Finalize the Nature of Legal Entity and Its Registration

 

Domestic Entry: Wholly Owned Subsidiary (WOS), Limited Liability Partnership (LLP)

  • It may take 1 month time to register with the Registrar of companies (ROC) but Government fee and Stamp duty are applicable
  • Business operations may be conducted with high flexibility as a separate legal entity
  • Legal compliances are higher than foreign entry
  • Rate of Income Tax is 25% and 30% respectively
  • Closure and winding up is easier than foreign entry ways
  • Provisions of Permanent Account Number (PAN), Tax Deduction or Collection Account Number (TAN), Import Export Code (IEC), Goods and Services Act (GST) and Transfer Pricing (TP) Applicable to all

Foreign Entry: Branch Office (BO), Liaison Office (LO), Project Office (PO)

  • It may take 2 months’ time to take approvals from RBI / ROC
  • Business operations are permitted with some restrictions for BO and PO but not allowed to LO, hence all returns and submissions will be in the name of parent company because these are not a separate entity
  • Rate of Income Tax is 40% for BO and PO but Zero for LO
  • Closure and winding up may be done with the approval of RBI except LO
  • BO and PO will constitute Permanent Establishment (PE) for taxation but LO will not
  • Provisions of Permanent Account Number (PAN), Tax Deduction or Collection Account Number (TAN) and Transfer Pricing (TP) Applicable to all
  • Provisions of Import Export Code (IEC) are applicable except LO
  • Provisions of Goods and Services Tax Act (GST) are applicable except LO; for LO, if GST is payable under reverse charge
Translate »