How Foreign Entities can Setup Business in India?
In India, business can be setup by following ways:
- Liaison Office
- Branch Office
- Project Office
- Wholly Owned Subsidiary Company
- Joint Venture
- Limited Liability Partnership
Type of business entity depends upon the need. India is considered as the most preferred country by the world startup community. Foreign companies have shown interest to start operations in India and ready to enter into the world’s fastest growing economy to access the best human resource in the world. A foreign nation (other than Entity of Pakistan and Bangladesh) can invest and start a business in India subject to FDI Policy. For investment in India, in the form of equity shares is monitored by the Reserve bank of India.
There are two categories of making investment in India either though automatic route or approval route. Automatic route means where no prior regulatory approval is required for investment in the Indian company. Investment in activities/industries where an automatic route is not permissible can be made with the approval of Reserve Bank of India.
Wholly Owned Indian Subsidiary Company Registration Process in India
- Digital Signature Certificate (DSC)
- Director Identification Number (DIN)
- Company Name approval
- Final Incorporation and CIN
- PAN
- Open your Bank Account and Start business
- RBI Compliances for FDI in India
- Necessary Registrations
All Proposed directors/promoters of the company should have a digital signature and digital signature will be used to file the incorporation form, ROC compliance forms, and Income Tax returns. There is no need of a physical signature to register a company.
As soon as Digital signature is approved, the next step is to apply for DIN (Director Identification Number) by all the proposed directors in the company. DIN application will be certified by the professional; thereafter you will get an approval email from the Registrar of companies that now you are eligible to become director in a company. It takes one working day to approve DIN.
For name availability, we have to make sure that there is no trademark on the same name and no company is already registered on the proposed name. Thereafter we will file a Name approval application to ROC on your behalf.
After Name approval from the Registrar of Companies, we will file a final incorporation form with all supporting documents like registered address proof, Declaration from all the directors. We will certify all the required documents of the proposed company by the Practicing Professional.
Then we will file PAN application which will take around one working day.
We will assist you in bank account opening and start business.
A newly incorporated wholly owned subsidiary company in India has to comply with the RBI compliances by filing necessary forms. Compliances can be done simultaneously with the business.
Wholly Owned Subsidiary Company can apply for other mandatory registrations such as GST registration, in case of import export business then it is required to apply for IEC registration in India. In case there are employees more than 10 or 20 then they would have to apply for ESI or PF registration.
Income Tax Norms for Wholly Owned Subsidiary Company in India
Each completely possessed auxiliary organization enlisted in India is a duty inhabitant and they would need to settle government expense in India on its worldwide salary regardless of whether the assessment have been paid of its parent organization in the nation of origin on its benefits. On the off chance that the Indian Backup organization is a 'related undertaking' according to segment 92A of the Personal Expense Act than the arrangements concerning a careful distance estimating on its universal exchanges will be relevant.
To encourage globalization of financial exercises India is transforming its duty strategies. In India for remote organizations, corporate expense rate is 40% and for local organizations and LLP assessment rate is 30%. By virtue of different derivations and exclusions accessible under the assessment laws, net expense rate is lower. Unique Monetary Zones set up to make industry comprehensively focused, charge occasions are accessible there. Uncommon duty treatment/occasions are appreciated by Framework Area Tasks. As there is an electronic recording of archives, an easy to understand charge organization has been presented by the specialist.
Transfer Pricing Norms
Move valuing guidelines are pertinent on Completely Possessed Backup Organization in India. Just move estimating is the correlation of exchange cost of related or holding organization with the business edge and the distinction would be exhausted to touch base at the A manageable distance cost.
FDI (Foreign Direct Investment) Norms
In almost all sectors including service sector, FDI is allowed under automatic route, except few sectors where FDI is not permitted beyond a ceiling.
- Automatic Route
- Approval Route
For FDI, under the Automatic Route, prior approval of RBI is not required only information is required to be given to RBI.
In certain cases of FDI, government Approvals might be required. On the recommendations of the Foreign Investment Promotion Board (FIPB), FDI not covered under the 'Automatic Route' requires Governmental Approval.
FDI Restricted Sectors
FDI is not permitted in following areas:
- Railways
- Atomic Energy
- Atomic Minerals
- Postal Service
- Gambling and Betting
- Lottery
- basic Agriculture or plantations activities or Agriculture (excluding Floriculture, Horticulture
- Seeds Development
- Animal Husbandry
- Cultivation of Vegetables, Mushrooms etc. under controlled conditions and services related to agro and allied sectors) and
- Plantations (other than Tea plantations).
