RBI approval process, permitted activity framework, profit repatriation, FEMA annual reporting, income tax obligations and operational compliance for foreign company branch offices in India.
Short, direct, on the record.
A branch office is not a separate legal entity and the foreign parent is directly liable for its obligations. A subsidiary is a separate Indian company with limited liability. Branch profits are taxed at 40% (plus surcharge and cess) with no DDT but also no treaty benefit on branch remittance in most cases. Subsidiaries offer limited liability but require minimum two directors including one Indian resident.
Yes, but only within the RBI permitted activity scope. Branches can export goods from India, provide professional and consultancy services, carry out research work, render technical support to Indian companies and represent the parent in commercial dealings. Manufacturing requires special RBI approval on standalone basis.
Branch profits are taxed at 40% plus applicable surcharge (2% if income exceeds INR 1 crore, 5% if exceeding INR 10 crore) and 4% health and education cess. There is no additional branch profit remittance tax under Indian law, but the applicable DTAA may impose branch profit tax or provide exemptions.
There is no direct conversion mechanism. The foreign company must separately incorporate an Indian subsidiary, transfer the branch assets and business, and then close the branch office through RBI approval. The transfer must comply with FEMA pricing norms and may trigger capital gains and stamp duty obligations.
Share the parent jurisdiction, proposed activities and the compliance concern for a preliminary assessment.