Foreign Branch Office Setup in India

RBI Approval Under FEMA, FNC Registration, Annual Activity Certificate and Tax Compliance

A Branch Office (BO) allows a foreign company to carry on specified business activities in India without incorporating a separate entity. A Branch Office is an extension of the foreign parent — not a separate legal entity. RBI prior approval under FEMA is mandatory. Permitted activities include export/import of goods, professional/consultancy services, research, promoting technical/financial collaborations, IT services, and manufacturing in SEZs. A Branch Office cannot undertake manufacturing outside SEZs, retail trading, or agriculture. All Branch Office income is taxed in India at 40% as a foreign company.

Key Facts at a Glance

Parameter	Details
Legal Nature	Extension of foreign parent — not a separate Indian entity
RBI Approval	Mandatory prior approval via AD Category I Bank (Form FNC)
Permitted Activities	Export/import, professional services, research, IT, technical collaboration
Prohibited	Manufacturing outside SEZ, retail trading, agriculture
ROC Registration	Form FC-1 within 30 days of establishment
Tax Rate	40% on Indian-source income (plus surcharge and cess)
Annual Reporting	Annual Activity Certificate (AAC) from CA to RBI annually
Branch Closure	Tax clearance + ROC deregistration + RBI intimation

Our Services

RBI Application (Form FNC)

Filing Form FNC with RBI through an AD Category I Bank — covering proposed activities, parent company profile, financials, and funding source for the Indian Branch Office.

ROC Registration (FC-1)

Registration as foreign company with ROC in Form FC-1 within 30 days — filing parent's charter, directors list, and principal officer details.

Tax Registration

PAN and TAN application, GST registration for applicable activities, and complete TDS compliance setup for vendor and employee payments.

Annual Activity Certificate

CA-certified AAC submitted to AD Bank and RBI annually — confirming only approved activities were carried on and no prohibited income was earned.

Income Tax Compliance

Income tax return at 40% as a foreign company — advisory on deductible expenses, transfer pricing, and DTAA benefits available to the parent's country.

Branch Closure

Tax clearance certificate, ROC deregistration, RBI intimation, and repatriation of residual funds to the foreign parent.

Frequently Asked Questions

Branch Office vs Liaison Office — what is the difference?

A Branch Office can earn revenue from approved activities — it can invoice Indian customers and repatriate profits after tax. A Liaison Office cannot earn any income from India. It is purely for promotion and communication, fully funded by the foreign parent. Branch Office suits companies wanting to provide services to Indian clients; Liaison Office suits companies exploring the market.

How long does RBI approval take?

Typically 2 to 4 months from complete Form FNC submission through the AD Bank. After approval, the Branch must register with ROC (FC-1) within 30 days of establishment.

Can a Branch Office convert to a subsidiary?

Yes. Incorporate a wholly-owned subsidiary, obtain RBI approval for asset/liability transfer from the Branch, file necessary FEMA forms, and close the Branch after tax clearance. Conversion is common when India operations grow beyond Branch Office capacity.

Setting Up a Branch Office in India? We Handle RBI Approval to Annual Compliance.

Form FNC filing, RBI approval, ROC registration, annual activity certificate, and tax compliance — complete foreign Branch Office services.