What is a Branch Office in India?

A Branch Office in India is an extension of a foreign company that can conduct business operations, generate revenue, and serve Indian clients.

Can a Branch Office generate income in India?

Yes, a Branch Office can earn revenue, bill clients, and conduct permitted commercial activities in India.

Do NRIs need a separate company to open a Branch Office?

No, NRIs can use their existing foreign company if it meets FEMA and RBI eligibility criteria.

How long does it take to set up a Branch Office?

The process typically takes 30 to 45 days including bank processing, RBI approval, and ROC registration.

What is the tax rate for a Branch Office?

A Branch Office is taxed as a foreign company at 40% plus applicable surcharge and cess.

Is RBI approval mandatory?

Yes, RBI approval is required either through the automatic route or approval route via an AD Bank.

Can a Branch Office hire employees in India?

Yes, it can hire employees, consultants, and staff for operations in India.

Can a Branch Office export goods from India?

Yes, it can engage in import-export activities including global shipments.

Can a Branch Office carry out manufacturing?

Manufacturing is generally not allowed except in Special Economic Zones under specific conditions.

What happens if a Branch Office exceeds permitted activities?

Non-compliance may lead to FEMA penalties, regulatory scrutiny, or restructuring requirements.

Branch Office in India | Revenue Generating with Taxlegit

Introduction

A branch office in India is an extension of a foreign company that allows it to conduct commercial and revenue-generating activities locally. Opening a branch office in India is a smart way for global businesses to test the market, sell products or services, and operate without setting up a full subsidiary. It offers complete operational freedom, 100% foreign ownership, and a simplified regulatory framework.

For smooth branch office registration in India, our experts guide you through every step of setting up a branch office in India. Foreign companies and NRIs can start operations quickly and compliantly, ensuring a hassle-free entry into the Indian market

What Is a Branch Office?

A branch office in India, as defined under FEMA (Foreign Exchange Management Act), is a legally recognized extension of a foreign company that can carry out activities permitted by the Reserve Bank of India (RBI). Opening a branch office in India is an ideal choice for global firms and NRI-owned foreign entities looking to establish a presence in the Indian market without forming a separate Indian company. It allows companies to:

Function as a revenue-generating extension of the parent company
Operate under RBI approval
Engage in professional, technical, and commercial activities
Be treated as a full-fledged operational office in India
Comply with FEMA, RBI, and ROC regulations

With expert support for branch office registration in India, setting up a branch office in India is smooth, compliant, and hassle-free, giving foreign companies the flexibility to grow their business efficiently.

Eligibility Criteria for Opening a Branch Office in India

To qualify for branch office registration in India, the foreign parent company must meet the key FEMA and RBI requirements. These conditions ensure that only financially stable and genuine global companies are allowed to set up operations in India.

Financial Eligibility

This is a critical requirement for opening a branch office in India. The parent company must show that it is financially healthy and capable of operating in India. It should:Read moreRead less

Have a consistent profit-making track record of 5 years
Maintain a minimum net worth of USD 100,000 (or equivalent)
Provide a Net Worth Certificate certified by a CPA/CA

AD Bank Approval / RBI Route

Some sectors or applicants from sensitive countries may need direct RBI approval. All applications for setting up a branch office in India are submitted to an AD Category-I Bank. The bank reviews:Read moreRead less

The parent company’s financial position
Nature of business and global presence
Proposed activities in India
FEMA and compliance history

For NRI-Owned Foreign Companies

If the overseas entity is owned by NRIs or OCI cardholders:

The foreign company (not the individual) must meet the financial conditions
Extra KYC and AML checks may be required for verification

Mandatory Compliance Framework

Once approved, a branch office in India must follow ongoing compliance under multiple laws, including:

FEMA regulations
RBI guidelines
Companies Act & ROC filings
Income Tax Act
GST laws (if applicable)

Foreign investors love the branch office in India model because it lets them start generating revenue right away, while still keeping complete foreign control. If you’re still asking what is a Branch Office?, it’s the legal structure that allows a foreign company to operate, earn revenue, and manage Indian operations efficiently.

Activities Allowed VS Not Allowed for Opening a Branch Office in India

Category	Description	Activities
Activities Allowed for a Branch Office in India	The RBI permits foreign companies to undertake a wide range of commercial and operational activities through a branch office to support the parent company’s business and establish a strong presence in India.	• Import and export of goods• Providing professional or consultancy services• Research and development activities• IT and ITeS services• Technical support for products or equipment• Promotion of parent company’s products and services• After-sales support services• Representation of the parent company in India• Sourcing, procurement, and quality control• Foreign airline or shipping operations
Activities Not Allowed for a Branch Office in India	Certain activities are restricted to ensure compliance with FEMA and RBI regulations. Branch offices must operate strictly within the scope approved by the authorities.	• Retail trading of any kind• Manufacturing activities (except within an SEZ)• Business activities outside the parent company’s core operations• Activities restricted under FEMA regulations• Activities not specifically approved by the RBI

To stay compliant and avoid penalties, every foreign company must ensure that its branch office in India strictly follows the permitted activity list and operates within the approved framework.

Have Questions?

Get free guidance on tax filing, compliance & business registration

Documents Required for Foreign Company / NRI-Owned Company

To begin the process of opening a branch office in India, the foreign parent company must submit a clear set of documents to meet RBI and FEMA requirements. Below is the complete checklist.

Source	Document / Requirement	Details
From Parent (Foreign) Company	• Certificate of Incorporation	Proof of legal existence of the foreign company
	• Memorandum & Articles / Charter Documents	Governing constitutional documents of the company
	• Board Resolution	Approval for opening a Branch Office in India
	• Power of Attorney	Authorising the local representative in India
	• Audited Financial Statements (Last 5 Years)	Financial credibility and track record
	• Net Worth Certificate	Issued by a CPA/CA confirming net worth
	• KYC of Directors & Authorised Signatories	Identity and compliance verification
	• Business Plan for Indian Operations	Scope, objectives, and operational plan
	• Activity Statement (FEMA Aligned)	Confirmation of permitted activities under FEMA
	• Proof of Registered Overseas Office	Address proof of the parent company
From NRI Shareholders (If Applicable)	• Passport Copy	Identity proof
	• Overseas Address Proof	Residential address verification
	• Ownership / Shareholding Declaration	Shareholding structure disclosure
	• KYC and AML Declaration	Regulatory compliance confirmation
Document Authentication Requirements	• Notarisation	Mandatory for all submitted documents
	• Apostille / Consularisation	As per the country of origin rules

Taxation Rules for Branch Offices in India

When setting up a branch office in India, it’s important to understand how taxation works so you can plan your operations smoothly. A branch office is treated as a Permanent Establishment (PE) of the foreign company, which means it is taxed just like any other operational unit earning revenue in India. Proper tax planning at the time of opening a branch office in India helps avoid surprises later. Here are the key tax rules every foreign company should know:

Corporate Tax Rate

Branch Offices are taxed at 40% plus applicable surcharge and cess because they fall under the foreign company category.

GST Applicability:

GST applies to all goods and services supplied by the branch office in India.

TDS Requirements:

The branch must deduct TDS on applicable payments such as salaries, contractor payments, professional services and rent.

Income Tax Return Filing:

Filing an annual income tax return is mandatory for all branch offices.

Transfer Pricing

No transfer pricing issues arise unless the branch is dealing with related-party or inter-company transactions.

Profit Repatriation:

A branch office can repatriate its profits to the parent company after paying all applicable Indian taxes.

Tax Planning:

Early tax structuring is essential to avoid unnecessary liabilities and ensure smooth compliance throughout the year.

Understanding these rules is a crucial part of branch office registration in India, helping foreign businesses operate confidently and compliantly. If you want, I can also prepare a shorter version for your website or a taxation summary table.

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

Setting up a branch office in India involves coordination with the RBI, an AD Category-I Bank and the ROC. The process may look technical at first, but when broken down into simple steps, it becomes easy to follow. Here’s a clear explanation of how opening a branch office in India typically happens.

Eligibility Check

We begin by checking whether the foreign parent company meets FEMA’s financial and operational criteria. This includes reviewing its global standing, business activities and overall financial strength.Read moreRead less

Document Preparation

Once eligibility is confirmed, we prepare all supporting documents. This usually includes audited financial statements, a net worth certificate, board resolutions, authorization letters and complete KYC documentation. Proper documentation makes the approval process smoother.Read moreRead less

Application Filing with the AD Bank

The complete file is then submitted to an AD Category-I Bank. The bank evaluates the company’s financial background, proposed activities in India, compliance history and the country of origin. This is one of the most important steps in branch office registration in India.Read moreRead less

RBI Approval or Automatic Route

Depending on the business sector and country of incorporation, the file is either processed under the Automatic Route or forwarded to the RBI for direct approval. Sensitive industries or certain geographical regions may require additional security.Read moreRead less

UIN Allotment

After approval, the RBI issues a Unique Identification Number. This officially recognises the branch office under the Indian regulatory framework.

PAN and TAN Registration

The branch must apply for PAN and TAN. These are essential for taxation, invoicing, TDS and overall financial operations in India.Read moreRead less

Opening the Bank Account

The AD Bank then opens the branch office’s dedicated bank account. All Indian transactions related to the foreign parent company are routed through this account.Read moreRead less

ROC Registration (Form FC-1 or FC-2)

A statutory filing must be completed with the Registrar of Companies within 30 days of establishing the branch. This ensures compliance under the Companies Act.Read moreRead less

GST Registration

If the branch plans to provide taxable services or raise invoices in India, a valid GST registration is needed.

Compliance Framework Setup

Once all approvals are completed, we create a detailed compliance plan. This covers FEMA reporting, RBI filings, ROC submissions, income tax obligations and any sector-specific requirements. This helps the foreign management team stay compliant throughout the year.Read moreRead less

Have Questions?

Get free guidance on tax filing, compliance & business registration

Timeline for Setting Up a Branch Office in India

Steps	Timeline
RBI / AD Bank Approval	20–30 days
ROC Registration	10–15 days
PAN / TAN Allotment	5–7 days
Bank Account Setup	3–5 days
Total Time to Become Fully Operational	30–45 days

Note: Timelines may vary depending on country of origin, industry type, and AD Bank processing speed.

Annual & Ongoing Compliance Requirements

Setting up a Branch Office in India is only the first step—maintaining it is equally important. A foreign company must follow strict RBI, FEMA, ROC, and tax compliance to operate smoothly. Here’s a clear and human-friendly breakdown of everything required.

RBI & FEMA Reporting

Foreign companies operating through a Branch Office must regularly update regulators to ensure transparency and compliance with Indian foreign exchange laws. Key filings include:Read moreRead less

Annual Activity Certificate (AAC) submission
FLA Return (Foreign Liabilities & Assets)
Reporting any change in ownership, structure, or key management
Intimation for any major transaction or operational change
FEMA compliance review for cross-border transactions

ROC (Registrar of Companies) Filings

A Branch Office must file annual reports and financial statements with the Ministry of Corporate Affairs. Mandatory filings include:

Form FC-3: Annual Return of activities
Form FC-4: Financial Statements & documents from the parent company
Disclosure of funding, expenses, and international remittances

Taxation Compliance

Just like any domestic company, a Branch Office must meet all tax obligations in India. Key requirements include:

Annual Income Tax Return
GST registration + monthly/quarterly GST filings
TDS deduction & TDS return filing
Statutory audit for books of accounts
Compliance for foreign remittances & tax withholding

Corporate & Operational Compliance

Day-to-day operations of a Branch Office must be legally maintained and documented. This covers:

Maintenance of proper books of accounts
Cross-verification of FEMA compliance
Reporting transactions with the foreign parent company
Ensuring transparent money flow between India & overseas
Internal controls for corporate governance

Taxlegit provides a complete, end-to-end compliance dashboard so foreign HQ teams can track everything in real-time.

Industries Where Foreign Companies Commonly Open Branch Offices

A Branch Office is ideal for foreign companies looking to operate commercially in India without forming a subsidiary. Common sectors include:

Trading & Import–Export
Consulting & Professional Services
Engineering & technical support companies
IT, software development, and ITeS
Defense & aerospace contractors
Airlines, shipping & maritime companies
Research & R&D organisations
Global logistics companies
Digital service providers
International EPC contractors & sourcing firms

India’s large talent pool, growing market, and transparent regulations make the Branch Office route highly attractive for global companies.

Why Choose Taxlegit for Branch Office Registration in India

Taxlegit is trusted by multinational companies, EPC contractors, global consulting firms, and international brands for a reason, we handle everything end-to-end.

Our Expertise Includes:

Specialists in Branch Office Registration under FEMA & RBI
Complete handling of AD Bank application + RBI approval
ROC, GST, Income Tax & cross-border compliance
Experience working with foreign companies from USA, UK, UAE, Singapore, Japan, Europe & Australia
Support for PAN, TAN, accounting, payroll & statutory compliance
Dedicated compliance dashboard for the foreign headquarters
24×7 assistance across global time zones

We manage everything, from eligibility checks to full operational setup, so your foreign company can expand into India without stress.

Why Foreign Companies & NRI Investors Choose a Branch Office in India

Foreign investors love the branch office in India model because it lets them start generating revenue right away, while still keeping complete foreign control. It’s one of the simplest ways of opening a branch office in India and tapping into the country’s fast-growing market without the heavy setup of a full subsidiary.

Key advantages:

With full commercial freedom, you can invoice Indian customers directly
Instant access to India’s booming consumer and B2B market
Lighter compliance compared to forming a wholly-owned subsidiary
100% foreign ownership allowed
Faster RBI approval process
Perfect for companies involved in:
- Trading
- Professional & consulting services
- Engineering & technical services
- R&D
- Sourcing & procurement
- IT & software development

Foreign entities owned by NRIs can also apply for branch office registration in India through their overseas company, as long as they meet the eligibility requirements. Overall, setting up a branch office in India is one of the easiest and most flexible entry routes for global businesses.

Branch Office in India

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