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Step-by-Step Guide for Branch Office for NRI in India

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Saving Mantra Blog: Step-by-Step Process for Branch Office for NRI in India

For Non-Resident Indians (NRIs) and foreign companies wishing to conduct business activities in India, establishing a Branch Office is an effective route. Unlike a Liaison Office, a Branch Office can earn income from permitted activities in India. This guide explains the entire step-by-step process for setting up a Branch Office in India for NRIs.

✔ What is a Branch Office in India?

A Branch Office is an extension of a foreign company in India that allows specific revenue-generating activities while retaining the status of a foreign entity.

Permitted Activities

A Branch Office may engage in:

  • Export/import of goods
  • Professional consultancy services
  • IT/software services
  • Research work in business area
  • Technical support services
  • Representing the parent company in India
  • Acting as buying/selling agent (permitted cases)
  • Rendering services in project execution

Restricted Activities

A Branch Office cannot:

  • Engage in retail trading
  • Engage in manufacturing (except SEZ)
  • Carry out real estate business
  • Accept deposits

Manufacturing can be done via Special Economic Zones (SEZ) only.

✔ Step 1: Check Eligibility Requirements

Before applying, ensure the foreign company meets:

  • Profitability Track Record: At least 5 years
  • Net Worth: Minimum USD 100,000 (certified by CPA/CA)

NRIs acting via foreign companies can also apply under these norms.

✔ Step 2: Determine Approval Route

A Branch Office requires approval from the Reserve Bank of India (RBI) through one of the following routes:

  • Automatic Route: For low-risk sectors
  • Government + RBI Route: For sensitive sectors or if parent company is from country of concern

Approvals are processed through an Authorized Dealer Category-I Bank (AD Bank).

✔ Step 3: Arrange Required Documentation

All foreign-issued documents must be notarized/apostilled/consularized.

Required Documents:

  • Certificate of Incorporation/Registration
  • Memorandum & Articles of Association
  • Audited financial statements (last 5 years)
  • Net worth certificate from CPA/CA
  • Board Resolution authorizing Branch Office setup
  • Proposed Indian office address proof
  • KYC documents of parent company
  • Details of business operations and objectives
  • Banker’s report from parent company

✔ Step 4: File Application Using FNC Form

The applicant must submit Form FNC to the Authorized Dealer Bank, which reviews and forwards the application to RBI.

✔ Step 5: Obtain RBI Approval

If approved, RBI issues an Approval Letter specifying:

  • Validity period
  • Allowed activities
  • Operational conditions

Only after approval can the Branch Office legally start operations.

✔ Step 6: Open Bank Account in India

The Branch Office must open a current account, through which:

  • Business receipts can be credited
  • Business expenses can be paid

Unlike a Liaison Office, a Branch Office can generate revenue in India.

✔ Step 7: Register with MCA as Foreign Company

Within 30 days of establishment, registration with Ministry of Corporate Affairs (MCA) is mandatory through:

  • Form FC-1
  • Attach RBI approval and corporate documents

✔ Step 8: Apply for PAN & TAN

Every Branch Office must apply for:

  • PAN (Permanent Account Number) – tax registration
  • TAN (Tax Deduction Number) – for withholding tax on payments

✔ Step 9: GST & Other Local Registrations (If Applicable)

Depending on business activity, the Branch Office may require:

  • GST Registration
  • Professional Tax Registration
  • Shops & Establishment Act registration

✔ Step 10: Annual Compliance Requirements

A Branch Office must comply with:

RBI Compliance:

  • Annual Activity Certificate (AAC) by Chartered Accountant
  • Submission to RBI & AD Bank

MCA Compliance:

  • Filing of annual financials
  • Annual return under Companies Act

Income Tax Compliance:

  • Filing of IT return if taxable income exists
  • Maintenance of books of accounts
  • Statutory audits (if applicable)

Since Branch Offices can earn income, they are taxed at corporate tax rates.

✔ Step 11: Closure/Extension Procedures

To close a Branch Office, NOC is required from:

  • Authorized Dealer Bank
  • Income Tax Department
  • RBI

After settling liabilities, balances may be repatriated subject to FEMA rules.

Conclusion

Setting up a Branch Office is a strong option for NRIs and foreign companies who want commercial exposure in India without fully incorporating a subsidiary. With proper documents, RBI approval, and ongoing compliance, the process is structured and manageable.

Disclaimer

This blog is for informational purposes only. Regulatory norms may change. Please consult a legal, tax, or compliance expert before initiating the process.

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