, they must establish a proper legal presence in the country. One of the most popular options for this is registering a Branch Office in India.

In this blog, we will explain how foreign companies can start operations in India through a Branch Office, along with its eligibility, procedure, documents required, and benefits.

1. What Is a Branch Office in India?

A Branch Office (BO) is an extension of a foreign company established in India to carry out business activities on behalf of the parent company. It acts as a representative arm, not a separate legal entity.

The branch office helps the parent company explore the Indian market, handle sales, provide customer support, and build brand recognition. However, it must follow the rules set by the Reserve Bank of India (RBI) and the Ministry of Corporate Affairs (MCA).

2. Who Can Open a Branch Office in India?

Foreign companies that are financially sound and have a profitable track record can apply to set up a Branch Office in India.

Here are the eligibility criteria as per RBI guidelines:

  • The foreign company must have a profit-making record for the past five financial years.
  • The net worth of the company should be at least USD 100,000 or its equivalent.
  • The company must be engaged in business activities that are allowed in India.

If these conditions are met, the company can proceed with the registration process.

3. Permitted Activities for a Branch Office in India

A Branch Office in India can undertake only specific activities approved by the RBI. These include:

  • Import and export of goods
  • Providing professional or consultancy services
  • Carrying out research work in areas where the parent company is engaged
  • Representing the parent company in India and acting as a buying or selling agent
  • Providing technical support to products supplied by the parent company
  • Promoting collaborations between Indian and foreign companies
  • Acting as a communication channel between the parent company and Indian customers

However, a Branch Office cannot engage in retail trading, manufacturing, or direct commercial trading in India.

4. Regulatory Approvals Required

To start operations in India, a Branch Office needs prior approval from the Reserve Bank of India (RBI). The RBI grants approval under two routes:

  1. Reserve Bank Route – For companies from countries that have a good relationship with India and engage in business activities allowed by the RBI.
  2. Government Route – For companies from countries like Pakistan, Bangladesh, Sri Lanka, Iran, or China, or if the proposed activities are not covered under the automatic route.

Once the RBI approval is received, the branch office must be registered with the Registrar of Companies (ROC) under the Companies Act, 2013.

5. Documents Required for Branch Office Registration

Here is a list of essential documents needed for registration:

  1. Certificate of Incorporation of the parent company
  2. Memorandum and Articles of Association (duly attested)
  3. Latest audited financial statements of the parent company
  4. Board resolution authorizing the setup of the Branch Office in India
  5. Details of directors and key management personnel
  6. Address proof of the proposed office in India
  7. Banker’s report from the parent company’s bank confirming good financial standing

All these documents must be notarized and apostilled in the home country before submission in India.

6. Step-by-Step Process of Branch Office Registration in India

Let’s look at the complete procedure for registering a Branch Office:

Step 1: Application to RBI

The parent company must apply to the Reserve Bank of India (RBI) through an authorized dealer (Category I Bank). The bank verifies documents and submits them to the RBI for approval.

Step 2: RBI Approval

Once the RBI reviews and approves the application, it issues a Unique Identification Number (UIN) to the branch office.

Step 3: Registration with ROC

The company then needs to register the branch office with the Registrar of Companies (ROC) using Form FC-1 within 30 days of RBI approval.

Step 4: Obtain PAN and TAN

After ROC registration, the Branch Office must apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) from the Income Tax Department.

Step 5: Open a Bank Account

A current account must be opened in an Indian bank to manage operational expenses and transactions.

Step 6: GST Registration (if applicable)

If the branch provides taxable services or sells goods, it must obtain GST registration.

Step 7: Other Registrations

Depending on business type, the branch may need additional registrations like Shops & Establishment License, Professional Tax, or Import Export Code (IEC).

7. Compliance Requirements for Branch Offices in India

After registration, the Branch Office must follow ongoing compliance requirements under Indian laws. These include:

  • Annual filing with ROC: Submission of Form FC-3 (annual accounts) and Form FC-4 (annual activity report).
  • Income tax compliance: Filing of annual income tax returns in India.
  • Audit of accounts: The branch office must maintain proper books of accounts and get them audited by a Chartered Accountant in India.
  • Reporting to RBI: Annual activity certificates must be submitted to the RBI through the authorized dealer bank.

Non-compliance with these requirements can lead to penalties or cancellation of the branch license.

8. Advantages of Opening a Branch Office in India

Here are the main benefits of establishing a branch office in India:

Market Expansion

It allows foreign companies to expand into one of the largest consumer markets in the world.

Direct Business Operations

Unlike liaison offices, a branch office can carry out direct business and earn income in India.

Brand Presence

It helps the parent company build brand recognition and maintain direct control over Indian operations.

Technical and Customer Support

A branch office can provide after-sales service and technical assistance to Indian customers, increasing customer satisfaction.

Ease of Setup

The process is simpler compared to incorporating a subsidiary company, and RBI approval ensures regulatory transparency.

9. Limitations of a Branch Office

While a branch office offers flexibility, it also has some limitations:

  • It cannot carry out manufacturing or retail trading in India.
  • It is taxed as a foreign company, often at a higher rate than domestic companies.
  • All liabilities of the branch are borne by the parent company.
  • It must strictly follow RBI guidelines for operations, remittances, and reporting.

10. Taxation of Branch Office in India

A Branch Office is considered a foreign company for taxation purposes in India. The income earned in India is taxable under the Income Tax Act, 1961.

The current tax rate for a foreign company is around 40% (plus applicable surcharge and cess). However, India has Double Taxation Avoidance Agreements (DTAAs) with several countries, which help reduce the overall tax burden.

11. Closing a Branch Office

If a company wishes to close its branch office in India, it must:

  1. Obtain approval from the RBI.
  2. Submit audited financial statements and a no-objection certificate from the parent company.
  3. Apply for deregistration with the ROC.
  4. Settle all taxes and liabilities before remittance of funds abroad.

Once the RBI and ROC approve the closure, the branch office can cease operations legally.

Before You Go

Setting up a Branch Office in India is one of the best ways for foreign companies to explore business opportunities, provide services, and establish a strong presence in the Indian market. With proper planning, compliance, and expert assistance, the process can be smooth and profitable.

If you are planning to register your branch office in India, it is advisable to consult professionals who specialize in RBI and ROC compliance to ensure stress-free setup and operation.

For expert guidance and complete assistance in Branch Office Registration in India, you can connect with Groom Tax, your trusted partner for company registration, compliance, and legal advisory services in India.