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FOREIGN COMPANY IN INDIA FAQs

The below table indicates the professional fees for various Services , The foreign Companies need the three types of Services for a complete setup in India as below :-

Private Company Setup

Basic and Mandatory Licenses

RBI & Foreign Investment Compliance

Areas Activity to be done Fees
Company Formation To get an Approved Directors Identification No.
To Get the Digital Signature of Directors
To Get the approval for the Desired Name of the
Company
To Draft the Memorandum and Articles of
Association
To formulate the desired Shareholding pattern.
To Get the Certificate of Incorporation for
Company

Registrations under various Act

Income Tax registration PAN & TAN

Bank Account opening Support Shop Establishment Registration
Profession Tax Company & Employee VAT/Registration
Import Export Code

RBI & Foreign Investment Documentation Preparation and Submission
work (Automatic Route) Compliance certificate from CS
Valuation Certificate from CA

Complete Professional Fees

GST would be charged @ 18%

Payment of 50% of fees and government fees of signing contract

SUMMERY OF TOTAL SETUP COST

PARTICULERS AMOUNT

Professional Fees + GST @18%

Government Cost – for Company Setup

Government Cost – Other Licenses
TOTAL

*The Government Cost will Change according to Share Capital

Administrative suppor

As such there are not specific tax rates for foreign owned private limited Company , Once a Foreign Company has formed a Private Company in India it become an Indian Private Limited Company under the Companies Act 2003, and all the tax rates as applicable to Indian company would apply. Summary of the taxes are below:-

Type of Tax Rates Description

Income Tax 30% Paid on the net profit earned During the year.

Dividend 20% Paid by companies in case of Distribution of profits as
Distribution Tax dividend.

Value added Tax 0% – On sale & purchase done within state, rate depends
(VAT) 12.5% on product.

Central Sales Tax 2% On the sale & Purchase done between two states..rate
(CST) depends on product.

Central Excise 1% – 14% Paid on Manufacturing of Goods, or any process does
Duty which amounts to emerging of new product.

Service Tax 14% For services sector or providing services to customers

Custom Duties Wide Custom duty is charges when the goods are imported
range in India, The tax rates varies from product to product

A foreign company operating in India and registered in India is treated as a Local Indian company. Following are the basic information for your information:-

Subsidiary of Foreign Company need to take RBI Approval for investment made in India.

Company need to Maintain its books of Accounts.

Company need to get its accounts audited every year. Company need to file its tax return annually.

Company need to file annual account with authorities annually.

Income tax rates applicable to Companies on Net profit @30%.

Company need to have various Business registration with authorities like PAN, TAN, VAT, CST, Services Tax, Profession Tax, Central Excise, Import Export Code , Shop Act etc depending on the applicability.

Regular Monthly/Quarterly/Six Monthly Return shall be filled for above registration as per applicability.

Company should have a board meeting every quarter.

Every year one meeting of shareholders shall be kept i.e Annual General Meeting.

Foreign companies setting up a subsidiary in India and investing in the Indian Company is called FDI i.e Foreign Direct Investment in India. The Company has to carry out Post investment Compliance with Reserve Bank of India (RBI) if the Investment is allowed under the Automatic route in India.

In case of investment in certain sector government has asked to take prior approval before investing in India, most of the sectors are covered under automatic.

To get various government registration for Private Limited company in India, the Company need to have the above registration , These registration have government
& Liaison fees involved Following are the details

Type of Tax Registration Government Cost

PAN & TAN

Bank Account Opening

Professional Tax Registration

Shop Establishment Registration

GST Registration

Import Export Code

TOTAL

* May differ from state to state

The additional Business Registration shall be taken once the Company is registered. Generally following Registration are taken by companies in India depending on their nature of business as above

Type of Tax No. of Days Why Required

PAN & TAN 12 – 15 Days Registration Under Income Tax ,
Mandatory for All

Bank Account Opening 12 – 15 Days Necessary to carry out transactions

Service Tax 07 – 10 Days* For providing all types of Services in India

Shop Establishment 07 – 10 Days* For having office in municipal limits
Registration

Professional Tax 07 – 10 Days* For doing business in the Maharashtra
Registration state

These registrations can be taken done simultaneously after getting PAN & TAN and Opening Bank Account.

The Cost of formation of Private limited depends on the Authorized Capital of the Company; Following is the breakup of Cost for the formation of the Company with a Minimum required authorized Capital of INR 1 Lac.

Activity Amount

Taking Digital Signature of Directors INR 5000/- Each Director*2

Filling fees of government * *INR 9200/- (Depends on Capital)

Total Cost INR 19200/-

* Fees Changes with the amount of Capital of Company

The formation of the above Entity in India takes Approximate 15-20 Days after receipt of all the necessary Documents.

No, the directors need not be present to perform the formation of the Company;they can provide the documents first through scanned copy and then courier to our office. The presence might be required for other registration post incorporation of the Company; hence the other company cannot become director in an Indian company.

As per the new Companies Act 2003, least one director shall be in India for 182 Days.

As per the Basic requirement for the Company formation we need minimum 2 Shareholders and 2 Directors hence we need minimum two shareholders and directors.

In order to fulfill your requirement we can form Company by giving just one share to the second shareholders. The second shareholder will hold the shares on behalf of the Company itself hence the ownership will be 100% with the Company. In respect of the directorship we need minimum two individual to be acting as directors of the Company.

Yes, The Directors and Shareholder can be some person, only for Individual. Any body corporate is not allowed to be Director in an Indian Company.

The basic Conditions for a private Limited Company in India is as follows:-

Minimum Two Directors of The Company Minimum Two Shareholders of the Company

Generally it depends on the Requirement of the Client, but the most suitable form of entity for carrying out business in India with a long term objective would be to form a Private Limited Company, by making investment through the equity shares in the Company.

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