FAQ's - Bhargav Bhatt & Associates
Foreign Companies
How do I decide what is the appropriate structure for our operations in India?
The right structure depends on several factors, such as your business model, scale, and long-term objectives. Foreign companies can operate in India through options like a liaison office, branch office, subsidiary, or joint venture. We can help you analyze the best structure based on your operational needs, regulatory requirements, and tax implications.
As a foreign company, are we required to obtain a Permanent Account Number (PAN) from Indian tax authorities?
Yes, foreign companies are required to obtain a PAN in India if they are earning income in India or conducting business activities. This is essential for compliance with Indian tax laws.
How long does it take to form a company in India?
Typically, it takes around 10-20 business days to form a company in India, depending on the type of company and the speed of regulatory approvals.
Do we have to obtain registrations for the company in India? How long does that take?
Yes, after incorporating a company in India, several registrations might be required, including Goods and Services Tax (GST), Employee Provident Fund (EPF), Employee State Insurance (ESI), and others. The process can take from a few days to several weeks depending on the specific requirements.
Are we required to submit a lot of documents to form a company?
Yes, certain documents like the passport copies of directors, proof of address, the Memorandum and Articles of Association, and others are required. However, the documentation process is streamlined and relatively straightforward.
Once the Indian company pays taxes in India, is the parent company liable to pay taxes in its jurisdiction?
The tax liability of the parent company depends on the tax laws of its jurisdiction. Many countries have double taxation avoidance agreements (DTAA) with India, which helps avoid paying taxes on the same income in both countries.
What are the Transfer Pricing regulations in India?
India has strict Transfer Pricing regulations to ensure that transactions between related entities are conducted at arm's length. Companies are required to maintain documentation to prove the fairness of inter-company transactions and to submit annual Transfer Pricing reports.
Do we need a resident Director in India?
Yes, it is mandatory for a company registered in India to have at least one resident director (someone who has stayed in India for at least 182 days during the preceding year).
Can the Indian company be a 100% subsidiary of the parent company?
Can the Indian company be a 100% subsidiary of the parent company?
Are there any restrictions on the activities that an Indian subsidiary of a foreign company can engage in?
Yes, there are restrictions based on the sector of operation. Certain sectors, like defense or media, have specific foreign direct investment (FDI) caps and restrictions. We can guide you on which sectors permit 100% foreign ownership and which have limitations.
What are the options for winding up a company in India?
The options for winding up a company include:
- Voluntary winding-up (by shareholders).
- Compulsory winding-up** (by the tribunal due to non-compliance or other reasons).
- Fast Track Exit (FTE) Scheme** for defunct companies.
Existing NRIs (Non-Resident Indians)
What does NRI mean?
An NRI is an Indian citizen who resides outside India for employment, business, or other purposes for more than 182 days during the preceding financial year.
What are the income tax implications for NRIs?
NRIs are subject to tax on income earned in India. They are also required to file income tax returns in India if their income exceeds the exemption limit. Tax rates may vary depending on their income source.
What are the basic concepts under FEMA (Foreign Exchange Management Act)?
FEMA regulates foreign exchange transactions in India and deals with the inflow and outflow of foreign currency. It governs NRIs' financial transactions in India, including investments, remittances, and property transactions.
How is residential status determined under FEMA?
Your residential status under FEMA depends on the number of days you have stayed in India in the preceding financial year. An NRI status is applicable if you have stayed less than 182 days in India in the last financial year.
What are the benefits associated with the NRI status?
Some benefits include tax exemptions, special schemes for NRIs (such as NRE/NRO accounts), and relaxed norms for property and investment in India.
Can NRIs buy residential/commercial property in India?
Yes, NRIs can buy residential and commercial property in India, subject to certain conditions set by the Reserve Bank of India (RBI).
Can NRIs start a business in India?
Yes, NRIs can start businesses in India and invest in various sectors. However, certain restrictions apply to specific industries (such as agriculture).
Can NRIs invest in shares of listed companies in India?
Yes, NRIs can invest in shares of listed Indian companies through the portfolio investment scheme (PIS) after obtaining the necessary approvals from the RBI.
Can NRIs invest in mutual funds in India?
Can NRIs invest in mutual funds in India?
Are NRIs allowed to bring jewellery and other movable assets into India?
Yes, NRIs can bring jewelry and movable assets to India, but it must be declared at customs.
Can NRIs hold insurance policies in India?
Yes, NRIs can hold life insurance policies in India. However, the policies must comply with FEMA guidelines.
Can NRIs use credit cards in India?
Yes, NRIs can use credit cards in India, but they must be issued by Indian banks and comply with FEMA regulations.
Can NRIs lend money to resident Indians?
Yes, NRIs can lend money to resident Indians, but the loan should be in compliance with FEMA regulations.
Can NRIs borrow money in India?
Yes, NRIs can borrow money from financial institutions in India for certain purposes, such as property acquisition.
Can NRIs give security or guarantee in India?
Yes, NRIs can provide security or guarantees, but this must be done under the provisions of FEMA.
Can NRIs be directors of a company in India?
Yes, NRIs can hold directorships in Indian companies. However, there must be a minimum of one resident director.
Can NRIs be trustees of a trust in India?
Yes, NRIs can be trustees of a trust, but there must be a minimum of one resident trustee.
How does inheritance work for NRIs in India?
NRIs can inherit property in India. The inheritance process is governed by Indian laws such as the Indian Succession Act, and the transfer is subject to applicable taxes.
Are gifts received by NRIs taxable in India?
Gifts received by NRIs are taxable under Indian tax laws, but gifts from specified relatives are exempt from tax.
What is repatriation for NRIs?
Repatriation refers to transferring money from India to an NRI’s foreign account. There are specific guidelines regarding the repatriation of earnings, income, and investments.
Can NRIs issue a power of attorney in India?*
Yes, NRIs can issue a Power of Attorney to a trusted individual in India to manage their financial and legal matters.
Draft Your WILL
Is a WILL compulsory in India?
No, a WILL is not compulsory, but it is strongly recommended to ensure your assets are distributed according to your wishes.
What is the purpose of preparing a WILL?
A WILL allows you to designate who will inherit your property after your death, ensuring your wishes are followed and avoiding legal disputes.
What is the nomination process in India?
Nomination is the process of designating a person to receive your assets or investments after your death. While nomination simplifies the transfer of assets, it does not replace a WILL.
Do I need a WILL even if I have made a nomination?
Yes, it’s important to make a WILL to ensure all your assets are distributed as per your wishes. Nomination does not cover all assets and may not be applicable in some cases.
Should I make a global WILL or a specific WILL for Indian assets?
If you have assets in multiple countries, it’s advisable to create a separate WILL for Indian assets and ensure they align with your global WILL.
Is it mandatory for me to be physically in India to make my WILL?
No, you can make your WILL while being abroad. However, it must comply with Indian legal formalities for execution.
Is it mandatory to register my WILL in India?
No, registration is not mandatory. However, registering your WILL makes it a public document and can help in reducing disputes.
Do my legal heirs need to visit India to make my WILL?
No, your legal heirs do not need to be present for the execution of the WILL, but they may need to visit during the probate process.
Can NRIs invest in mutual funds in India?
Can NRIs invest in mutual funds in India?
What is the need to define executors in my WILL?
Executors are responsible for administering your estate according to your wishes. Naming an executor ensures smooth distribution of assets.
What are the powers of Executors?
Executors have the legal authority to manage and distribute your estate according to the terms of your WILL.
Once my assets are sold, will I be liable to pay tax in India?
Yes, you may need to pay capital gains tax in India if you sell assets like property or securities.
Do I need to file my returns with the Income Tax authorities in India?
Yes, if you have income or assets in India, you are required to file an income tax return in India.
Is there Estate Duty applicable in India?
No, India does not have estate duty (inheritance tax) as of now.
Can I distribute my assets as per my desire? Are there any restrictions?
You can distribute your assets as per your desire, but certain legal restrictions may apply, especially if you have immovable property in India.
After my death, can my heirs sell my assets and take the money out of India?
Yes, your heirs can sell assets and repatriate the funds, subject to compliance with FEMA guidelines.
Is it mandatory for my heirs to visit India to sell my assets?
Yes, your heirs may need to visit India to complete the sale and legal formalities.
Can I issue a power of attorney to a close friend or CA to handle my asset distribution?
Yes, you can issue a Power of Attorney to handle your asset distribution, but ensure it is legally valid.
Is a doctor's certificate mandatory for creating a WILL?
Is a doctor's certificate mandatory for creating a WILL?