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Yes foreign companies, foreign national, NRI or OCI can register a company in India. The registration of foreign company in India is completely online and foreign nationals do not need to visit India for the same. Foreign company registration in India can be completed in 10 days. The cost for the same will be approximately USD 1700. Click here to know more about the possible structures available to the foreigners in India.
There are different type of companies a foreign person can register in India :
1) Private Limited company : This is like incorporation Incorporation in USA or PTE in Singapore or Pvt Ltd in UK. This is the most preferred structure for IT companies planning to setup their development office in India.
2) Limited Liability Partnership:This is like a LLC in USA or LLP in UK. This is not a preferred structure as it is not the tax efficient structure.
Conditions/Checklist to form a company in India are:
- 2 – 20 directors of them 1 should be Indian resident
- 2-200 shareholders. All the shareholders can be foreign individuals of foreign companies.
- Address proof in India where this company will be registered
More details about procedure and documents for registration by a foreign company can be found here.
Documents required from the foreign individual or foreign company to register a company in India are as follows:
- Passport of all foreign nationals
- Address proof i.e bank statement or electricity bill or credit card statement of all the foreign nationals.
- PAN, Aadhar card and bank statement of Indian nationals
- If you are incorporating a subsidiary company then certificate of registration and address proof of the parent company.
- Application for Name Approval
- Application of digital signatures for all the directors
- Preparation of charter of companies
- Filing of incorporation documents
- Filing FCGPR with RBI
- Application for GST number
- Opening of bank account
What are the payroll and tax compliances after the company is registered in India?
The Indian company has to comply with following:
- Auditor appointment within 30 days.
- GST returns to be filed monthly
- TDS returns to be filed quarterly
- Statutory Audit to be conducted by a CA annualy
- Secretarial filing every year
- Income tax return to be filed every year
Overview on labour laws of India:
Following labour laws are applicable when you hire the employees in India:
- There is no requirement of having employee insurance. But its recommended to give insurance benefits to employees as its easy to attract and retain good employees then.
- The probation persiod is generally 2 months but you can decide probation period upto 6 months
- The notice period is generally 2 months
- Tax on employment i.e TDS is to be deducted from salary when paying salary.
- In India employees cannot work more than 54 Hours a week.
- 21 Days paid leave in an year is mandatory for employees in India.
- Maternity leave is 6 months
- 4 Mandatory national holidays in a year that is 15th August, 26th January, 1st may and 2nd October.
Overview of Tax Laws in India
The income tax rate in India is 25.17% for service companies and 17% for manufacturing companies.
For the subsidiary companies which provide services only to its parent companies for example a offshore IT company which provides services to its parent company a mandatory markup of 12-15% is to be done on all the expenses made. So for example if the total expenses(includes payroll exp, rent and other professional fees) incurred in a year is Rs 1 Million, the profit will be assumed to be 12% of of expenses that is 0.12 Million and the tax will be 25.17% of that.
To repatriate the profit of Indian company to its foreign shareholders the additional dividend distribution tax of 20.55% is payable.
About Rohit Lohade
Rohit Lohade is a Chartered Accountant with 15+ years of experience. He has assisted more than 300 Gobal Companies with India Entry Strategy