7 Important Points Relating to Foreign Company Registration in India
In September 2022, India has become 5th largest economy in the world surpassing United Kingdom. Over the years, India has become one of the most sought-after business destinations in the world, attracting more and more foreign companies to make investments in India as well as set up their business in India in one form or the other. Business Wire IndiaIn September 2022, India has become 5th largest economy in the world surpassing United Kingdom. Over the years, India has become one of the most sought-after business destinations in the world, attracting more and more foreign companies to make investments in India as well as set up their business in India in one form or the other. Before deciding to set up business in India, every foreign company shall keep in mind the following 7 important points relating to foreign company registration in India.
As an unincorporated entity, a foreign company has an option to set up business in India in the form of either branch office or liaison office or project office.
Each of the aforesaid entities has their own pros and cons and one may decide for a particular entity on the basis of their nature of business, their long term planning and goals for doing business in India.
Liaison office cannot do any business in India or earn profits from India. They act only as a representative office of the foreign company in India. They act as a channel of communication between India customers and parent company. Their legal status in India is that of a foreign company.
Branch office can do trading activities as well as provide service in India. However, they can be indulging in only those activities which have been permitted by RBI. They cannot do manufacturing activities in India. Their legal status in India is that of a foreign company. They are considered as Permanent Establishment of foreign entity in India. They are taxable in India at highest rate of 40% plus surcharge plus education cess.
Project office can do all the activities permitted by the RBI. Normally, project offices are opened for a particular project and once the project is completed, it is closed. They are taxable in India at highest rate of 40% plus surcharge plus education cess.
Unlike Branch office and liaison office, there is no restriction on business activities of wholly owned subsidiary companies. They can do all the activities as mentioned in its Memorandum of Understanding and subject to guidelines of RBI. They are taxable at lowest rates as compared to other forms of entities. They have many advantages as compared to other forms of entities in India.
Foreign companies may also register joint ventures in India for the purpose of execution of particular project or particular objectives and once the object is achieved, the joint venture may be closed. It can be by way of contractual agreement between two parties or by way of acquisition of shares of each other entity or some new entity. It is similar of private limited companies or wholly owned subsidiaries.
Another popular form of entity registration by foreign entities in India is in the form of Limited Liability Partnership registration or LLP registration
Out of all the above options, Subsidiary Company Registration in India is most popular and tax efficient option.
6. Subsidiary company registration in India is one of the most popular form of entity registration
Reserve Bank of India, Indian apex Bank for regulating foreign exchange need to be intimated about receipt of FDI from foreign company/foreign citizen. Once entire share subscription money is received in the Indian bank account, Certificate of commencement of business is applied with ROC/MCA
It may be noted that in case, share subscription money is coming from any countries with which India shares its borders, then in that case, prior approval of FIFP is required to be taken before such money can be brought into the Indian bank account. Similarly, in case the investment is required to be made in such activities which do not fall into automatic routes, in such cases also, prior approval of government/FIFP is required to be made.
How can EZYBIZ India help you in business set up in India
- Advisory on type of entity to be registered
- Complete hand holding in entire registration procedure
- Assistance in getting all the approvals and licenses
- Assistance in opening Bank account
- Assistance in all Post Registration Taxation, Audit and Regulatory Compliance
- Assistance in winding up or closure of company in India and repatriation of money
- In case foreign company wants to set up manufacturing unit in India, we can provide complete handholding in feasibility study, land acquisition, getting all approvals and licenses, factory construction, trial run etc.
Disclaimer: This content is distributed by Business Wire India.
