ANNUAL COMPLIANCE BRANCH OFFICE

(09^th December 2023)

SHORT SUMMARY:

The author will cover the "Annual Compliance of Branch Office" in this column. A Branch office established in India required to do some compliances on annual basis.

'Branch Office' in relation to a company, means any establishment described as such by the company.

INTRODUCTION OF BRANCH OFFICE:

BRANCH office is setup by a foreign Company in India to carry out the BRANCH activity for its business. The foreign Company can have any revenue from the Indian Branch office only from the activity allowed by the Reserve Bank of India; It has to meet all its expenses of Indian office through remittances from the Head office or through the revenue generated from the Indian operation permitted by the Reserve Bank of India.

Foreign companies are allowed to set up a branch office in India. But unlike the case of setting up a Company, a branch office requires approval from the Reserve Bank of India (RBI). Only upon getting the branch license from RBI, the foreign Company is allowed to commence the operations.

BRANCH office is suitable for a foreign Company to test and understand the Indian market with a very strict control by the Reserve Bank of India, as it does allow the companies to do business but just to do the activity which are mentioned in the application of Branch office, any additional activity to be carried by the Branch office shall be illegal.

 Compliances:

After the establishment of Branch Office, its required to comply with compliances of following Acts:

     i.       Compliance under Income Tax Act, 1961

   ii.        Compliance under Goods and Services Tax Act, 2017

  iii.       Compliance under FEMA Regulations

  iv.       Compliance under Companies Act, 2013 read with allied Rules.

A.  ANNUAL COMPLIANCE UNDER INCOME TAX ACT, GST ACT

     i.       Preparation of Books of Accounts of Company

   ii.        Preparation & Filing of Income Tax Return

  iii.       Assessment & Payment of Advance Tax

  iv.       Assessment & Filng TDS Return

   v.        Filing of Monthly/Quarterly GST Return

  vi.       Filing of Annual GST Reurn

B.  ANNUAL COMPLIANCE UNDER RBI

The following are the annual compliance procedures to be complied with by a BO/LO/PO:

Submission of Annual Activity Certificate (AAC)

An annual activity certificate (AAC) is a certificate given by a Chartered Accountant to the effect that the activities undertaken by the BO/PO/LO during the year have been specifically permitted by the Reserve Bank vide its approval letter.

a)   The CA should also certify in the AAC that the BO/PO/LO has complied with the all the terms and conditions specified in the approval letter given by RBI.

b)   AAC as at 31st March, along with the audited financial statements including receipt and payment account should be submitted on or before 30th September of every year.

c)   In case the annual accounts of the BO are finalized on any date other than March 31st, the AAC along with the audited Balance sheet may be submitted within 6 months from the due date of the Balance sheet.

d)   In case of BO, the AAC shall be submitted to the designated AD Category -I bank as well as to the Director General of Income Tax (International Taxation), New Delhi

C.  ANNUAL COMPLIANCE UNDER COMPANY LAW

  I.      Filing of Annual return with the ROC

A foreign company is required to file its annual return to the Registrar of Companies in e-Form FC-4 within a period of 60 days from the close of financial year.

Mandatory Attachment for FC-4:

ü  Details of Promoters, Directors and Key managerial personnel and changes therein since close of previous financial year

ü  Details of directors and key managerial personnel and their remuneration

ü  Details of the meeting of the members or class thereof, board and its various committees along with attendance details

ü  Particulars of members and debenture holders along with changes therein since the close of previous financial year

ü  Particulars of Holding, subsidiary and associate companies and firms.

ü  Details of Penalties / punishment/ Compounding of offences, if any

II.      Filing of Financial statements, the ROC:

A foreign company is required to file its audited financial statements in e-Form FC-3 with the Registrar of Companies within a period of 6 months of the close of the financial year.

Mandatory Attachment for FC-3:

ü  Latest Financial statements of the parent foreign company.

ü  Latest consolidated financial statements of the parent foreign company.

ü  Auditor Report

ü  RPT Disclosures

Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com). 

Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, I assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not professional advice and is subject to change without notice. I assume no responsibility for the consequences of the use of such information. 

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