This document summarizes the key regulations regarding establishing a liaison office in India by a foreign company. It discusses that a liaison office allows a company to explore business opportunities without full commercial operations. Key points include:
1) Liaison offices can only perform representative and communicative functions, not commercial activities.
2) The Reserve Bank of India regulates liaison offices through regulations that require approval and ongoing compliance.
3) Establishing a liaison office has low costs and regulatory requirements compared to forming an Indian subsidiary company.
This document discusses various strategies that a foreign company can use to enter the Indian market. It outlines options such as setting up a liaison office, branch office, or wholly-owned subsidiary. It also discusses establishing a joint venture with an Indian partner or acquiring an existing Indian company. The key factors that go into selecting an entry strategy include level of investment, degree of control desired, and whether the company wants to enter India directly or through a local entity. Regulatory approvals may be required from organizations like the Reserve Bank of India or Foreign Investment Promotion Board, depending on the chosen strategy.
Detailed write up on establishing of branch-liasion-project office in indiaMANOJ KUMAR KOYALKAR
This document provides details on the establishment of liaison offices, branch offices, and project offices in India by foreign entities. It discusses the entities entitled to open each type of office, application processes, eligibility criteria like track record and net worth, permissible and non-permissible activities, duration of permission, reporting requirements, and other guidelines. Key points include that liaison offices are limited to liaison activities while branch offices can undertake broader business operations. Project offices require a contract from an Indian company and approval from authorities. Remittance of profits is allowed for branch offices. Comprehensive procedures are outlined for each type of office.
The document discusses various types of business organizations in India including sole proprietorships, partnerships, private limited companies, public limited companies, and charitable organizations. It provides details on the key features and regulatory requirements for each type. The document also summarizes foreign direct investment rules in India, methods for foreign companies to enter the Indian market, and regulations related to liaison offices, branch offices, joint ventures, and wholly owned subsidiaries.
Foreign company Registration In India, Foreign Nationals looking for company registration In India, FDI FEMA Compliance for foreign Company In India, Foreign Company Registration in India. Guide on Company registration in India. FORM of FEMA , RBI Permission for company registration In India.
The document provides information on setting up a foreign company subsidiary in India. It discusses the options of a private limited company or LLP, the minimum requirements for each, and outlines an 8 step process for company registration that includes obtaining necessary approvals and compliances. Key points covered are selecting an acceptable company name, preparing required documents such as MOA and AOA, and post-incorporation formalities like opening a bank account and filing necessary registrations.
Key Takeaways:
Concerns relating to tax treaties and it's taxability
Issues in determination of PE
Considerations for determination of residential status
Implication for cross border work
This document discusses various strategies that a foreign company can use to enter the Indian market. It outlines options such as setting up a liaison office, branch office, or wholly-owned subsidiary. It also discusses establishing a joint venture with an Indian partner or acquiring an existing Indian company. The key factors that go into selecting an entry strategy include level of investment, degree of control desired, and whether the company wants to enter India directly or through a local entity. Regulatory approvals may be required from organizations like the Reserve Bank of India or Foreign Investment Promotion Board, depending on the chosen strategy.
Detailed write up on establishing of branch-liasion-project office in indiaMANOJ KUMAR KOYALKAR
This document provides details on the establishment of liaison offices, branch offices, and project offices in India by foreign entities. It discusses the entities entitled to open each type of office, application processes, eligibility criteria like track record and net worth, permissible and non-permissible activities, duration of permission, reporting requirements, and other guidelines. Key points include that liaison offices are limited to liaison activities while branch offices can undertake broader business operations. Project offices require a contract from an Indian company and approval from authorities. Remittance of profits is allowed for branch offices. Comprehensive procedures are outlined for each type of office.
The document discusses various types of business organizations in India including sole proprietorships, partnerships, private limited companies, public limited companies, and charitable organizations. It provides details on the key features and regulatory requirements for each type. The document also summarizes foreign direct investment rules in India, methods for foreign companies to enter the Indian market, and regulations related to liaison offices, branch offices, joint ventures, and wholly owned subsidiaries.
Foreign company Registration In India, Foreign Nationals looking for company registration In India, FDI FEMA Compliance for foreign Company In India, Foreign Company Registration in India. Guide on Company registration in India. FORM of FEMA , RBI Permission for company registration In India.
The document provides information on setting up a foreign company subsidiary in India. It discusses the options of a private limited company or LLP, the minimum requirements for each, and outlines an 8 step process for company registration that includes obtaining necessary approvals and compliances. Key points covered are selecting an acceptable company name, preparing required documents such as MOA and AOA, and post-incorporation formalities like opening a bank account and filing necessary registrations.
Key Takeaways:
Concerns relating to tax treaties and it's taxability
Issues in determination of PE
Considerations for determination of residential status
Implication for cross border work
The document summarizes recent changes and clarifications related to corporate laws in India. It discusses:
1) Amendments to exclude independent directors and their relatives from the definition of related parties for related party transactions.
2) Clarification that restrictions on related party transactions do not apply to mergers, amalgamations, and schemes of arrangements.
3) No fresh approval needed for pre-existing related party contracts, unless terms are modified.
The document outlines various laws and regulations that govern foreign investment and business operations in India, including the Foreign Exchange Management Act, Companies Act, tax laws, and others. It also summarizes different modes of foreign investment such as liaison offices, branch offices, joint ventures, technology transfers, and wholly-owned subsidiaries. For each investment type, it provides brief details on approval requirements, statutory compliances, taxation implications, and other considerations.
The document discusses key concepts related to company audits under the Companies Act of 1956 in India. It covers the appointment and remuneration of auditors, qualifications of auditors, disqualifications of auditors, powers and duties of auditors, and the audit report. It also discusses special provisions for government-owned companies and the power of the central government to order special audits. Key points include:
- Auditors must be appointed at the annual general meeting and remuneration must be fixed.
- Only chartered accountants can serve as auditors.
- Auditors have rights to access company documents and attend general meetings.
- Duties include inquiring about loans and transactions
Guidelines for calculation of total foreign investment in indian companiespgcinternational
This document provides guidelines for calculating total foreign investment in Indian companies, rules for transferring ownership and control of Indian companies to non-resident entities, and rules for downstream investment by Indian companies. It defines key terms, outlines a methodology for calculating direct and indirect foreign investment, and establishes approval processes for foreign investment in sectors with caps. The annex attached provides more detailed definitions and guidelines.
This document is an audit report for Hari leela co-op housing society for the period of April 2009 to March 2011. It includes an introduction and analysis of the society's balance sheet as of March 2011. On the liabilities side, it notes the share capital of Rs. 4,500 and reserve fund of Rs. 60,770. On the assets side, it details the cash and bank balances totaling Rs. 67,885 as well as investments, deposits, and fixed assets. The auditor awarded the society an audit classification of "B" based on its financial position and overall workings during the period reviewed.
The document discusses the role and permissions of a liaison office in India. A liaison office acts as a communication channel between a foreign parent company and its current or prospective customers in India, allowing it to represent the parent company, promote exports/imports and technical/financial collaborations. However, a liaison office cannot conduct any commercial activities or earn income in India. It must comply with tax withholding obligations and can only repatriate balances in its special bank account upon closure. Setting one up involves applying to the Reserve Bank of India with various documents like the parent company's charter and audited financial statements.
A foreign entity can establish a business in India through various forms: 1) a joint venture company with an Indian partner where ownership is typically 51-49%, 2) a wholly owned subsidiary where 100% foreign ownership is allowed in some sectors, 3) a liaison/representative office which can gather market intelligence but not conduct commercial activities, 4) a branch office to conduct approved manufacturing and trading activities, or 5) a project office to execute a specific contract. The document then provides details on the requirements and regulations for each business establishment type.
The document summarizes recent updates to the Companies Act 2013 in India, including increasing the threshold for mandatory appointment of a Company Secretary to Rs. 10 crores, expanding requirements for secretarial audit reports, introducing new forms like SPICe+ for easier incorporation, extending various filing timelines due to COVID-19, and allowing meetings to be conducted virtually.
This document provides information about establishing investment entities in Indonesia for foreign companies. It discusses the two main legal entities that can be chosen: a foreign representative office or a PT PMA corporation. A representative office allows a company to conduct market research and coordination but not generate revenue. It also describes the four types of representative offices (general, trade, construction, and bank) and their permit requirements.
The document summarizes guidelines issued by the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) on May 12, 2016. It discusses 5 guidelines issued by RBI related to the establishment of foreign offices in India, foreign exchange regulations, interest rates for co-operative banks, surrendering payments system licenses, and new ownership rules for private banks. It also summarizes one SEBI guideline outlining rules for public issues of units for Infrastructure Investment Trusts. The document provides links to the full notifications on the respective websites of RBI and SEBI.
Foreign investors can enter the Indian market through various entry strategies including setting up a liaison office, branch office, project office, or incorporating a wholly-owned subsidiary or joint venture. A foreign company can choose to operate as an Indian company by forming a joint venture with an Indian partner or setting up a wholly-owned subsidiary. They can also operate as a foreign company by opening a liaison office, branch office, or project office, subject to RBI approval. Liaison offices are limited to representative functions while branch and project offices allow for additional commercial activities related to the foreign company's core business.
This document provides an overview of Sections 1-17 of the Income Tax Act of 1961 as amended by the Finance Act of 2013. It begins with background information on nationality, citizenship and types of persons under the act. It then summarizes key points about determining residential status for individuals, HUFs, firms/AOPs/LLPs and companies. Several sections are summarized including income deemed to accrue in India, special provisions for newly established units in SEZs and meanings of terms like computer programs. Conditions for tax exemption of trusts and institutions are also outlined.
The document defines several new key concepts introduced in the 2013 Companies Act of India. It discusses new types of companies like one-person companies and changes to the definitions of private and small companies. It also covers new roles like independent directors and promoters. New requirements around consolidated financial statements, mandatory auditor rotation, and secretarial standards are introduced. The roles of regulatory authorities like the National Company Law Tribunal are also discussed.
India Enacts Further Sections of the Companies Act, 2013Nair and Co.
With reference to the effectiveness of India?s new Companies Act, 2013, the Ministry of Corporate Affairs (MCA) has further notified 183 sections and schedules. The newly notified sections have come into effect 1 April 2014.
The document contains 4 circulars from the Reserve Bank of India regarding updates to foreign exchange laws and regulations in India from July 2015. The circulars provide clarification on the re-export of unsold rough diamonds from special customs zones without export forms, allow foreign investment in activities related to tobacco other than manufacturing, issue of employee stock options/shares to overseas employees in accordance with sector caps, and permit banks to factor export receivables on a non-recourse basis. The document also contains an advertisement from a professional services firm called Taxpert Professionals providing taxation and corporate advisory services.
Dear Reader,
Please find enclosed herewith our Tax Bulletin on the decision of the Hon’ble Delhi Income-tax Appellate Tribunal, in the case of GE Energy Parts Inc., US (‘the assessee’). The Hon’ble ITAT has observed that employees of the foreign enterprise assigned to India for performing marketing and sales functions for the overseas group entities, used the liaison office of one of the group entities in India. Thus, the ITAT held that the assessee had both, a fixed place permanent establishment (PE) and agency PE, in India.
Trust you will find it an interesting read.
Banking services management vth sem bcom banking calicut universitysreevkn
This document provides an overview of banking services management and banking reforms in India. It discusses key Indian banking legislation like the Banking Regulation Act of 1949 and the roles and powers of the Reserve Bank of India in regulating banks. It also lists the different types of banks in India including public sector banks, private sector banks, foreign banks, regional rural banks, and cooperative banks. Banking reforms since the 1990s aimed to increase efficiency, reduce government control, and bring banks in line with international standards through recommendations from the Narasimham Committee.
BCAS - Study Course on FEMA - Sector specific FDI (Real Estate, Retail Tradin...P P Shah & Associates
The document discusses foreign direct investment (FDI) in India, including sector-specific FDI in real estate, retail trading, and the financial sector. It provides an overview of the history and liberalization of FDI policy in India. It outlines the key conditions, rules, and sectors that are prohibited or restricted for FDI under India's FDI policy.
The registration process for a company in India involves several steps. First, the company must get approval for its proposed name from the Registrar of Companies in the relevant state. Next, the company must file its Memorandum and Articles of Association with the ROC along with the requisite fees. Finally, once all documents are properly filed, the ROC will issue a Certificate of Incorporation, officially establishing the company. The process from filing until receiving the certificate can take one to two weeks. Additionally, companies must obtain necessary tax registrations like a Permanent Account Number.
Role and-impact-of-fiis-on-indian-capital-marketfreny m
This document is a project report on the role and impact of foreign institutional investors (FIIs) on the Indian capital market. It includes an introduction, literature review, methodology, analysis and conclusions. The introduction provides the objectives of studying FII trends and their influence on the Indian capital market from 1992 to 2012. It also acknowledges those who provided guidance and support. The literature review covers the liberalization of the Indian economy in the 1990s that opened the door to FIIs and their importance as portfolio investors. The methodology section outlines the research design, data collection, sample and tools used for analysis. The analysis and conclusions examine trends in FII flows and their impact on the stock market and economy.
The document summarizes recent changes and clarifications related to corporate laws in India. It discusses:
1) Amendments to exclude independent directors and their relatives from the definition of related parties for related party transactions.
2) Clarification that restrictions on related party transactions do not apply to mergers, amalgamations, and schemes of arrangements.
3) No fresh approval needed for pre-existing related party contracts, unless terms are modified.
The document outlines various laws and regulations that govern foreign investment and business operations in India, including the Foreign Exchange Management Act, Companies Act, tax laws, and others. It also summarizes different modes of foreign investment such as liaison offices, branch offices, joint ventures, technology transfers, and wholly-owned subsidiaries. For each investment type, it provides brief details on approval requirements, statutory compliances, taxation implications, and other considerations.
The document discusses key concepts related to company audits under the Companies Act of 1956 in India. It covers the appointment and remuneration of auditors, qualifications of auditors, disqualifications of auditors, powers and duties of auditors, and the audit report. It also discusses special provisions for government-owned companies and the power of the central government to order special audits. Key points include:
- Auditors must be appointed at the annual general meeting and remuneration must be fixed.
- Only chartered accountants can serve as auditors.
- Auditors have rights to access company documents and attend general meetings.
- Duties include inquiring about loans and transactions
Guidelines for calculation of total foreign investment in indian companiespgcinternational
This document provides guidelines for calculating total foreign investment in Indian companies, rules for transferring ownership and control of Indian companies to non-resident entities, and rules for downstream investment by Indian companies. It defines key terms, outlines a methodology for calculating direct and indirect foreign investment, and establishes approval processes for foreign investment in sectors with caps. The annex attached provides more detailed definitions and guidelines.
This document is an audit report for Hari leela co-op housing society for the period of April 2009 to March 2011. It includes an introduction and analysis of the society's balance sheet as of March 2011. On the liabilities side, it notes the share capital of Rs. 4,500 and reserve fund of Rs. 60,770. On the assets side, it details the cash and bank balances totaling Rs. 67,885 as well as investments, deposits, and fixed assets. The auditor awarded the society an audit classification of "B" based on its financial position and overall workings during the period reviewed.
The document discusses the role and permissions of a liaison office in India. A liaison office acts as a communication channel between a foreign parent company and its current or prospective customers in India, allowing it to represent the parent company, promote exports/imports and technical/financial collaborations. However, a liaison office cannot conduct any commercial activities or earn income in India. It must comply with tax withholding obligations and can only repatriate balances in its special bank account upon closure. Setting one up involves applying to the Reserve Bank of India with various documents like the parent company's charter and audited financial statements.
A foreign entity can establish a business in India through various forms: 1) a joint venture company with an Indian partner where ownership is typically 51-49%, 2) a wholly owned subsidiary where 100% foreign ownership is allowed in some sectors, 3) a liaison/representative office which can gather market intelligence but not conduct commercial activities, 4) a branch office to conduct approved manufacturing and trading activities, or 5) a project office to execute a specific contract. The document then provides details on the requirements and regulations for each business establishment type.
The document summarizes recent updates to the Companies Act 2013 in India, including increasing the threshold for mandatory appointment of a Company Secretary to Rs. 10 crores, expanding requirements for secretarial audit reports, introducing new forms like SPICe+ for easier incorporation, extending various filing timelines due to COVID-19, and allowing meetings to be conducted virtually.
This document provides information about establishing investment entities in Indonesia for foreign companies. It discusses the two main legal entities that can be chosen: a foreign representative office or a PT PMA corporation. A representative office allows a company to conduct market research and coordination but not generate revenue. It also describes the four types of representative offices (general, trade, construction, and bank) and their permit requirements.
The document summarizes guidelines issued by the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) on May 12, 2016. It discusses 5 guidelines issued by RBI related to the establishment of foreign offices in India, foreign exchange regulations, interest rates for co-operative banks, surrendering payments system licenses, and new ownership rules for private banks. It also summarizes one SEBI guideline outlining rules for public issues of units for Infrastructure Investment Trusts. The document provides links to the full notifications on the respective websites of RBI and SEBI.
Foreign investors can enter the Indian market through various entry strategies including setting up a liaison office, branch office, project office, or incorporating a wholly-owned subsidiary or joint venture. A foreign company can choose to operate as an Indian company by forming a joint venture with an Indian partner or setting up a wholly-owned subsidiary. They can also operate as a foreign company by opening a liaison office, branch office, or project office, subject to RBI approval. Liaison offices are limited to representative functions while branch and project offices allow for additional commercial activities related to the foreign company's core business.
This document provides an overview of Sections 1-17 of the Income Tax Act of 1961 as amended by the Finance Act of 2013. It begins with background information on nationality, citizenship and types of persons under the act. It then summarizes key points about determining residential status for individuals, HUFs, firms/AOPs/LLPs and companies. Several sections are summarized including income deemed to accrue in India, special provisions for newly established units in SEZs and meanings of terms like computer programs. Conditions for tax exemption of trusts and institutions are also outlined.
The document defines several new key concepts introduced in the 2013 Companies Act of India. It discusses new types of companies like one-person companies and changes to the definitions of private and small companies. It also covers new roles like independent directors and promoters. New requirements around consolidated financial statements, mandatory auditor rotation, and secretarial standards are introduced. The roles of regulatory authorities like the National Company Law Tribunal are also discussed.
India Enacts Further Sections of the Companies Act, 2013Nair and Co.
With reference to the effectiveness of India?s new Companies Act, 2013, the Ministry of Corporate Affairs (MCA) has further notified 183 sections and schedules. The newly notified sections have come into effect 1 April 2014.
The document contains 4 circulars from the Reserve Bank of India regarding updates to foreign exchange laws and regulations in India from July 2015. The circulars provide clarification on the re-export of unsold rough diamonds from special customs zones without export forms, allow foreign investment in activities related to tobacco other than manufacturing, issue of employee stock options/shares to overseas employees in accordance with sector caps, and permit banks to factor export receivables on a non-recourse basis. The document also contains an advertisement from a professional services firm called Taxpert Professionals providing taxation and corporate advisory services.
Dear Reader,
Please find enclosed herewith our Tax Bulletin on the decision of the Hon’ble Delhi Income-tax Appellate Tribunal, in the case of GE Energy Parts Inc., US (‘the assessee’). The Hon’ble ITAT has observed that employees of the foreign enterprise assigned to India for performing marketing and sales functions for the overseas group entities, used the liaison office of one of the group entities in India. Thus, the ITAT held that the assessee had both, a fixed place permanent establishment (PE) and agency PE, in India.
Trust you will find it an interesting read.
Banking services management vth sem bcom banking calicut universitysreevkn
This document provides an overview of banking services management and banking reforms in India. It discusses key Indian banking legislation like the Banking Regulation Act of 1949 and the roles and powers of the Reserve Bank of India in regulating banks. It also lists the different types of banks in India including public sector banks, private sector banks, foreign banks, regional rural banks, and cooperative banks. Banking reforms since the 1990s aimed to increase efficiency, reduce government control, and bring banks in line with international standards through recommendations from the Narasimham Committee.
BCAS - Study Course on FEMA - Sector specific FDI (Real Estate, Retail Tradin...P P Shah & Associates
The document discusses foreign direct investment (FDI) in India, including sector-specific FDI in real estate, retail trading, and the financial sector. It provides an overview of the history and liberalization of FDI policy in India. It outlines the key conditions, rules, and sectors that are prohibited or restricted for FDI under India's FDI policy.
The registration process for a company in India involves several steps. First, the company must get approval for its proposed name from the Registrar of Companies in the relevant state. Next, the company must file its Memorandum and Articles of Association with the ROC along with the requisite fees. Finally, once all documents are properly filed, the ROC will issue a Certificate of Incorporation, officially establishing the company. The process from filing until receiving the certificate can take one to two weeks. Additionally, companies must obtain necessary tax registrations like a Permanent Account Number.
Role and-impact-of-fiis-on-indian-capital-marketfreny m
This document is a project report on the role and impact of foreign institutional investors (FIIs) on the Indian capital market. It includes an introduction, literature review, methodology, analysis and conclusions. The introduction provides the objectives of studying FII trends and their influence on the Indian capital market from 1992 to 2012. It also acknowledges those who provided guidance and support. The literature review covers the liberalization of the Indian economy in the 1990s that opened the door to FIIs and their importance as portfolio investors. The methodology section outlines the research design, data collection, sample and tools used for analysis. The analysis and conclusions examine trends in FII flows and their impact on the stock market and economy.
Presentation on Current and Capital Account Transactions and LRS by CA.Sudha ...TAXPERT PROFESSIONALS
This document summarizes a presentation on current and capital account transactions and the liberalized remittance scheme. It discusses key aspects of current account transactions including what they consist of according to regulations, examples of common current account transactions, and rules and schedules related to current account transactions. It provides information on capital account transactions, the balance of payments, and components of the balance of payments. It also discusses the liberalized remittance scheme and exceptions and limits related to current account transactions and remittances from resident foreign currency and exchange earnings foreign currency accounts. Overall, the summary provides a high-level overview of the topics covered in the presentation related to foreign exchange transactions and current account rules in India.
The document contains 5 job advertisements from the Staff Selection Commission of Karnataka-Kerala Region. The positions advertised are:
1. Junior Engineer (Civil) in the Directorate of Lighthouses and Lightships in Cochin, Kerala.
2. Investigator in the Office of the Development Commissioner for Handicrafts in New Delhi.
3. Cataloguer at the Central Institute of Indian Languages in Mysore, Karnataka.
4. Language Typist (Malayalam and Telugu) at the Central Institute of Indian Languages in Mysore.
5. Instructions are provided regarding abbreviations used, fee details, the selection process, how to apply and documents to be attached
FEMA Provisions on ESOP : Presentation by CA. Sudha G. Bhushan TAXPERT PROFESSIONALS
The document discusses an employee stock option plan (ESOP) for an Indian company. It provides details on the regulations around issuing ESOPs to foreign employees under the Foreign Exchange Management Act. An Indian company can issue shares to employees of its foreign joint ventures or subsidiaries, subject to certain conditions like the value of shares not exceeding 5% of the company's paid-up capital. The tax treatment of ESOPS in India and accounting standards under IFRS are also summarized.
Presentation on Fema by CA. Sudha G. Bhushan [balance sheet and fema]TAXPERT PROFESSIONALS
The document discusses regulations related to balance sheets, foreign exchange management, and international transactions per the Companies Act, Income Tax Act, and Foreign Exchange Management Act of India. Key points include:
1. Balance sheets must provide a true and fair view of the company's financial position and comply with Schedule VI of the Companies Act.
2. The Income Tax Act contains several sections related to computing income from international transactions and reporting requirements.
3. FEMA regulates foreign exchange transactions and capital/current account transactions, requiring certain approvals and documentation for foreign investment, borrowings, remittances abroad, and other financial activities involving foreign exchange.
A project report on overview of indian stock marketProjects Kart
The document provides an overview of the Indian stock market, including its history dating back nearly 200 years. It discusses the two major stock exchanges in India - the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). It provides details on the establishment of NSE in 1992 to modernize Indian stock trading, and its role in reforming practices and increasing trading volumes through electronic trading and settlement methods. Trading at NSE includes both wholesale debt and capital markets.
The document summarizes Brent Callinicos' presentation about Google Treasury. It outlines Google's mission to organize the world's information and make it universally accessible. It then discusses Google's strategy of focusing on search, ads, and apps. The presentation also provides an overview of Google Treasury's organization, focus on areas like foreign exchange management, and goal of implementing robust risk management systems.
The Reserve Bank of India regulates the establishment of branches, liaison offices, or other places of business in India by foreign companies. No foreign company can set up such an office without RBI approval, except for banking and insurance companies regulated by other acts. Foreign companies can also set up standalone branches in Special Economic Zones to conduct permitted business activities without RBI approval if they meet certain conditions. The regulations specify the application process and permitted activities of foreign branches and liaison offices in India.
Establishing foreign branches abroad by indian companyVineeth T
Setting up a branch office abroad involves several steps and requirements. An Indian company can establish a branch office outside India to conduct normal business activities. The key steps include obtaining board approval, appointing an authorized representative, opening a bank account, and filing required forms and applications with the RBI through an Authorized Dealer along with supporting documents. The branch office must promptly report bank account details to the Indian company's banker and repatriate any profits to India. Specific requirements may apply depending on the host country location of the branch office.
A branch office is a suitable business model for foreign companies looking to establish a temporary presence in India. The branch office serves as an extension of the head office business and carries on the same business and activity as that of its parent company.
The document discusses the process of forming a company in India. It involves several key steps:
1) Approval of the company name from the Registrar of Companies.
2) Filing the Memorandum and Articles of Association with the ROC along with other required documents and fees.
3) Receipt of the Certificate of Incorporation from the ROC to legally form the company.
4) Additional steps for public companies, including obtaining a Certificate of Commencement of Business from the ROC to officially start operations.
Thane Study Circle of WIRC FEMA Course - Inbound Investment 2 - 15.DEC.2013P P Shah & Associates
The document summarizes the presentation given by Mr. Paresh P. Shah on establishing inbound investment offices in India. It provides an overview of liaison offices, branch offices, and the application process for obtaining regulatory approval to set them up. Key activities and restrictions for different office types are also outlined.
The document discusses various ways for foreign investment in India including incorporated and unincorporated entities. It provides details on types of unincorporated entities like liaison offices, branch offices and project offices that can be established by foreign companies in India. It also summarizes the key differences between these types of unincorporated entities and incorporated joint ventures or wholly owned subsidiaries when it comes to permissions required, activities allowed, profit repatriation and other aspects. Further, it outlines the regulatory framework governing foreign investment in India including relevant regulations, rules and policies.
The document discusses various ways for foreign entities to invest and establish a presence in India, including incorporated and unincorporated entities. It provides details on types of unincorporated entities like liaison offices, branch offices, and project offices, as well as the regulatory requirements for establishing and operating each type. It also covers incorporated joint ventures and wholly owned subsidiaries and compares the characteristics of unincorporated vs incorporated structures.
1. The document defines various types of companies under Indian law such as Indian company, domestic company, foreign company, and company in which the public are substantially interested.
2. It explains the residential status of companies in India, noting that an Indian company is always resident in India regardless of control or location, while a foreign company's residence is determined by its place of effective management.
3. Tax planning tips are provided for the Minimum Alternate Tax (MAT) under section 115JB, such as recognizing revenue conservatively, using written down value depreciation, timing asset sales, writing off goodwill, and amortizing certain expenditures.
FEMA Regulations for Incorporation of WOS/JV/ Step-down Subsidiary outside IndiaDVSResearchFoundatio
Key Takeaways:
Acquisition of JV/WOS by Indian parties
Approvals required for investment in JV/WOS by Indian parties
Understanding step-down subsidiary
Setting up step-down subsidiary outside India and reporting procedures involved
The document provides information on Section 8 companies in India, which are companies formed for charitable purposes. Section 8 companies have certain benefits like zero stamp duty and tax exemptions. The document outlines the requirements for forming a Section 8 company, including having at least two directors and promoters and applying profits only towards furthering the company's objectives.
procedural requirements & Compliance requirements for establishing a compan...kartheek reddy
To establish a company in India, it must be registered with the Registrar of Companies where it will be located. The company must be organized according to the Companies Act of 1956 and necessary registration forms must be filed. Directors must be appointed by completing proper identification forms. Foreign companies can open branch offices in India to represent parent companies, conduct research, engage in export/import, and promote technical/financial collaborations by submitting applications to the Reserve Bank of India. Ongoing compliance requirements for companies in India include filing annual corporate and withholding tax returns, paying excise/service taxes, and meeting RBI reporting obligations.
The document discusses the due diligence requirements for cross border transactions and mergers. It covers:
- The key definitions under regulations for cross border mergers between an Indian company and foreign company.
- The allowability, vulnerability, accountability, and explainability aspects that must be considered for cross border transactions.
- The conditions under which an Indian company can merge with a foreign company or vice versa, including compliance with FEMA regulations, treatment of offices and assets/liabilities, valuation requirements, and other regulatory conditions.
- Specific provisions for inbound and outbound mergers depending on whether the resultant company is Indian or foreign. This includes timelines for compliance on guarantees, borrowings, and non-compliant assets.
How a foreign company is registered in India? What is Foreign Company Registration Number? What are the documents to be filed with ROC by Foreign Companies?
How a foreign company is registered in India? What is Foreign Company Registration Number? What are the documents to be filed with ROC by Foreign Companies?
This document provides an overview of direct tax implications in India for companies looking to do business in the country. It discusses key aspects like the scope of taxable income for resident and non-resident companies, applicable corporate tax rates, considerations around dividend income, minimum alternate tax, and other tax obligations. The document also covers indirect tax implications and specifics of the taxation system relevant for non-resident entities operating in India.
- There are no restrictions on the percentage of royalty payments for use of technology or trademarks under FEMA. Royalty payments are considered current account transactions.
- There are no restrictions on payment of commissions, except for commissions over USD 25,000 or 5% of inward remittance paid to agents abroad for sale of residential/commercial property in India.
- Payment for employee stock ownership plans (ESOPs) are considered capital account transactions governed by FEMA regulations.
- Under the Liberalized Remittance Scheme, residents can provide loans in foreign currency to non-resident Indian relatives.
- Profits from sale of property or shares by non-resident Indians are considered capital account transactions as the
The document discusses the key steps and considerations for forming a joint venture in India.
1) The joint venture company must be incorporated with regulatory bodies like ROC.
2) Partners will make inter-corporate investments in the joint venture company according to Section 372A of the Companies Act.
3) Various regulatory approvals are required depending on the industry and foreign investment percentage.
4) Important clauses in the joint venture agreement address issues like control, confidentiality, contributions of each partner.
This document provides an overview of different types of business organizations and structures in India. It discusses sole proprietorships, partnerships, private limited companies, public limited companies, and charitable organizations. For each type of structure, it outlines key defining features, advantages, disadvantages and regulations. It also covers topics like joint ventures, foreign direct investment rules in India, and how a foreign company can enter the Indian market through a liaison office, branch office, joint venture or wholly owned subsidiary.
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Note on entry strategies in India by CA.Sudha g. bhushan
1. Evaluation on the Entry
Strategies in India
CA.SUDHA G.
This report deals with the provisions relating to Liaison
BHUSHAN office, Branch Office and Company incorporation with
foreign Capital
Page 1
2. LIAISON OFFICE
Introduction
A ‘Liaison Office’ is a representative office set up primarily to explore and understand
the business and investment climate. Such office is not permitted to undertake any
commercial / trading / industrial activity, directly or indirectly, and is required to maintain
itself out of inward remittances received from parent company through normal banking
channels.
As defined under clause 2(e) of Foreign Exchange Management (Establishment in India
of Branch or Office or other Place of Business) Regulations, 2000.
'Liaison Office' means a place of business to act as a channel of communication
between the Principal place of business or Head Office by whatever name called and
entities in India but which does not undertake any commercial /trading/ industrial
activity, directly or indirectly, and maintains itself out of inward remittances received
from abroad through normal banking channel;
The liaison office can do only permitted activities in India these are:-
(i) Representing the parent company/group companies in India.
(ii) Promoting export import from/to India.
(iii) Promoting technical/financial collaborations between parent/group companies
and companies in India.
(iv) Acting as a communication channel between the parent company and Indian
companies.
Suitability of Liaison office in India
The Liaison Office generally acts as a communication channel between the parent
company overseas and its present or prospective customers in India. The Liaison Office
can also be set up to establish business contacts or gather market intelligence to
promote the products or services of the overseas parent company. The cost involved in
Liaison Office is very low and also the statutory compliances are very less as compared
to company. It is best to start have the understanding of Indian customer and business
BY CA. Sudha Page 2
3. environment to open a Liaison office rather than incorporating a company and blocking
the capital .
Legal Framework for Liasion Office
The following pictorial presentation depicts the legal frame work for liaison office in
India.
BY CA. Sudha Page 3
4. Foreign Exchange Management Act
Foreign Exchange Management Act is an act to consolidate and amend the law relating
to foreign exchange with the objective of facilitating external trade and payments and for
promoting the orderly development and maintenance of foreign exchange market in
India.
The Act has given general power to the Reserve Bank of India under section 47 to
make notifications to regulate various provisions of the Act. Also the specific power has
been given under Section 6(6) to make the regulations to regulate the liaison office of
the companies incorporated outside India.
As per sub-section (6) of Section 6 of the Foreign Exchange Management Act, 1999
the Reserve Bank may, by regulation, prohibit, restrict, or regulate establishment in
India of a branch, office or other place of business by a person resident outside India,
for carrying on any activity relating to such branch, office or other place of business.
Reserve Bank of India (RBI)
In exercise of the powers given under sub section 6 of section 6 of the Foreign
Exchange Management Act, 1999.RBI has framed the regulation by way of notification
to regulate the provisions relating the Liaison office in India. These regulations are
Foreign Exchange Management (Establishment in India of branch or office or
other place of business) Regulations, 2000 framed by way of Notification No.
FEMA 22 /2000-RB dated 3rd May 2000.
Liaison office Registration
For opening the Liaison office in India, the person resident outside India has to take
prior permission of Reserve bank of India. As per the notification mentioned above no
person resident outside India shall, without prior approval of the Reserve Bank,
establish in India a branch or a liaison office or a project office or any other place of
business by whatever name called.
The permission for Liaison office is required to be taken in the form of application to the
RBI. Such an application is required to be made in the prescribed form i.e. Form FNC 1.
The FNC1 is the form which serves as the purpose for RBI for getting the required
BY CA. Sudha Page 4
5. information to arrive at the decision whether the permission is to be granted to Liaison
office in India or not.
The application form duly completed and submitted to the Chief General Manager,
Exchange Control Department (Foreign Investment Division), Reserve Bank of India,
Central Office, and Mumbai-400001.
The information required to be given in form:
Full name and address of the applicant company/firm [whether the applicant is a
proprietary concern or partnership firm or limited company or public sector
undertaking or any other organisation].
Date and Place of incorporation / registration of the applicant company.
Details of capital of the applicant company.
Brief description of activities of the applicant company.
Value of goods imported from and / or exported to India by the applicant during
each of the last three years.
Particulars of existing arrangements if any, for representing the company in India.
Particulars of the proposed Branch/ Liaison Office like activities to be undertaken
and place of establishment
Documents required to be submitted along with Form:
Translated English version of the Company’s Certificate of
Incorporation/Registration, Memorandum & Articles of Association attested by
the Indian Embassy/Notary public in the country of registration (Two original
copies)
Copies of last three years audited Balance Sheet, Profit & Loss Account of the
applicant company/firm.
Undertaking that the Liaison office will not carry out any trading and commercial
activity in India.
BY CA. Sudha Page 5
6. Copy of the Board resolution for opening office in India.
The permission granted to Liaison office shall be for the period of three years. The
liaison office is required to approach the office of Reserve bank of India before the
expiry of three years for seeking extension/ renewal of permission otherwise it will be
considered that the liaison office is functioning without a valid permission in violation of
regulation 3 of Notification No. FEMA 22 /2000-RB dated 3rd May 2000.
Permitted Activities
The liaison office can do only those activities in India that are permitted as per Schedule
II of the said notification. As per the Schedule II, activities that can be done by the
liaison office are:-
Representing in India the parent company/group companies.
Promoting export import from/to India.
Promoting technical/financial collaborations between parent/group companies
and companies in India.
Acting as a communication channel between the parent company and Indian
companies.
Prohibited/Restricted Activities
The liaison office in India is not allowed to carry on any business activity in India .
it shall not take any activity Trading, commercial or industrial activity. There shall
be no generation of revenue by Liaison office in India.
It shall not enter into any contracts with Indian residents;
No commission /fees shall be charged or any other remuneration received
/income earned by the office in India for the liaison office activities/services
rendered by it or otherwise in India.
All the expenses for the set-up, operation and maintenance of the Liaison office
have to be met out of foreign exchange remittances from the Foreign company
through normal banking channels.
The Liaison office shall not borrow/lend any money from/to any person in India
without RBI prior permission.
It shall not acquire, hold, and transfer any immovable property in India without
RBI prior approval.
BY CA. Sudha Page 6
7. Prior approval of RBI required before shifting of Liaison office
Acquisition of Immovable property in India
As per Foreign Exchange Management (Acquisition and transfer of immovable property
in India) Regulations, 2000 FEMA 21/2000-RB, dated 3-5-2000, [the regulations to
provide for provision for acquisition and transfer of immovable property in India] the
Liaison office is not allowed to own/acquire any immovable property in India however,
the same can take on lease the immovable for carrying on the permitted activities in
India.
Closure of Business operations
The Reserve Bank of India is required to be intimated with the documents
Copy of the letter of approval of Reserve Bank of India for establishment of
Liaison in India.
Board resolution from foreign/parent company duly notarised/consularized
Power of attorney from foreign/parent company duly notarised/counslarized in
favour of person signing documents for closure.
Certificate by Liaison office on pending legal proceedings in Indian courts or
enquiries from Enforcement Directorate.
Certificate by Liaison office that it does not own any immovable property in India.
Certificate by Liaison office that it does not own any deposits, loans and
advances.
An undertaking by Liaison office for remittance of surplus to head office.
Remittance of Funds outside India
In case the Liaison office wants to remit funds/assets out of India then it is required to
the regulations as mentioned in the Foreign Exchange Management (Remittance of
Assets) Regulations, 2000.The Regulation Foreign Exchange Management (Remittance
of Assets) Regulations, 2000 provides for remittance of assets outside India. Regulation
6 of the said notification deals with the Liaison office. It provides that in case of
remittance of winding up proceeds of a branch/office in India of a person resident
outside India, the application is required to be made to the RBI together with following
documents namely:
(A) Copy of the Reserve Bank's permission for establishing the branch/office in India;
(B) Auditor's certificate
BY CA. Sudha Page 7
8. (i) indicating the manner in which the remittable amount has been arrived and
supported by a statement of assets and liabilities of the applicant, and indicating
the manner of disposal of assets;
(ii) confirming that all liabilities in India including arrears of gratuity and other
benefits to employees etc. of the Liaison office have been either fully met or
adequately provided for;
(iii) confirming that no income accruing from sources outside India (including
proceeds of exports) has remained unrepatriated to India;
(C) No-objection or Tax clearance certificate from Income-Tax authority for the
remittance; and
(D) Confirmation from the applicant that no legal proceedings in any Court in India are
pending and there is no legal impediment to the remittance.
The Companies Act, 1956
Companies Act is an act to regulate the Companies incorporated in India and also the
companies functioning in India.
Section 591 to 602 of the said act, both inclusive shall apply to all foreign companies,
companies incorporated outside India which, have established a place of business
within India.
Registration when required
As per section 592 of the Companies Act, 1956 the registration is required within 30
days of the establishment of place in Business in India. The intimation is filed with the
Registrar of Companies within 30 days in Form 44 with the Ministry of Corporate affairs.
The documents which are required to be filed with Form 44 are as follows:
1. Certified copy of Memorandum and Articles of Association / Charter of the foreign
company with certified English translation thereof, where necessary.
2. Full address of registered/principal office of foreign company.
3. Name and address of the person resident in India authorized u/s 592(1)(d) to
accept on behalf of the foreign company, any notice or other documents required
to be served on the foreign company.
4. Full Address of the principal place of business in India.
5. List of Director and Secretary of the foreign company
BY CA. Sudha Page 8
9. 6. POA in favour of Authorized person/Country Manager
Alteration to be intimated to the office of Registrar of Companies
As per section 593 of the said Act, If any alteration is made or occurs in:-
(a) the charter, statutes, or memorandum and articles of a foreign company or
other instrument constituting or defining the constitution of a foreign company; or
(b) the registered or principal office of a foreign company ; or
(c) the directors or secretary of a foreign company ; or
(d) the name or address of any of the persons authorised to accept service on
behalf of a foreign company; or
(e) the principal place of business of the company in India;
the company shall, within the prescribed time, deliver to the Registrar for registration a
return containing the prescribed particulars of the alteration
Accounts and Audit
The Liaison office is required to submit its accounts to the office of Registrar of
Companies in Form 52.The provisions of sections 209, 209A, 233A and 233B and
sections 234 to 246 (both inclusive) shall, so far as may be, apply only to the Indian
business of a foreign company having an established place of business in India, as they
apply to a company incorporated in India. All documents relating to Liaison office shall
be submitted to Registrar of Companies, New Delhi.
The Income Tax Act, 1961
Registrations under the Act
The Liaison office is required to take the permanent account number (PAN) and
tax Deduction number (TAN) from the Income tax department.
Application for PAN is made in Form 49A and application for TAN is made in 49B
to the NSDL.
Copy of any one of the following documents is required to se sent with an
application
Copy of registration certificate of the respective country duly attested by
Indian Embassy/ Consulate/ High Commission/ Apostille in the country
where applicant is located.
Copy of certificate of registration with the competent authority in India
BY CA. Sudha Page 9
10. Copy of approval issued by the competent authority in India
Copy of the accompanying documents alongwith the approval issued by
competent authority in India
Copy of the application (duly acknowledged) made by the applicant before
the competent authority in India Registration certificate issued by ROC
(Form No. 44)
Applicability of the Indian Income Tax Act, 1961
On the basis of Permitted business activities as per the RBI regulation the Liaison office
is not allowed to carry on any BUSINESS ACTIVITY [trading, commercial or industrial]
in India. Therefore one might say since there is no business activity allowed to be
carried on Liaison office there is generation of income hence there is no income to be
chargeable in the hands of Liaison office. But this is required to be further analyzed from
the Income Tax perspective.
Section 2(13) Income Tax Act defines business as “business includes any trade,
commerce or manufacture or any adventure or concern in the nature of trade,
commerce or manufacture”.
Although the Liaison office is not doing any business activity in India but the activity of
the parent company is purely commercial in nature. One may argue that Liaison office is
not earning profit but it is assisting in earning profit for commercial activity but at the
same time it is not necessary that every activity should result in earning revenue.
The Income of the foreign company may be taxable in India.
As per section 5 of the Income Tax Act, 1961Subject to the provisions of this Act, the
total income of any previous year of a person who is a non-resident includes all income
from whatever source derived which—
(a) is received or is deemed to be received in India in such year by or on
behalf of such person ; or
(b) accrues or arises or is deemed to accrue or arise to him in India during
such year.
Keeping in mind the provisions of section 5 of the Income Tax Act, 1961 it can be
said that if the income is said to be received or is deemed to be received in India
or it accrues or arises or is deemed to accrue or arise to the foreign company the
same shall be taxable in India.
BY CA. Sudha Page 10
11. To determine whether the sum is deemed to accrue or arise in India Section 9 of
the Income Tax Act, 1961 is to be read. The section 9, in various clauses of sub-
section (1), enumerates certain incomes which shall be deemed to accrue or
arise in India, if the conditions mentioned in the respective clauses are fulfilled.
As per Section 9(1)(i) of the Act, a Liaison office would be deemed to be liable to
tax on its income in India in case it constitutes a ‘business connection’ of its
foreign parent in India.
“Business connection” shall include any business activity carried out through a
person who, acting on behalf of the non-resident,—
has and habitually exercises in India, an authority to conclude contracts on
behalf of the non-resident, unless his activities are limited to the purchase of
goods or merchandise for the non-resident; or
has no such authority, but habitually maintains in India a stock of goods or
merchandise from which he regularly delivers goods or merchandise on
behalf of the non-resident; or
habitually secures orders in India, mainly or wholly for the non-resident or for
that non-resident and other non-residents controlling, controlled by, or subject
to the same common control, as that non-resident.
Therefore it can be inferred that if the Liaison office is taken to be Business connection
of the parent company in India in that case the Liaison office shall be taxable under the
Income tax Act,1961.
In the present context, it is also relevant to mention section 90(2) of the Income Tax
Act, 1961, which provides that where the Central Government has entered into an
agreement with the Government of any country outside India for granting relief of tax, or
as the case may be, avoidance of double taxation, then, in relation to the assessee to
whom such agreement applies, the provisions of this Act shall apply to the extent they
are more beneficial to that assessee.
Therefore, for determining the taxability, if any, of LOs in India the Income Tax Act,
1961 is to be read with the double taxation avoidance agreement.
It could be said that the taxability of Liaison office in India is broadly governed by
Section 9(1)(i) of the Income Tax Act, 1961 (Act), and, Article 5 (on permanent
establishment [PE]) read with Article 7 (on business profits) of the relevant Double Tax
Avoidance Agreement (DTAA) (if any).
As said earlier, as per Section 9(1)(i) of the Act, an LO would be deemed to be liable to
tax on its income in India in case it constitutes a ‘business connection’ of its foreign
parent in India. As per Article 5 read with Article 7 of the relevant DTAA, an LO would
BY CA. Sudha Page 11
12. be taxable in India, in case it constitutes a Permanent Establishment of its foreign
parent in India.
It may be clarified that where the liaison office creates a PE or establishes a business
connection, the foreign company would become liable to pay tax on the profits, which
can be attributed to the liaison office. And if liaison office doesn’t create any of the
aforesaid relationship, liaison office will not attract any income tax in India.
But even if the Liaison office is held to be a ‘business connection’/ PE of its foreign
parent in India, only so much of the profits as are attributable to the operations carried
out by the Liaison office in India, would be liable to tax in India. Also, as per the Income
Act, no income shall be deemed to accrue or arise in India to the foreign parent through
or from ‘operations which are confined to the purchase of goods’ in India for the purpose
of export.
To avoid the tax liability of Liaison office in India it is important the Liaison office should
be engaged only in preparatory and auxiliary work and should not be construed as
carrying out any part of business operations of the foreign company in India. But there is
no set of guidelines that can be laid down to decide existence of a PE; this would
depend on the facts of each case and the gamut of activities carried out by the Liaison
office vis-a-vis global business operations of the foreign company.
BY CA. Sudha Page 12
13. BRANCH OFFICE
Introduction
One of the other entry strategies for the companies incorporated outside India to
establish their business in India is by way of opening the Branch office in India. As per
Indian laws companies incorporated outside India engaged in manufacturing or trading
activities are allowed to set up Branch Offices in India with specific approval of the
Reserve Bank.
The branch office is defined as per Regulation of Notification No. FEMA 22 /2000-RB
dated 3rd May 2000 clause 2(c) as “'Branch' shall have the meaning assigned to it in
sub-section (9) of Section 2 of the Companies Act, 1956 (1 of 1956),
and as per the companies Act, 1956 “branch office” in relation to a company means—
any establishment described as a branch by the company; or
any establishment carrying on either the same or substantially the same
activity as that carried on by the head office of the company; or
any establishment engaged in any production, processing or manufacture
Such Branch Offices are permitted to represent the parent/group companies and
undertake the activities in India like export/Import of goods from or to India, rendering
professional or consultancy services, carrying on the research, in areas in which the
parent company is engaged ,promoting technical or financial collaborations between
Indian companies and parent or overseas group company. representing the parent
company in India and acting as buying/selling agent in India, rendering services in
Information Technology and development of software in India, rendering technical
support to the products supplied by parent/group companies.
Foreign Exchange Management Act, 1999
As per Sub-section (6) of Section 6 of the Foreign Exchange Management Act, 1999
the Reserve Bank may, by regulation, prohibit, restrict, or regulate establishment in
India of a branch, office or other place of business by a person resident outside India,
for carrying on any activity relating to such branch, office or other place of business.
BY CA. Sudha Page 13
14. Reserve Bank of India
The Branch office is governed by following regulation framed by Reserve Bank of India
“Foreign Exchange Management (Establishment in India of branch or office or
other place of business) Regulations, 2000 framed by way of Notification No.
FEMA 22 /2000-RB dated 3rd May 2000”.
Branch office Registration – Reserve Bank of India
The Branch office is required to take prior permission of Reserve bank of India. As per
the notification mentioned above no person resident outside India shall, without prior
approval of the Reserve Bank of India, establish in India a branch or a liaison office or a
project office or any other place of business by whatever name called.
An application is required to be made to the Reserve Bank of India in Form FNC 1. The
application form should be duly completed and submitted to the Chief General Manager,
Exchange Control Department (Foreign Investment Division), Reserve Bank of India,
Central Office, and Mumbai-400001.
The information required to be given in form
1. Full name and address of the applicant company/firm [State whether the
applicant is a proprietary concern or partnership firm or limited company or public
sector undertaking or any other organisation
2. Date and Place of incorporation / registration of the applicant company.
3. Details of capital of the applicant company
4. Brief description of the activities of the applicant company
5. Value of goods imported from and / or exported to India by the applicant during
each of the last three years:
6. Particulars of existing arrangements if any, for representing the company in India.
7. Particulars of the proposed Branch/ Liaison Office like activities to be undertaken
and place of establishment
Following Documents are required to be submitted along with the Form:
Translated English version of the Company’s Certificate of
Incorporation/Registration, Memorandum & Articles of Association attested by
the Indian Embassy/Notary public in the country of registration (Two original
copies)
Copies of last Five years audited Balance Sheet, Profit & Loss Account of the
applicant company/firm
Copy of the Board resolution for opening office in India.
BY CA. Sudha Page 14
15. Permitted activities for a branch in India of a person resident outside India
As per Schedule I of the Foreign Exchange Management (Establishment in India of
branch or office or other place of business) Regulations, 2000 framed by way of
Notification No. FEMA 22 /2000-RB dated 3rd May 2000 the following are the activities
which can be performed by the Branch office in India:
Export/Import of goods
Rendering professional or consultancy services.
Carrying out research work, in which the parent company is engaged.
Promoting technical or financial collaborations between Indian companies
and parent or overseas group company.
Representing the parent company in India and acting as buying/selling
agent in India.
Rendering services in Information Technology and development of
software in India.
Rendering technical support to the products supplied by parent/group
companies.
Restricted Activities
The Branch office is prohibited from expanding its activities or undertake
any new trading, commercial or industrial activity other than that expressly
approved by RBI.
It is restricted from accepting deposits in India
Retail trading activities of any nature is not allowed for a Branch Office in
India.
Acquisition of Immovable property in India
As per Foreign Exchange Management (Acquisition and transfer of immovable
property in India) Regulations, 2000 FEMA 21/2000-RB, dated 3-5-2000, the
regulations to provide for provision for acquisition and transfer of immovable
property in India a branch, office in India of a foreign company established with
requisite approvals wherever necessary, is eligible to acquire immovable
property in India which is necessary for or incidental to carrying on such activity
provided that all applicable laws ,rules, regulations or directions in force are duly
complied with. The entity/concerned person is required to file a declaration in
Form IPI with the Reserve Bank, within ninety days from the date of such
acquisition.
BY CA. Sudha Page 15
16. Remittance of Profits
A person resident outside India permitted by the Reserve Bank, to establish a branch in
India may remit outside India the profit of the branch or surplus of the Project on its
completion, net of applicable Indian taxes, on production of the following documents,
and establishing the net profit or surplus, as the case may be, to the satisfaction of the
authorised dealer through whom the remittance is affected.
The Regulation Foreign Exchange Management (Remittance of Assets)
Regulations, 2000 provides for remittance of assets outside India. Regulation 6 of the
said notification deals with the branch office.
It provides that in case of remittance of winding up proceeds of a branch/office in India
of a person resident outside India, the application is required to be made to the RBI
together with following documents namely:
(A) Copy of the Reserve Bank's permission for establishing the branch/office in India;
(B) Auditor's certificate
(i) indicating the manner in which the remittable amount has been arrived and
supported by a statement of assets and liabilities of the applicant, and indicating
the manner of disposal of assets;
(ii) confirming that all liabilities in India including arrears of gratuity and other
benefits to employees etc. of the Liaison office have been either fully met or
adequately provided for;
(iii) confirming that no income accruing from sources outside India (including
proceeds of exports) has remained unrepatriated to India;
(C) No-objection or Tax clearance certificate from Income-Tax authority for the
remittance; and
(D) Confirmation from the applicant that no legal proceedings in any Court in India are
pending and there is no legal impediment to the remittance.
The Income Tax Act,1961
Registrations under the Act
The Branch office is required to take the permanent account number (PAN) and
tax Deduction number (TAN) from the Income tax department.
Application for PAN is made in Form 49A and application for TAN is made in 49B
to the NSDL.
BY CA. Sudha Page 16
17. Copy of any one of the following documents is required to se sent with an
application
Copy of registration certificate of the respective country duly attested by
Indian Embassy/ Consulate/ High Commission/ Apostille in the country
where applicant is located.
Copy of certificate of registration with the competent authority in India
Copy of approval issued by the competent authority in India
Copy of the accompanying documents alongwith the approval issued by
competent authority in India
Copy of the application (duly acknowledged) made by the applicant before
the competent authority in India Registration certificate issued by ROC
(Form No. 44)
Applicability of the Act
Will be taxable as the foreign company at the rate of 42.23% including surcharge
and Cess.
Quarterly payment of Advance tax and Fringe Benefit Tax
BY CA. Sudha Page 17
18. COMPANY
Introduction
One of the other options of method of establishing the presence in India is to open the
full fledged company in India with Foreign capital and foreign subscribers. The company
is incorporated with foreign capital will not be allowed to repatriate the capital yet it can
repatriate the dividends to the Foreign shareholders after payment of necessary taxes.
A Company once incorporated in India shall be an Indian company. Foreign Direct
Investment coming from abroad shall be regulated by the Foreign Exchange
management Act, Reserve Bank of India and the policy of Foreign Direct Investment in
India as formulated by Reserve Bank of India from time to time.
As per the current Foreign Direct investment policy the investment can be made in India
through two routes being Automatic route or approval route.
Under the automatic route the investment can be made without prior approval of central
government but in the case of approval route the prior approval of Central government
is required. India has among the most liberal and transparent policies on FDI among the
emerging economies. FDI up to 100% is allowed under the automatic route in all
activities/sectors except the following, which require prior approval of the Government:-
1. Sectors prohibited for FDI
2. Activities/items that require an industrial license
3. Proposals in which the foreign collaborator has an existing financial/technical
collaboration in India in the same field
4. Proposals for acquisitions of shares in an existing Indian company in financial
service sector and where Securities and Exchange Board of India (substantial
acquisition of shares and takeovers) regulations, 1997 is attracted)
5. All proposals falling outside notified sectoral policy/CAPS under sectors in which
FDI is not permitted
Most of the sectors fall under the automatic route for FDI. In these sectors, investment
could be made without approval of the central government. The sectors that are not in
the automatic route, investment requires prior approval of the Central Government. The
approval in granted by Foreign Investment Promotion Board (FIPB). In few sectors, FDI
is not allowed.
After the grant of approval for FDI by FIPB or for the sectors falling under automatic
route, FDI could take place after taking necessary regulatory approvals form the state
governments and local authorities for construction of building, water, environmental
clearance, etc.
BY CA. Sudha Page 18
19. Foreign Exchange Management Act, 1999
The Act has given general power to the Reserve Bank of India under section 47 to
make notifications to regulate various provisions of the Act. Also the specific power has
been given under Section 6(3)(b) to make the regulations to regulate the transfer or
issue of any security by a person resident outside India;
Reserve Bank of India
The Issue/ transfer of shares of any security by a person resident outside India is
regulated by Foreign Exchange Management (Transfer or issue of security by a person
resident outside India) Regulations, 2000, Notification No. FEMA 20 /2000-rb dated 3rd
May 2000, RBI.
As per the regulation 5 of the said regulation “A person resident outside India (other
than a citizen of Bangladesh or Pakistan or Sri Lanka) or an entity outside India,
whether incorporated or not, (other than an entity in Bangladesh or Pakistan) , may
purchase shares or convertible debentures of an Indian company under Foreign Direct
Investment Scheme, subject to the terms and conditions specified in Schedule 1of the
said notification”
Procedure under automatic route
FDI in sectors/activities to the extent permitted under automatic route does not
require any prior approval either by the Government or RBI. There is only two way
intimation to the Reserve Bank of India through the Authorised dealer category I.
An Indian company receiving investment from outside India for issuing
shares/convertible debentures/preference shares under the FDI Scheme, should
report the details of the amount of consideration to the Reserve Bank not later than
30 days from the date of receipt in the prescribed form along with the KYC report.
Once the Annexure II along with the KYC report is submitted the regional office of
Reserve Bank of India shall acknowledged the receipt by way of allowing the
Unique Identification Number (UIN) for the amount reported.
Time frame within which shares have to be issued
The equity instruments should be issued within 180 days from the date of receipt of
the inward remittance or by debit to the NRE/FCNR (B) account of the non-resident
investor. After issue of shares/ convertible debentures/ preference shares, the
Indian company has to file Form FC-GPR, not later than 30 days from the date of
BY CA. Sudha Page 19
20. issue. Price of shares issued to persons resident outside India under the FDI
Scheme, shall be on the basis of SEBI guidelines in case of listed companies. In
case of unlisted companies, valuation of shares has to be done by a Chartered
Accountant in accordance with the guidelines issued by the erstwhile Controller of
Capital Issues.
Part A of Form FC-GPR has to be duly filled up and signed by Managing
Director/Director/Secretary of the Company and submitted to the Authorised
Dealer of the company, who will forward it to the Reserve Bank. The following
documents have to be submitted along with Part A :
(i) A certificate from the Company Secretary of the company certifying that
(a) all the requirements of the Companies Act, 1956 have been complied
with;
(b) terms and conditions of the Government’s approval, if any, have been
complied with;
(c) the company is eligible to issue shares under these regulations; and
(d) the company has all original certificates issued by authorised dealers
in India evidencing receipt of amount of consideration.
(ii) A certificate from Statutory Auditors or Chartered Accountant indicating
the manner of arriving at the price of the shares issued to the persons
resident outside India.
The report of receipt of consideration as well as FC-GPR have to be submitted
to the concerned Regional Office of the Reserve Bank under whose jurisdiction
the registered office of the company is situated. Part B of FC-GPR should be
filed on an annual basis by the Indian company, directly with the Reserve
Bank. This is an annual return to be submitted by 31st of July every year,
pertaining to all investments by way of direct/portfolio investments/re-invested
earnings/others in the Indian company made during the previous years (i.e. the
information in Part B submitted by 31st July, 2008 will pertain to all the
investments made in the previous year’s up to March 31, 2008). The details of
the investments to be reported would include all foreign investments made into
the company which is outstanding as on the balance sheet date. The details of
overseas investments in the company both under Direct/portfolio investment
may be separately indicated.
Procedure under Government Approval
BY CA. Sudha Page 20
21. FDI in activities not covered under the automatic route require prior government
approval. Approvals of all such proposals including composite proposals involving
foreign investment/foreign technical collaboration are granted on the recommendations
of Foreign Investment Promotion Board (FIPB). Application for all FDI cases, except
Non-Resident Indian (NRI) investments and 100% Export Oriented Units (EOUs),
should be submitted to the FIPB Unit, Department of Economic Affairs (DEA), Ministry
of Finance. Application for NRI and 100% EOU cases should be presented to SIA in
Department of Industrial Policy and Promotion .Application can be made in Form FC-IL.
Plain paper applications carrying all relevant details are also accepted. No fee is
payable.
Prohibited Sectors
The extant policy does not permit FDI in the following cases:
1. Gambling and betting
2. Lottery Business
3. Atomic Energy
4. Retail Trading
5. Agricultural or plantation activities of Agriculture
General permission of RBI under FEMA
Indian companies having foreign investment approval through FIPB route do not require
any further clearance from RBI for receiving inward remittance and issue of shares to
the foreign investors. The companies are required to notify the concerned Regional
Office of the RBI of receipt of inward remittances within 30 days of such receipt and
within 30 days of issue of shares to the foreign investors or NRIs.
The Companies Act,1956
Once the company is incorporated in India, it shall be governed by the Indian
Companies Act, 1956 which means all the provisions enumerated in Indian companies
Act shall be applicable. Also all the acts/provisions/rules/notifications which are
applicable to companies in India shall be applicable in the same manner as are
applicable to the company with Indian capital. The Companies Act of 1956 sets down
rules for the establishment of both public and private companies. The most commonly
used corporate form is the limited company, unlimited companies being relatively
uncommon. A company is formed by registering the Memorandum and Articles of
Association with the State Registrar of Companies of the state in which the main office
is to be located.
The Income Tax Act
BY CA. Sudha Page 21
22. Since the company is incorporated all the provisions of Indian Income Tax, 1961 as are
applicable to company incorporated in India shall be applicable. As per the Income Tax
Act the income of company is taxable at the rate of 33.99%.
Advance Tax payment of Income Tax
As per section 211 of the income tax the total tax payable by the company is required
to be made in four installments. Following are the specified proportions and
scheduled dates for payment of Advance Tax to Govt.:-
Due date of Installments Amount Payable
On or before the 15th June Not less than 15% of Advance Tax Liability
Not less than 45% of Advance Tax Liability, as
On or before the 15th September reduced by the amount paid in earlier
installment.
Not less than 75% of Advance Tax Liability, as
On or before the 15th December reduced by the amount paid in earlier
installment(s).
The whole amount of Advance Tax Liability, as
On or before the 15th March reduced by the amount paid in earlier
installment(s).
Consequences of non deposit of Advance Tax: There shall be charged an interest
under Section 234B and Section 234 C of the Income Tax Act for the nonpayment ,
short payment of taxes and deferment in payment of Advance Tax.
BY CA. Sudha Page 22
23. Advance Tax payment of Fringe Benefit Tax
Due date of Installments Amount Payable
On or before the 15th June Not less than 15% of Advance Tax Liability
Not less than 45% of Advance Tax Liability,as reduced
On or before the 15th September
by the amount paid in earlier installment.
Not less than 75% of Advance Tax Liability, as reduced
On or before the 15th December
by the amount paid in earlier installment(s)
The whole amount of Advance Tax Liability, as reduced by
On or before the 15th March the amount paid in earlier installment(s)
Consequences of Fringe Benefit Tax: There shall be charged an interest under
Section 115WJ of the Income Tax Act.
Tax audit if gross receipts exceed INR 40,00,000
Annual corporate tax return, wealth tax return and fringe benefit tax return
Annual and quarterly withholding tax returns
Compliance with transfer pricing regulations
*FBT is abolished from Budget 2009-2010.
In case of further discussion on the above matter mail me at sudhag999@gmail.com.
BY CA. Sudha Page 23