What is Foreign Branch Office India

A Foreign Branch Office is really a 100 % functional branch of the parent company in India. It may carry out any business activity within India as permitted by Reserve Bank of India, except manufacture of items.An International Branch Office is responsible to pay income tax on any income produced through its operations in India.

Activities Permitted

1. Export / import of goods
2. Rendering skilled or consultancy assistance
3. Performing searching, where the parent company is involved.
4. Advertising and marketing specialized or monetary partnerships in between Indian companies and parent or international group company.
5. Addressing the parent company in India and acting as buying/selling brokers in India.
6. Rendering products and services in I . T . and growth of software in India.
7. Manifesting technical support to the items supplied by the parent/ group companies.
8. Foreign airline/shipping company.

Any sort of manufacturing activities can’t be carried out by branch office whereas on the other hand they may subcontract this to Indian manufacturer. Branch Offices founded with the permission of RBI, may remit outside India earnings from the branch, net of applied Indian taxes and subject to RBI rules of thumb. RBI (Reserve Bank Of India) is responsible for approving permission to setup branch offices.

Various other Conditions

• No other trading,commercial or professional activities, than those permitted by RBI can be undertaken by branch office.
• The entire expenditure of the branch office in India might be achieved either out from the resources obtained by it from out of the country by way of standard banking channels or by earnings generated by it within India
• The branch office can not accept any sort of deposits in India
• In case a branch office generates any kind of commission, for any agency business outside India coming from parties overseas has to be repatriated to India via normal banking channels

Procedure with regard to Establishing Branch Office in India

For setting up Foreign Branch Office in India and application needs to be made to the RBI in Form FNC-1. The application must include the following facts :-

1. Operating background of the organization around the world
2. Proposed interests and activities in India
3. Reasons behind planning to open up a branch office and
4. Any kind of foreign country significance regarding opening of branch office.

Branch Office on ?Stand Alone Basis?
Such Branch Offices could well be isolated and limited to the Special Economic zone (SEZ) on it’s own and no business activity / exchange will be permitted outside the SEZs in India, that include branches/subsidiaries of its parent office in India.

No consent will be necessary from RBI for a company to register a branch/unit in SEZs to undertake manufacturing and support activities governed by specific conditions.