Set Up a Branch Office in India: Eligibility, Documents, & Process

• Company formation / Compliances
• ||
• March 31, 2026

What is the Branch Office?

A branch office is a location other than the main headquarters that carries out the same business activities. Unlike a subsidiary, a branch office is usually not a separate legal entity; it is an extension of the parent company.

In simple words, it is not a separate company; it is simply an extension of the parent firm that carries out similar or related business activities. 

Overview of the Branch Office in India

A Branch Office in India is simply an extension of a foreign company*. It is registered under RBI rules and the Companies Act, 2013, and allows the Company to carry out business activities in India—like trading, manufacturing, or providing consultancy—without creating a separate legal entity.

A foreign company is a company that is registered outside India but has a business presence in India. This means that even if your Company is legally registered in the USA, as soon as it starts operating or doing business in India (through an office, projects, or contracts), it is treated as a foreign company under Indian law, as per Section 2(42) of the Companies Act, 2013

Why do foreign companies want to set up their branch office in India?

Foreign companies want to set up branch offices in India because it lets them enter the world’s fastest-growing market for the following reasons:

• Foreign companies set up branch offices in India to enter a fast-growing market with 1.4 billion people.
• The profits earned by a branch office in India for foreign companies can be sent back (repatriated) to the home country. This is allowed after paying applicable taxes in India.
• It involves lower setup and operating costs compared to other business structures.
• The parent company gets full control over operations.
• No need to create a separate legal entity
• Quick and easy setup process
• Useful for testing the Indian market through:
• Export and import
• Consultancy services
• Market research
• Technical or IT support
• Access to a skilled workforce in India
• Benefits from government initiatives like Make in India
• India acts as a hub for South Asia expansion
• Cheaper and simpler than a subsidiary company
• Helps in direct customer reach and brand building
• Allows easy profit repatriation after paying taxes

Real-Life Examples of Branch Offices in India:

Here are some successful branch office setups in India that are now highly profitable:

• IKEA (Sweden)
  Initially, a branch office model was used for market research, imports, and expansion planning in cities such as Hyderabad and Mumbai, before opening full stores.
• Reebok India (now part of Adidas)
  Operates branch offices in Gurgaon and Mumbai for sales, distribution, and wholesale trading.
• Alstom (France) and Siemens (Germany)
  Use branch offices in India for engineering services, exports, and technical operations.

Eligibility Criteria for Setting up a Branch Office in India

To set up a branch office in India, your foreign Company must prove its solidity and be ready.

Key rules:

• Net worth of at least USD 100,000
• and profits in each of the last 5 financial years.
• The Company must be properly incorporated outside India and active, not a new or shell entity.
• No blacklisting by any financial watchdog, and activities must fit the RBI’s permitted list. Banks check this via your application.

Allowed and Permitted Activities for the Branch Office in India

A branch office of a foreign company in India can do the following:

• Import and export of goods
• Provide consultancy and professional services
• Do research work related to the parent company’s business
• Help in technical or financial collaborations with Indian companies
• Act as a buying or selling agent for the parent company
• Provide IT services and software development
• Offer technical support for products sold by the parent company
• Operate as a foreign airline or shipping company office

In simple terms, the branch office can only do activities that are similar to what the parent company already does.

Firms from countries sharing India’s land border (like China, Pakistan) need prior government approval.

What activities are not allowed?

• Retail trading in India is not allowed
• Manufacturing or processing activities are not permitted (directly or indirectly)

How to Set up a Branch Office in India?

Before moving or jumping straight to the steps and forms, foreign entities need to first determine which route they want to apply through, because under FEMA, there are two approval routes: the Automatic Route and the Government Route.

Let’s understand these routes:

• Automatic Route (RBI route) – Where the principal business of the foreign entity falls under sectors where 100 percent FDI is permissible. If you want the list of permissible sectors, you can find it here-https://masllp.com/foreign-direct-investment-in-India.
• Government Route – Where the principal business of the foreign entity falls under the sectors where 100 percent FDI is not permissible under the automatic route.

Applications from entities falling under this category and those from non-government organizations are considered by the RBI in consultation with the Ministry of Finance, Government of India.

• Additionally, applications from Non-Government Organizations (NGOs), Non-Profit Organizations (NPOs), or government bodies/departments must use this route.
• Jurisdictional Requirement: Entities from or citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, or Macau also require prior RBI approval in consultation with the Government of India.

Now here is the step-by-step guide for both routes:

Document Required for Setting Up a Branch Office in India

Key Checklist: You’ll need these core papers, notarized/apostilled if from abroad:

• Parent company’s Certificate of Incorporation.
• MOA & AOA (Memorandum & Articles of Association).
• Audited financial statements for the last 5 years + net worth cert from banker/CA.
• Board resolution approving the branch setup.
• Power of Attorney for a local representative in India.
• KYC of directors/signatories (passport, address proof).
• Company profile, activity details, and banker’s report from the home country.
• Proof of Indian office address (lease deed).
• Form FNC, declarations, and English translations if needed.

Post-Incorporation Requirements in India

After you have completed the establishment of a branch office in India through the above-mentioned steps, the next most important thing is to complete the post-registration steps. Let’s understand the Key Compliance Requirements for the Branch Office in India:

• Register with ROC: Within 30 days of approval, the LO must register with the Registrar of Companies (ROC) office of the Ministry of Corporate Affairs. For this registration, you need to file Form FC-1 to obtain a corporate Identity Number.
• Obtain PAN and TAN: these are used for tax filing purposes, and can be applied for via the Income Tax Department of India. Although an LO cannot generate income, that’s why it is not required to pay any tax, but it is still required to comply with Indian tax regulations, file annual tax returns, and withhold taxes (TDS) on payments made to employees or vendors.
• Submit Annual Activity Certificate: Each year, a liaison office must file an Annual Activity Certificate(AAC), prepared by a chartered accountant, to the RBI, verifying that the office’s activities are within its charter (Annex-3).
• Open Bank Account: Open a non-interest-bearing INR current account with the AD Bank.
• Register with Police: Applicants from Bangladesh, Sri Lanka, Afghanistan, Iran, China, Hong Kong, Macau, or Pakistan must register with the state police authorities.

Timeline for Branch Office Setup in India

The expected time required to set up a branch office in India depends on the type of approval route, your business activity, and document verification. However, here is the general timeline for most cases:

• AD Bank approval: 1–2 weeks
• RBI approval: 2–4 weeks
• ROC registration: 1–2 weeks

Total time: 4–8 weeks

Tax Rates and Compliance Calendar for the Branch Office in India

A branch office in India is taxed on the income it earns in India. It is treated as a “permanent establishment” of the foreign parent company.

• Corporate Tax: 25%–30% (plus 4% cess and surcharge if applicable)
• No MAT (Minimum Alternate Tax) in most cases under the new regime

India also has DTAA (Double Taxation Avoidance Agreements) with over 85 countries. This helps foreign companies avoid paying tax twice—once in India and again in their home country.

Other Taxes & Compliance

• GST:
• 18% on services
• 5%–28% on goods (if applicable)
• TDS: Applicable on salaries and payments to vendors
• Transfer Pricing: Applies to transactions between the branch office and the parent company
• Profit Repatriation: Profits can be freely sent back to the parent company after paying taxes, with a CA certificate

Annual compliance calendar: 

Others: 

Audit applicability: Tax audit if turnover >₹1 Cr.

PF/ESIC monthly for employees; Shops Act renewal yearly.

In case you Miss deadlines? You can face  Penalties up to ₹5 lakhs.

Governing Authorities for Branch Offices in India

Branch  Offices in India are primarily regulated by:

• Reserve Bank of India
• Ministry of Corporate Affairs
• Indian Income Tax Department

It is Governed under the Foreign Exchange Management Act (FEMA)

Conclusion

Setting up a branch office in India is one of the most effective entry strategies for foreign companies looking to expand into the Indian market with full control, lower costs, and easy profit repatriation. With clear RBI guidelines, FEMA regulations, and Companies Act compliance, the process of branch office registration in India is streamlined for eligible businesses. From understanding eligibility criteria, documents required, and approval routes to managing taxation, GST, and annual compliance, a well-planned approach ensures smooth operations. If you’re a foreign company planning to do business in India without incorporating a subsidiary, a branch office offers the perfect balance of flexibility and control while helping you establish a strong presence in one of the fastest-growing economies in the world.

How can Mercurius help in setting up a branch office in India?

At Mercurius, our professionals make the setup of a branch office in India hassle-free for foreign firms. From RBI application to ROC filing, GST, and bank setup—we handle it all.

Our team does audits, tax filings, compliance calendars, and profit remittances, too. We’ve helped many open branches fast, saving time and avoiding penalties. Contact us at info@masllp.com or +91 966 777 9615 for a free chat.

FAQs

1. Can a foreign company open a branch office in India?
Yes, a foreign company can open a branch office in India after obtaining approval from the RBI under FEMA regulations.

2. Is a branch office a separate legal entity in India?
No, a branch office is not a separate legal entity. It is an extension of the foreign parent company.

3. What is the minimum requirement to open a branch office in India?
The Company must have a net worth of USD 100,000 and a profit track record of 5 years.

4. Can a branch office earn income in India?
Yes, a branch office can earn income from permitted activities and must pay taxes on Indian income.

5. Can profits be sent back to the parent company?
Yes, profits can be freely repatriated after paying applicable taxes in India.

6. What activities are restricted for branch offices?
Retail trading and manufacturing activities are not allowed.

7. How long does it take to set up a branch office in India?
It usually takes 4–8 weeks, depending on approvals and documentation.

8. Is GST required for branch offices?
Yes, GST registration is required if the branch office provides taxable goods or services.

9. Can a Branch Office Hire Employees in India?
Yes, and this is a very common question:

• Branch offices can hire Indian employees
• Must comply with:
• PF (Provident Fund)
• ESIC
• Labour laws
• TDS must be deducted from salaries