Every year a branch office is required to undertake the following activities:
- Maintenance of Books of Account
- Getting Annual Accounts audited
- Filling of Annual Activity Certificate with RBI
- Filing of Annual Return and Balance sheet with Registrar of Companies
- Intimating any change in the constitution of Foreign Company to RBI & ROC
- Intimating any change in Directors of Foreign Company to RBI & ROC
- Intimating each and every change in the BRANCH office to RBI & ROC
- No additional place of business can be started unless approval is taken from RBI.
- Retail trading activities of any nature.
- Manufacturing or processing activities, directly or indirectly.
RBI has given general permission to foreign companies for establishing a branch office in Special Economic Zones (SEZs) to undertake manufacturing and service activities.
Taxation rules applicable to Branch Office
The branch office will be liable to pay 40% (plus surcharges as applicable) of profits as income tax on the status of Foreign Company in India.
As per the functioning of branch office in India, it shall be liable to different indirect taxes as well, for example, if the Branch is providing technical services it shall be liable to pay service tax @ 12% (plus surcharges) and if it is selling the goods in India then it shall be liable to pay Value-added Tax (VAT) and/or Central Sales Tax (CST) at the rates prescribed for the dealt product. There is Local Body Tax (LBT) if the goods are entering the state of Maharashtra in India as few of these indirect taxes are levied by States. With the implementation of GST, the indirect tax regime in India will get simplified.
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