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comparison table

Summarized Comparison Table of all entry Options

Type Of Entity

As Foreign Entity

As Domestic Entity

Point of Comparison

Branch Office

Liaison Office

Project Office

Wholly Owned Subsidiary

Limited Liability Partnership

 

A. Incorporation/Establishment Point of View

Establishment

Approval from Reserve Bank of India (RBI) is required

Approval from Reserve Bank of India (RBI) is required

Automatic Route-An intimation of establishment is required to be sent to RBI

Approval of Registrar of Companies (ROC) is required.

Approval of Foreign Investment Promotion Board (FIPB) and ROC would be required

Pre-Establishment Statutory Fee

No Government Fee is required to be paid

No Government Fee is required to be paid

No Government Fee is required to be paid

Stamp Duty and ROC fee is required to be paid depending on the Authorised Share Capital of the company

Stamp Duty and ROC fee is required to be paid depending on the Contribution of LLP

Minimum Capital Investment

Not Applicable

Not Applicable

Not Applicable

0.10 Million Indian Rupees for a Private Limited Company 0.50 Million Indian Rupees for a Public Limited Company

No minimum contribution has been prescribed

Lead time for setting up

4-5 Months

4-5 Months

1-2 Months

3-4 Months

3-4 Months

Operations

Business operations as approved by RBI

No Business operations are permitted. LO can only act as an communication channel

Permitted business operations

Very Wide & Significantly higher flexibility on nature of operations

Very Wide & Significantly higher flexibility on nature of operations

B. Compliance & Taxes

Legal Compliance

Moderate

Moderate

Moderate

Higher

Higher

Permanent Account number (PAN No.) i.e. Registration Under Income Tax Act.

Applicable

Applicable

Applicable

Applicable

Applicable

Tax Deduction Number (TAN No.) i.e. Registration under Income Tax Act for deduction of Tax

Applicable

Applicable

Applicable

Applicable

Applicable

Permanent Establishment (PE)

BO being a commercial office will constitute PE for Taxation purpose

LO being a representative office is not taken as PE

PO being a commercial office will constitute PE for Taxation purpose

Not Applicable

Not Applicable

Status of Taxable Entity

All tax returns and other submissions concerning BO operations will be filled in the name of Parent Company as a foreign taxable entity

All tax returns and other submissions concerning LO operations will be filled in the name of Parent Company as a foreign taxable entity

All tax returns and other submissions concerning PO operations will be filled in the name of Parent Company as a foreign taxable entity

WOS is a separate legal entity

LLP is a separate legal entity

Rate of Corporate Tax

42.024% (Base Rate of 40%, Surcharge @ 2% in case income exceeds Rs. 10 Million and Cess at 3%)

Not Applicable

42.024% (Base Rate of 40%, Surcharge @ 2% in case income exceeds Rs. 10 Million and Cess at 3%)

32.445% (Base Rate of 30%, Surcharge @ 5% in case income exceeds Rs. 10 Million and Cess at 3%)

30.90% (Base Rate of 30%, and Cess at 3%)

Dividend Distribution Tax

Not Applicable

Not Applicable

Not Applicable

16.2225% (Base Rate of 15%, Surcharge @ 5% and Cess at 3%)

Not Applicable

Transfer Pricing

Applicable

Not Applicable

Applicable

Applicable

Applicable

Import export Code (In case of Import Export of Goods)

Applicable

Not Applicable

Applicable

Applicable

Applicable

Excise Duty (In case of manufacturing of Goods)

Not Applicable (Manufacturing is not allowed, but can register as Trader)

Not Applicable (Manufacturing is not allowed)

Applicable

Applicable

Applicable

Sales Tax/Value Added Tax (In case of sale purchase of Goods)

Applicable

Not Applicable

Applicable

Applicable

Applicable

Service Tax (In case services are rendered)

Applicable

Not Applicable

Applicable

Applicable

Applicable

Exit

Approval of RBI is required for closure of business operations

Approval of RBI is required for closure of business operations

Automatic subject to fulfilment of certain conditions.

Detail winding up procedure is required to be undertaken for closure of a WOS

Winding procedure as prescribed under LLP Act, 2008 is required to be followed.

Disclaimer: Information in this note is intended to provide only a general update of the subjects covered. It is not intended to be a substitute for detailed research or the exercise of professional judgment. The rates of Taxes mentioned above are as applicable for the Financial Year 2012-13. KNM accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Please take proper professional help specific to your business operation before initiating any further step in this regards.