FAQ’s

Appropriate structure for your proposed activities in India are determined by various factors like –

• Proposed Activity – The foreign direct investment (FDI) in India is governed by The Reserve Bank of India (RBI) directives imposing sectoral caps on various activities. For example, activities like agriculture, defense supplies etc. are prohibited. Activities to the like of real estate development etc. are permitted subject to restrictions. So one has to obtain clear advise on RBI directives to choose an appropriate structure for India.
• Local Partner – If foreign company wishes to explore Indian market with the help of a local partner, it has no choice but to form a Joint venture company.
• Nature of Transactions – If foreign company wishes to engage India only for representation purpose, it can opt for either a liaison office (no commercial operations allowed) and if it wishes to engage in commercial transactions of purchase and sale, maintenance contracts etc. it can opt for a branch office subject to obtaining prior RBI permission.

As per section 206AA of The Indian Income Tax Act, if a foreign company does not have a PAN, the Indian company effecting remittance needs to deduct withholding taxes @ 20%. To avoid the same, it is advisable for the foreign company to obtain a PAN subject to specific conditions.

The UDIN can be verified through the “Verify UDIN” on UDIN Portal by following below steps;

• Please click on Verify UDIN.
• A window for entering few details for verification will open.
• Enter the details such as Name of the Authority, Mobile number & Email-ID of the person searching the UDIN.

Indian Companies Act has elaborate procedure for winding up of companies. Basically, The corporate law gives options for a Fast Track winding up subject to fulfillment of prescribed conditions and voluntary winding up under sec 391 / 394 of The companies Act. The process entails approaching Indian High Court and seeking assistance of official liquidator to wind up a company. In nutshell, if the Indian company has fulfilled all its contractual obligations and there are no open investigations, suits pending, it can be wound up within a period of 6 months.

RBI guidelines have defined activities for a foreign company under following broad categories-

• Activities that a foreign company is freely allowed to engage in without obtaining any permission (Automatic Route).
• Activities that a foreign company is allowed to participate subject to conditions / permission (Approval Route).
• Activities that a foreign company is prohibited to engage in (Prohibited Activities). These activities are further elaborated under various circulars of RBI under FEMA.

It includes Engagement as per Standards on Auditing, Review Engagement as per Standards on Review Engagement. Other Assurance Services as Standards on Assurance Engagement/ Guidance note on Reports & Certificates for special purposes and & other Engagements as per Standards on related Services & any Assurance Services rendered by full time practicing Chartered Accountant.

Yes. Indian companies Act requires that there should be at least 2 shareholders and foreign companies therefore hold 99.99% of shares of Indian subsidiary and minority balance holding is nominated and held under The Indian companies Act in the name of an individual.

In this field, the period for which the engagement is accepted is to be mentioned.

As per the recently amended Indian Companies Act, it is now mandatory for all foreign companies to have a local resident Director.

For this purpose, every company and its directors must first appoint an auditor within 30 days from the date of registration of the company.

At each Annual General Meeting (AGM), the shareholders of the company must appoint an auditor who holds the position from one AGM to the conclusion of the next AGM. The Companies (Amendment) Act, 2017 maintains that the auditors can only be appointed for a maximum term of five consecutive AGMs.

However, in individual and partnership firms, auditors cannot be appointed for more than one or two terms, respectively.

India has transfer pricing (TP) regulations modeled on International standards. The guiding pole being ‘arms length transactions’. The regulations stipulate that all ‘related party transactions’ should be based on ‘arms length’ ; thereby making it mandatory that due income should be offered for taxation in India. Foreign companies therefore need to consult subject area experts and carry out a detailed TP study and frame up a TP method and fix all commercial transactions based on this advise. It is important to note a company is obligated to file a separate TP Report with Revenue authorities in India and these companies would also be assessed by a designated TP Cell of The Indian revenue authorities.