Setting Up New Company

Setting Up New Company

Setting up a business in India can be done through a Proprietary Concern, Partnership Firm, Limited Liability Partnership, or Private Limited Company, depending on the entrepreneur's needs. Foreign companies typically choose between a subsidiary (Private Limited Company) or a branch/liaison office.

Key considerations include:

  • Taxation
  • Repatriation of Profits
  • Ease of Doing Business

Branch Office vs. Subsidiary:
Branch Office:
  • Requires Reserve Bank approval.
  • Must have a profit-making track record for the last five years.
  • Net worth must be at least USD 100,000.
  • Requires a local resident Indian as an authorized representative.
  • Taxed at 41.2% or 42.23%.
  • Dividends paid to the parent are tax-free.
  • Unlimited liability, extending to the parent company.
Subsidiary Company:
  • No Reserve Bank approval needed.
  • No track record required.
  • No minimum net worth requirement.
  • Requires a local director.
  • Taxed at 26% on profits.
  • Dividends subject to Dividend Distribution Tax (20.35%).
  • Liability is limited to the subsidiary.

Additional Points:
  • Local Director/Partner:
    Mandatory local director under Companies Act, 2013.
  • Physical Presence:
    Shareholders do not need to be physically present; documents can be sent via courier.
  • Foreign Direct Investment (FDI):
    FDI policy is liberalized for most sectors, but some restrictions apply.

    Pragathi ATC. has been providing consultation and incorporation services for over 10 years. For more information on setting up a business in Bangalore, please contact us at info@pragathiatc.com