Branch Office Compliance in India

Branch Office Compliance in India: Complete RBI, FEMA, ROC & Tax Checklist

Establishing a Branch Office enables a foreign company to conduct permitted business activities in India without incorporating a separate Indian subsidiary. However, obtaining approval and registering the Branch Office is only the beginning. Once operational, the Branch Office becomes subject to continuing regulatory, corporate, tax and reporting requirements in India.

Branch Office compliance in India can involve the Foreign Exchange Management Act (FEMA), Reserve Bank of India (RBI) directions, Companies Act, Income-tax law, GST and other regulations depending upon the nature of the activities carried on in India.

Foreign companies should therefore establish a proper annual compliance calendar immediately after setting up their Branch Office.

EzyBiz India assists foreign companies with both Branch Office registration in India and ongoing regulatory, tax and accounting compliance.

This guide explains the major compliance requirements that a foreign company operating through a Branch Office in India should monitor.

Quick Branch Office Compliance Checklist

The major recurring compliances generally include:

• maintenance of books of account;
• audit of financial statements;
• Annual Activity Certificate (AAC);
• FEMA/RBI and designated AD Category-I bank compliance;
• ROC financial statement filings;
• annual return in Form FC-4;
• income-tax return;
• tax audit, where applicable;
• transfer pricing compliance, where applicable;
• TDS compliance;
• GST compliance, where applicable; and
• reporting specified changes relating to the foreign company or its Indian establishment.

The exact compliance obligations depend upon the Branch Office’s activities, transactions and regulatory approvals.

FEMA and RBI Compliance for Branch Office in India

A Branch Office of a foreign entity operates within the framework of FEMA and the conditions applicable to its establishment and operations in India.

The RBI’s framework for Branch Office/Liaison Office/Project Office covers matters including establishment, bank accounts, Annual Activity Certificates, additional offices and activities, remittance of profits, transfer of assets and closure.

Foreign companies should therefore ensure that their Branch Office continues to operate within the activities and conditions permitted under the applicable approval and FEMA framework.

For the regulatory framework, refer to the Reserve Bank of India and the applicable RBI directions governing establishment of Branch Office/Liaison Office/Project Office in India.

Operate Only Within Permitted Activities

One of the most important continuing requirements is that the Branch Office should undertake only activities permitted under the applicable FEMA/RBI framework and its approval.

A foreign company should therefore periodically compare the actual activities of its Indian Branch Office with the activities for which it has been permitted to operate.

Expansion into a new activity should not be undertaken merely because the foreign parent undertakes that activity overseas.

Foreign companies evaluating the permitted scope of operations can also refer to our detailed Branch Office in India service page.

Changes in Branch Office Particulars

Changes affecting the Indian Branch Office may require reporting and/or approval under the applicable FEMA/RBI and Companies Act framework.

Examples can include changes relating to:

• address or place of business;
• authorised representative;
• constitution or particulars of the foreign company;
• directors or secretary of the foreign company;
• additional place of business in India; or
• proposed activities of the Indian Branch Office.

The compliance implications should be examined before implementing a material change, rather than dealing with it only at year-end.

Additional Branch Offices or Activities

Where a foreign company proposes to establish an additional office or undertake activities beyond those already permitted, the FEMA/RBI implications should be checked in advance.

This is particularly important because approval for establishing a Branch Office does not automatically mean that every activity of the overseas parent can be undertaken in India.

Annual Activity Certificate for Branch Office

The Annual Activity Certificate (AAC) is one of the most important annual FEMA compliances for a Branch Office in India.

What Is an Annual Activity Certificate?

The AAC is certified by a Chartered Accountant and broadly confirms that the Branch Office has undertaken activities in conformity with the activities permitted under the applicable approval and has complied with the relevant conditions.

The prescribed certificate specifically refers to activities undertaken by the Branch Office/Liaison Office/Project Office and compliance with the terms and conditions of the relevant approval.

Why Is the AAC Important?

The AAC provides regulatory assurance regarding the activities actually carried out by the Branch Office.

Accordingly, foreign companies should maintain adequate documentation demonstrating:

• nature of services or business activities undertaken;
• transactions with the foreign parent/group entities;
• receipts and payments;
• supporting contracts and invoices; and
• compliance with the permitted scope of operations.

Financial Statements and AAC

The applicable RBI framework links the AAC with audited financial statements and prescribed reporting to the designated AD Category-I bank and other prescribed authority.

Companies should verify the current applicable filing timeline for the relevant financial year before submission because regulatory requirements can change.

ROC Compliance for a Foreign Company’s Branch Office

A foreign company having a place of business in India can also have reporting obligations under the Companies Act, 2013 and the Companies (Registration of Foreign Companies) Rules, 2014.

These compliances are separate from FEMA/RBI compliance.

Foreign companies should therefore not assume that completing RBI or AD-bank reporting automatically completes their ROC obligations.

Maintenance and Filing of Financial Statements

Foreign companies covered by the Companies Act provisions relating to foreign companies are required to comply with the applicable financial reporting requirements.

The Indian Branch Office should maintain proper books, records and supporting documentation so that the financial statements and statutory filings can be completed accurately.

Form FC-3

The applicability and filing requirements relating to financial statements of a foreign company should be reviewed for each financial year under the Companies Act and the applicable rules.

The required documents and information should be prepared well before the statutory due date to avoid delays.

Form FC-4 – Annual Return of Foreign Company

Form FC-4 is an important annual ROC filing for foreign companies.

According to the MCA’s current instruction kit, every foreign company is required to prepare and file its annual return in Form FC-4 within 60 days from the close of its financial year, subject to the applicable provisions.

The filing contains prescribed information relating to the foreign company and its Indian operations.

For current forms, instructions and filing requirements, refer to the Ministry of Corporate Affairs.

Reporting Changes to ROC

Apart from annual filings, certain changes relating to the foreign company or its Indian place of business can trigger event-based ROC reporting.

Accordingly, changes should be communicated promptly to the professional team handling Indian compliance rather than waiting until preparation of the annual return.

Accounting and Audit Compliance

Proper accounting is central to Branch Office compliance because the same financial information affects ROC, income tax, FEMA and other filings.

Maintenance of Books of Account

The Branch Office should maintain appropriate books of account for its Indian operations along with supporting documentation.

Records would ordinarily include, as relevant:

• sales/service invoices;
• purchase and expense invoices;
• bank statements;
• parent-company remittances;
• inter-company transactions;
• fixed asset records;
• employee and payroll records;
• tax records; and
• supporting agreements.

Foreign companies requiring ongoing support can consider our Accounting and Bookkeeping Services in India.

Statutory Audit Requirements

The financial statements and accounts of the Indian operations should be examined for applicable audit requirements under Indian law.

The audit also becomes important for ensuring consistency between financial statements, tax filings, ROC filings and FEMA reporting.

Reconciliation of Regulatory Filings

Before completing annual compliance, management should reconcile important figures appearing across:

• books of account;
• audited financial statements;
• income-tax return;
• GST returns;
• TDS returns;
• ROC filings;
• transfer pricing documentation; and
• FEMA/AAC reporting.

Differences should be identified and resolved before filing wherever possible.

Income Tax Compliance for Branch Office in India

Taxation is a particularly important consideration for a Branch Office because a Branch Office is not a separate Indian subsidiary; it is an extension of the foreign enterprise.

The tax treatment should therefore be examined in light of the Income-tax law and the applicable Double Taxation Avoidance Agreement (DTAA), where relevant.

PAN and Tax Registration

A Branch Office carrying on operations in India would generally require appropriate Indian tax registrations, including PAN, and other registrations depending upon its activities.

Income Tax Return

The Branch Office should determine and discharge its Indian income-tax obligations and file the applicable income-tax return within the prescribed timeline.

For official income-tax information and e-filing requirements, refer to the Income Tax Department.

Permanent Establishment and Attribution of Profits

A Branch Office can have important Permanent Establishment (PE) implications in India.

Where a PE exists, determination of profits attributable to Indian operations can become a significant international-tax issue.

The position should be examined having regard to:

• functions performed in India;
• assets used;
• risks assumed;
• transactions with the overseas head office/group companies;
• Indian tax law; and
• applicable DTAA provisions.

This is an area where foreign companies should obtain professional tax advice rather than treating the Indian Branch Office merely as an administrative establishment.

Transfer Pricing Compliance

Transactions between an Indian Branch Office and its foreign head office or associated enterprises may require examination under India’s transfer pricing provisions.

International Transactions

Depending upon the nature of the arrangements, transactions involving the Branch Office and overseas associated enterprises can include:

• allocation of common expenses;
• management or technical support;
• purchase or supply of goods;
• provision of services;
• use of intellectual property;
• financing arrangements; and
• other cross-border dealings.

Arm’s-Length Documentation

Where Indian transfer pricing provisions apply, appropriate documentation and reporting should be maintained to support the arm’s-length nature of relevant international transactions.

The applicability should be determined from the actual transactions rather than assumed solely from the legal form of the Branch Office.

TDS Compliance

A Branch Office making specified payments in India may have tax-deduction-at-source obligations.

Common Payments Requiring TDS Review

These can include, depending upon the facts:

• salaries;
• professional fees;
• contractual payments;
• rent;
• interest;
• payments to non-residents; and
• other specified payments.

TDS Returns and Certificates

Where TDS provisions apply, tax should be deducted and deposited within the applicable timelines, relevant TDS returns should be filed and prescribed certificates should be issued.

A year-end review should also reconcile TDS records with the books of account.

GST Compliance for Branch Office in India

GST applicability depends upon the nature of activities undertaken and other relevant circumstances.

Where GST registration is applicable, the Branch Office should ensure ongoing compliance with India’s GST law.

GST Registration and Returns

Depending upon applicability, compliance can involve:

• obtaining GST registration;
• issuing GST-compliant invoices;
• payment of GST;
• filing applicable GST returns;
• input tax credit reconciliation; and
• maintaining prescribed records.

For assistance, see our GST Registration and Compliance Services.

Cross-Border Transactions

Transactions between the Indian Branch Office and overseas entities should also be reviewed from a GST perspective based on their actual nature.

Income tax, transfer pricing and GST analyses should not be performed independently where the same cross-border transaction affects multiple laws.

Profit Repatriation by a Branch Office

A Branch Office may wish to remit profits generated from its Indian operations to its overseas parent.

FEMA Conditions

Profit/surplus remittance is addressed within RBI’s Branch Office framework and is subject to applicable regulatory and documentary requirements.

Before making a remittance, the Branch Office should ensure that applicable Indian taxes and compliance requirements have been appropriately dealt with.

Documentation for Remittance

The designated AD bank may require prescribed financial, tax and other supporting documents before processing a remittance.

The exact documentation should therefore be confirmed with the designated AD bank for the particular transaction.

Event-Based Compliance During the Year

Annual compliance is only one part of Branch Office compliance.

Certain events occurring during the year may trigger additional reporting or approval requirements.

Change in Address

A change in the Branch Office’s Indian address should be examined under both the FEMA/RBI and ROC frameworks.

Change in Authorised Representative

Changes relating to the authorised representative of the foreign company in India may require appropriate regulatory reporting.

Change in Parent Company Details

Changes in the foreign company’s directors, constitutional documents, name, registered office or other prescribed particulars should be reviewed for Indian reporting requirements.

Additional Place of Business

Before establishing another place of business in India, the foreign company should examine whether prior approval or reporting is required.

Common Branch Office Compliance Mistakes

Foreign companies sometimes focus heavily on obtaining approval and setting up the office but give insufficient attention to post-registration compliance.

Missing the Annual Activity Certificate

The AAC should be incorporated into the annual compliance calendar and coordinated with completion of the financial statements and audit.

Undertaking Activities Outside the Permitted Scope

The actual operations of the Branch Office should periodically be compared against the activities permitted under the regulatory framework.

Treating RBI and ROC Compliance as the Same

FEMA/RBI reporting and Companies Act/ROC filings arise under different regulatory frameworks. Completing one does not automatically satisfy the other.

Ignoring Inter-Company Transactions

Transactions with the foreign parent and overseas group companies can have income-tax, transfer pricing, GST and FEMA implications.

Poor Reconciliation Between Filings

Different figures appearing in tax returns, financial statements, GST records, transfer pricing reports and ROC filings can create unnecessary compliance issues.

Annual Compliance Calendar for a Branch Office

Foreign companies should maintain a centralized compliance calendar covering all applicable Indian requirements.

At the Beginning of the Financial Year

Review:

• permitted activities;
• changes in business operations;
• tax registrations;
• authorised signatories;
• inter-company arrangements; and
• recurring regulatory obligations.

During the Financial Year

Monitor:

• accounting;
• GST;
• TDS;
• payroll;
• cross-border transactions;
• transfer pricing;
• changes requiring regulatory reporting; and
• adherence to permitted Branch Office activities.

At Financial Year-End

Prepare and coordinate:

• closing of books;
• financial statements;
• audit;
• tax computation;
• transfer pricing review;
• ROC requirements; and
• Annual Activity Certificate.

Before Filing Annual Returns

Perform a final reconciliation between financial, tax, FEMA and ROC information and ensure that statutory filings are supported by appropriate documentation.

How EzyBiz India Can Assist

Managing a Branch Office requires coordination across FEMA, RBI, ROC, accounting, taxation, transfer pricing and GST.

EzyBiz India Consulting LLP assists foreign companies throughout the lifecycle of their Indian operations, including setting up a Branch Office in India and managing ongoing regulatory and tax compliance.

Our support can include:

• annual Branch Office compliance review;
• accounting and financial reporting;
• audit coordination;
• Annual Activity Certificate support;
• ROC compliance;
• income-tax compliance;
• GST compliance;
• TDS compliance;
• transfer pricing coordination;
• FEMA/RBI advisory; and
• assistance with profit remittance and regulatory changes.

Frequently Asked Questions

What are the major annual compliances for a Branch Office in India?

A Branch Office may have compliance requirements under FEMA/RBI, Companies Act/ROC, income-tax, GST, TDS, transfer pricing and other applicable laws. Important annual requirements can include audited financial statements, Annual Activity Certificate, ROC filings and income-tax compliance.

Is Annual Activity Certificate mandatory for a Branch Office in India?

The FEMA/RBI framework provides for submission of an Annual Activity Certificate for Branch Offices. The certificate broadly confirms that activities have been undertaken in accordance with the permitted scope and applicable conditions.

Who certifies the Annual Activity Certificate?

The prescribed Annual Activity Certificate is certified by a Chartered Accountant.

Does a Branch Office have to file Form FC-4?

A foreign company covered by the relevant Companies Act provisions is required to file the prescribed annual return in Form FC-4. MCA’s instruction kit states that the annual return is filed within 60 days from the close of the financial year.

Does a Branch Office need to file an income-tax return in India?

A Branch Office carrying on taxable operations in India should determine its applicable Indian tax obligations and comply with the applicable income-tax return requirements.

Is transfer pricing applicable to a Branch Office?

It can be applicable where the Branch Office enters into transactions covered by India’s transfer pricing provisions with its overseas head office or associated enterprises. Applicability should be examined based on the particular transactions.

Is GST registration mandatory for every Branch Office?

Not automatically. GST registration and compliance depend upon the nature of supplies, place of supply, applicable registration provisions and other relevant circumstances.

Can a Branch Office undertake any activity carried on by its foreign parent?

No. The Branch Office should operate within the activities permitted under the applicable FEMA/RBI framework and relevant approval conditions.

Can a Branch Office remit profits to its foreign parent?

The RBI framework provides for remittance of profit/surplus by a Branch Office, subject to applicable conditions, tax compliance and documentation.

What happens if the Branch Office changes its address or activities?

The proposed change should be examined under the applicable FEMA/RBI and Companies Act requirements. Depending upon the change, regulatory approval and/or reporting may be necessary.

Related Services

• Branch Office Registration in India
• India Market Entry Consulting
• Foreign Company Registration in India
• Accounting and Bookkeeping Services in India
• GST Advisory and Compliance Services
• Tax Assessment and Litigation Services

Prepared By:
EzyBiz India Consulting LLP
Chartered Accountants & Business Advisory Professionals

Last Updated:
September 2026

Disclaimer:
This article is intended for general informational purposes only and should not be construed as legal, tax, FEMA, RBI or other professional advice. Regulatory requirements, forms, procedures and timelines may change from time to time and may also vary depending upon the facts and circumstances of a particular foreign company or Branch Office. Professional advice should be obtained before taking any action based on the information contained in this article.