§ 1
How a branch office differs from a subsidiary
A branch has no separate legal identity. Contracts are signed by the foreign company, its liabilities in India are the foreign company's liabilities, and the branch's accounts form part of the foreign company's books. For Indian purposes it is a 'place of business' of a foreign company, registered with the Registrar of Companies and approved under FEMA.
The approval route sets out what the branch may do. The permitted list covers export and import of goods, professional or consultancy services, research in the parent's field, promoting technical or financial collaboration between Indian and overseas companies, acting as buying or selling agent, IT and software development services, technical support for the parent's products, and foreign airline or shipping operations. Retail trading and manufacturing are outside it, except for manufacturing in a Special Economic Zone.
Branch income is taxed in India as the income of a foreign company, at a higher headline rate than an Indian subsidiary, but profits can be remitted to the head office without dividend withholding. For a business that will stay within the permitted activities, that can make a branch simpler to run than a subsidiary.
§ 2
Who this is for
Consultancy and professional firms
Foreign firms delivering advisory or technical services to Indian clients under their own name.
Trading and sourcing operations
Companies exporting from or importing into India and needing a local presence to manage it.
IT and engineering support
Groups delivering software development or product support from India for the head office.
Airlines and shipping lines
Foreign carriers that need an Indian office for their operations.
§ 3
The law that applies
| FEMA (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any other place of business) Regulations, 2016 | Eligibility, permitted activities, approval through the AD bank and cases needing prior RBI approval. |
|---|---|
| RBI Master Direction on establishment of branch, liaison and project offices | Form FNC, documents, Unique Identification Number, Annual Activity Certificate and closure. |
| Companies Act, 2013, sections 380 to 386 | Registration of the place of business with the ROC in Form FC-1 and annual filings by the foreign company. |
| Income-tax Act, 2025 and the relevant tax treaty | Taxation of branch profits as a foreign company, permanent establishment attribution and withholding. |
§ 4
Issues and how we solve them
The problems that most often hold up or complicate this work, and how we deal with each.
Issue 1
The foreign company does not meet the profit and net worth tests.
Our approach
A branch normally needs a profit-making record in the home country for the five preceding financial years and a net worth of at least USD 100,000. Where the applicant is a subsidiary that falls short, a letter of comfort from a parent that meets the tests can be submitted. We test eligibility against the audited accounts at the start, so the application is not built on a footing the bank will reject.
Issue 2
The applicant or its activity falls into a category that needs prior RBI approval.
Our approach
Applications from entities in Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong or Macau, and those in defence, telecom, private security or information and broadcasting, go to the RBI (and the Government where required) through the bank. We identify this upfront, prepare the additional disclosures and set realistic timelines.
Issue 3
The proposed activities go beyond what a branch may do.
Our approach
We map the business plan against the permitted list before drafting Form FNC. Where part of the plan, such as local trading or manufacturing, is outside it, we recommend a subsidiary for that part or a change in structure, rather than an approval that later restricts the business.
Issue 4
The branch is approved but misses the ROC registration and tax registrations that follow.
Our approach
A branch must file Form FC-1 with the Registrar within 30 days of establishing its place of business, and then obtain PAN, TAN and, where it supplies taxable services or goods, GST registration. We run these straight after the UIN is issued, so the branch can open its bank account and invoice from day one.
§ 5
Process and timeline
- 1
Eligibility and plan
Week 1Check the five-year profit record and net worth, the activities proposed and whether prior RBI approval applies.
- 2
Documents
Weeks 1–4Collect the parent's certificate of incorporation, constitution, audited accounts and bankers' report; draft the board resolution. Apostille or legalisation abroad.
- 3
Application
Weeks 4–5File Form FNC with the AD Category-I bank with the supporting documents and the bank's due diligence.
Filing: Form FNC
- 4
Approval and UIN
Weeks 5–9The bank grants approval and the RBI allots a Unique Identification Number to the branch.
- 5
ROC registration
Weeks 9–10Register the place of business with the Registrar of Companies.
Filing: Form FC-1 within 30 days
- 6
Tax and bank
Weeks 10–12PAN, TAN, GST where applicable, and the branch's bank account.
§ 6
Documents
What we usually ask for. The exact list depends on the facts.
Foreign company
- Certificate of incorporation and constitution
- Audited financial statements for the last five years
- Bankers' report from the home-country bank
- Board resolution approving the branch
India office
- Name and particulars of the authorised representative in India
- Office lease or premises details
- Power of attorney for the representative
§ 7
Ongoing obligations
| Obligation | Basis | When |
|---|---|---|
| Annual Activity Certificate from the auditor | FEMA · AD bank | By 30 September each year |
| Audited accounts of the Indian business | Companies Act, s.381 · Form FC-3 | Within six months of year end |
| Annual return of the foreign company | Form FC-4 | Within 60 days of year end |
| Income-tax return, tax audit and transfer pricing report | Income-tax Act, 2025 | Annually |
| Change in particulars (address, representative) | Form FC-2 | Within 30 days of the change |
§ 8
Our scope of work
Included
- Eligibility review
- Form FNC and supporting documents
- Liaison with the AD bank
- FC-1 registration
- PAN, TAN and GST registration
- Bank account support
- First-year compliance calendar
Not included (quoted separately)
- Prior RBI or government approval applications
- Apostille and translation costs abroad
- Government fees
§ 9
Practical notes
§ 10
Questions
Can a branch office earn income in India?
Yes, a branch can earn income from the activities permitted in its approval. Its profits are taxed in India as the income of a foreign company and can then be remitted to the head office.
Who approves a branch office?
In most cases the authorised dealer Category-I bank approves it under delegated powers, and the RBI allots a Unique Identification Number. Some applicants and sectors need prior RBI approval.
Does a branch office need an audit in India?
Yes. The accounts of the Indian business are audited by a Chartered Accountant, and the auditor also issues the Annual Activity Certificate confirming the branch stayed within its permitted activities.
Can a branch office be closed easily?
Closure is done through the AD bank with an auditor's certificate, tax clearance and proof that all liabilities are settled, after which the remaining funds can be repatriated.
Prepared by CA Utsav Dogra, Chartered Accountant, ICAI M. No. 542375, SU and Company · Last reviewed 4 November 2026. General information only, based on the law as it stood on that date; it is not advice for any particular case.