Setting up in India — branch, LO, project office or subsidiary: how much of this can I do myself?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: a liaison office may not earn income, a branch is taxed on Indian profits, a project office is tied to a contract, and a subsidiary is an Indian company with transfer pricing and repatriation questions.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Should we open a liaison office or an Indian subsidiary?
They are not two points on one scale, so the choice follows from what you intend to do. A liaison office cannot earn income; it exists to represent and to gather information, and once it starts negotiating or concluding business the form has been outgrown. A subsidiary is an Indian company in its own right: it can trade, and it brings transfer pricing on its dealings with the group and a set of questions about getting profits back out. Between them sit the branch and the project office. Write down the activities first, then pick the form that permits them, then look at what approvals and reporting each carries.
Can a liaison office sign contracts or invoice Indian customers?
No. That is the defining limit of the form, and it is where liaison offices most often come unstuck — not by a deliberate decision, but by drift, as the person on the ground starts negotiating prices, taking orders or chasing collections because it is convenient. Activity of that kind can put the parent's own tax position in India in issue, quite apart from the regulatory consequence for the office itself. If the work has genuinely outgrown what a liaison office may do, the answer is to change the form rather than to hope the description holds.
How is an Indian branch of a foreign company taxed?
A branch is not a separate company. It is the foreign company present in India, taxed on the profits attributable to its Indian operations. That attribution — which income belongs to the branch and which expenses it may take, including charges from head office — is where the work sits, and it is examined. The branch also carries its own registration, reporting and audit obligations, distinct from the parent's. Groups often choose the branch for a contract-driven business and then find that the compliance load and, in particular, the closure procedure are heavier than they expected.
We have one Indian contract — is a project office enough?
Possibly, and where the presence really is tied to that contract it is often the cleaner answer. A project office exists for the project: its permitted activity is bounded by the contract it was opened for, its tax position follows the Indian profits of that work, and it is meant to be wound up when the contract completes. The difficulties arise when the client relationship outlives the contract and the office is quietly used for the next piece of work, or when the office is simply left open because closing it looks like paperwork nobody has time for.
How hard is it to close an Indian branch or office?
Harder than opening it, and it is the part groups plan for least. Each form has its own closure procedure, with tax clearances, final filings, regulatory steps and the settlement of whatever is outstanding, in a defined order. The entity cannot simply be abandoned. An office left dormant continues to carry filing obligations, and the defaults accumulate quietly until somebody needs a clearance and cannot get one. If a presence is being established for a fixed purpose, read the exit procedure at the same time as the entry one, and keep the records it will call for.
Does an Indian subsidiary bring transfer pricing obligations straight away?
Yes. Transfer pricing applies to the Indian company's dealings with the rest of the group from the first year in which those dealings occur, not once the company reaches some size. That includes the things easy to overlook at the start: management charges, shared services, a group loan, the use of group intellectual property, and cost recharges during the setup phase itself. The practical step is to put intercompany agreements in place before the transactions begin and keep the supporting evidence as you go, because reconstructing the first year afterwards is both expensive and weak.
Branch or subsidiary — which should we use to expand?
A branch keeps one taxpayer: results consolidate at home, losses are usable sooner, and the exposure is that the branch is a permanent establishment whose profit the host country taxes, sometimes with a branch tax on repatriation. A subsidiary is a separate taxpayer with limited liability and local rates, at the cost of withholding on dividends home and transfer pricing on everything between them. The deciding facts are usually expected losses, liability and exit plans. See branch against subsidiary.
What is OECD Pillar One?
The part of the international agreement that reallocates a share of taxing rights over the very largest and most profitable groups to the jurisdictions where their customers and users are, regardless of physical presence — plus a simplified approach to routine marketing and distribution returns. It is aimed at the digitalised economy problem that physical-presence rules could not reach, and its implementation is still moving, which is why we read the current instrument rather than the original blueprint. See BEPS and Pillar Two.
