Branch office in India for a foreign company

What is a branch office in India?

A branch office is a place of business of the foreign company in India. It has no separate legal identity: the foreign company itself carries on the activity, and the foreign company remains responsible for it. This differs from a wholly owned subsidiary, which is an Indian company in its own right.

The operative law is the FEMA (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any other place of business) Regulations 2016 and the related RBI Master Direction. A foreign company that establishes a place of business in India also registers with the Registrar of Companies on Form FC-1.

What can a branch office do?

RBI permits a branch to carry out these activities:

• Export and import of goods.
• Professional or consultancy services.
• Research work in the parent’s field.
• Technical and financial collaboration between Indian and overseas companies.
• Acting as a buying or selling agent.
• IT and software services, and technical support for products supplied by the parent.
• Representing foreign airlines and shipping companies.

A branch may not carry out retail trading or manufacturing. If you need to make or sell products locally, a subsidiary is the usual route. A separate category, the project office, exists for a specific contract awarded by an Indian company and needs one of the prescribed funding sources.

How does approval work?

You apply through an Authorised Dealer Category-I bank on Form FNC. The bank decides under general permission, except in specified sensitive cases that need prior RBI or government approval. Those cases include entities or nationals of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong and Macau, non-governmental organisations, government bodies, and the defence, telecom, security and broadcasting sectors.

Under the 2016 rules, your company needs a profit-making record in the last five financial years and net worth of at least USD 100,000. A subsidiary can rely on a letter of comfort from its parent or group. We found no fixed validity period for a branch office, and we do not state one.

How is a branch office taxed?

A branch is taxed as part of the foreign company. Its profits attributable to India are taxed at the rates for foreign companies, not the domestic company rate. The Income Tax Department publishes the rates for foreign companies, summarised below for assessment year 2026-27. The Income-tax Act, 2025 applies from tax year 2026-27, so confirm the computation and any changes with a Chartered Accountant.

Head-office dealings can raise transfer pricing and permanent establishment questions, so take tax advice before you fix the flow of money and work between the two.

Branch and liaison offices also submit an Annual Activity Certificate with audited accounts through the AD bank, due by 30 September.

Who does a branch office suit?

A branch suits an established foreign company with a profit record that wants to provide consultancy, IT or technical services in India under its own name, and does not need a separate Indian legal entity. It does not suit a company that plans to hire a large team, manufacture, trade at retail, or ring-fence liability from the parent. It also does not suit a start-up without a track record. For those cases, compare it with the liaison office and the entity types comparison.

Note: Rules and forms change often. This page is general information, not legal or tax advice. Check the current position with a practising Chartered Accountant or Company Secretary before you act.

General information only, not legal or tax advice. Rules and forms change, so confirm the current position with a practising Chartered Accountant or Company Secretary before you act. See our disclaimer.