FAQs on Starting a Company in India by a Foreigner.
First question that comes when you are thinking of starting a business in India by foreigners is that “Can a foreigner start a company in India?” the answer to this question is “yes”. A foreigner can start a business in India easily. Here is a detailed article on FAQs on starting a company in India by a foreigner. Get answers to all the questions.
1.Do mainland companies need local legal person? If yes, do we need shareholder?
Ans: Yes, while Company registration, the mainland company needs local legal person and he/she need not be a Shareholder. Indian Laws allow you to retain 100% ownership by subscribing shares of Indian company.
2.Does a foreigner or non resident need residency visa for starting a company in India? If yes, how much do we need for its cost and how long does it cost? If No, what are the documents that would be required?
Ans: No a foreigner or a non-resident Indian would not need Residency visa for starting a company in India. However following are the documents that would be required in case of foreign national to become a director in India.
Documents required for setting up business in india by foreign companies::-
- Photographs of all directors
- Apostilled Digital Signature Application Form (You can get it From Ebizfiling)
- Apostille Passport of all Foreign directors.
- Apostilled copy of address proof (Telephone, Electricity Bill, latest Bank Statement)
- Apostilled copy of Driving License
3. What if a foreign national can not provide Utility bill as residential address proof? can we provide any other document as Address proof?
Ans. If a foreign national does not have the Utility bill, He can provide the latest Bank Statement as address proof. For Directors residence proof, their bank account statement is sufficient with latest bank entry.
4. will there be any differences if a foreign individual register an Indian company with local legal person ,foreign company or individual as shareholder? Will there be any influence on the import and export processing and operation?
Ans: No, there will not be any difference. Any person can become a shareholder and a person could mean an individual, a body corporate, an association or a company irrespective of its incorporation. Moreover, There won’t be any influence on the import and export processing and operations.
5. Can a foreign company be a shareholder of the subsidiary company in India with 100% shares?
Ans: Yes a foreign Company can become a Parent company of the Indian Subsidiary holding 100% shares. Indian Laws allow you to retain 100% ownership by subscribing shares of Indian company.
6. What are the responsibility of directors and owners of the company we will register?
Ans: The owners will not have any responsibilities. However, the Directors of the company will have responsibilities to run the operations and ensure adherence to Indian laws. Also a director’s duties includes:
- Determining and implementing policies and making decisions
- Preparing and filing statutory documents with the Companies Office or other agencies
- Calling meetings, including an annual meeting of shareholders
- Maintaining and keeping records
- Binding the company to contracts with suppliers, lenders and others dealing with the company.
7. How many shareholders are required to incorporate a private limited company?
Ans: To incorporate a private limited company, a minimum of two shareholders are required. A minimum of two shareholders and a maximum of up to 200 shareholders are allowed in a private limited company. The shareholders could be natural persons or companies, including foreign companies.
8. If we register one kind of company in India, can we change the type of it in the future?
Ans: Yes, if at one point of time you register your company as a particular type say for example as a Private Limited Company, you can change the type of the company in future. However, such a change can take place only after the completion of a minimum period of one year.
9. How long does the whole process of registering a company in India take?
Ans: The Whole process of Company registration would take around 30-60 days subject to Ministry’s approval.
10. Would there be any requirement for registered capital? How much of it? Is it possible to inject capital into phases?
Ans: Yes there would be a requirement for a registered capital. Initially it can be as less as INR 1 lakhs or more as per your convenience and the same can also be increased at a later stage or periodically.
11. Is there any limitation or special requirement for company name?
The name must be unique and must not be resembling with any other company already registered in India. However, we can insist on getting the similar name as that of a parent company.
12. If the parent Company is a proprietary company, will there be any risk to the future operation of the new company?
Ans: No there would not be any risk to the future operation of the new company even if the parent Company is a proprietary Company. However, we, at Ebizfiling would We would require the charter Documents of the parent Company to help you in the registration of the company in India. The charter documents mean registration certificate, Memorandum of association, by-laws etc.
13. Are there any differences between pure foreign companies and local companies?
Ans: No there are no differences between pure foreign companies and local companies and hence it would be treated at par.
14. Do we need to register for GST? What are the conditions for compulsory registration of tax numbers?
Ans: The companies that are dealing in Import export business will require the GST registration. Moreover the Companies whose turnover exceeds INR 40 lakhs will require to register for GST.
15. How long will the company be established? What is your time schedule for company establishment? Are there any differences of registration time of the different types of companies?
Ans: Company incorporation process takes around 20 to 60 days depending on how quickly documents are made available to us and government approvals. Average time for a company incorporation is around 30 days.
Though there are different forms of registration for different types of Companies, it would take more or less the same time to register.
16. Can a foreign Company use a virtual address for registering a Company in India? If yes, what would be the function of it? Do you provide this service?
Ans: No a foreign Company or a foreigner or a Non resident can not use Virtual address to register a company in India, a Physical address is required. Yes, we do provide this service where we can coordinate to you with the vendor directly.
17. What is the registered capital and whether the government will verify capital or not?
Ans: Registered capital is the one that you will infuse in the company at the time of registration i.e. the total amount of capital registered for the registration of a foreign invested company by the parent company.
The registered capital would be verified by the government as per the FDI policy. Hence you need to deposit the amount of the registered share capital in the companies bank account post incorporation.
18. What is the approximate operating cost for the Indian company in the later period ?
Ans: The Approximate operating cost for Indian Company in the later period would depend on the turnover of the company.
19. How long the import and export licenses takes? How long is the validity period of it?
Ans: Generally, it takes 3-4 working days for the Import and export licenses to come and it is valid for life time.
20. Do you also provide India trademark and India application service?
Ans. Yes, at Ebizfiling, we have a special team of attorneys who take care of trademarks applications. We undertake international trademark registration under madrid protocol as well.
21. What would be the VAT of company that we will register in India?
Ans: There is no concept of VAT in India however there would be GST i.s. Goods and service tax that would be levied in India. Technically GST is equivalent VAT here in India.
22. What is the corporate income tax of a registered company in India?
Ans: The corporate income tax of a registered company in India could range from 15-25% of Net profits. However, Recently government has made an announcement to reduce corporate taxes to around 15% for new companies.
23. Are there some large amount of taxes levied on the companies in India?
Ans: There are as such no large amount of taxes applicable on the Companies in India except for the GST and Income tax that too will not be a large amount.
24. What would be the fiscal year for Indian company?
Ans: For Indian company, the Fiscal year it would be 1st April to 31st March.
25. Does your company have a payroll service and accounting services? How much will it cost?
Ans: Yes Ebizfiling do provide Accounting and Payroll service and the same would depend on turnover and no. of employees respectively. We have a comprehensive range of Accounting, Payroll, compliances, return filing, audits and transfer pricing services and all are bundled as retainership package. We will be happy to share inclusions and quotes for the same depending on your estimated sales in India, No. of employees to be hired and monthly payroll costs. However, for more information you can get in touch with Ebifiling.com @+91 9643203209
26. What are the statements, filings and reports required to be submitted, what would be the submission cycle and deadlines for the same? Can the same can be submitted online?
Ans: There are different Statements and filings required to be submitted to various regulatory authorities from time to time which would be guided at regular intervals from team Ebizfilings. As mentioned above, our retainer ship packages will take care of all compliances so that you can focus on your core operations.
27. Does an Indiana subsidiary company need auditing service? Does your company have auditing service?
Ans: Yes, the Indian subsidiary company would need Auditing service. We, at Ebizfiling have a highly qualified professionals who takes care of our client’s Audits.
28. What is the Director Identification Number (DIN)?
Director Identification Number is a unique identification number assigned to all existing and proposed Directors of a Company. It is mandatory for all present or proposed Directors to have a Director Identification Number. Director Identification Number never expires and a person can have only one Director Identification Number.
29. Can a foreign company or individual apply for a foreign currency account by the bank account I submit?
Ans: Yes, however Primary bank A/c will have to be INR denominated. You can then open an EEFC i.e. Exchange earners’ foreign currency account which is foreign currency denominated.
30. Are there any foreign exchange restrictions on transfer between countries？
Ans: yes there are foreign exchange restrictions on transfer between countries and anay transfer of money would be regulated by the provisions of FEMA.
31. What is the fee if we open India bank account? Must the director or shareholder go to India if we open India bank account? What materials should we provide if we open the account?
Ans. Our all packages include assistance in bank account opening. We correspond with bankers on your behalf always and supply them with necessary information. Director or shareholder needs to visit in India and visit banker if they are required to be named as authorized signatory in bank.
For bank account opening in the name of company, company papers for instance Certificate of incorporation + MOA + AOA + PAN card have to be submitted to the bank. Certain banks will provide some additional board resolutions to be prepared and signed by directors. These need to be submitted additionally.
32. Does the bank account application require the company’s legal person to open an account on the spot?
Ans: Yes the company’s legal person needs to be present once to open an account. This would be after the company is registered.
33. What are the secretary services of Ebizfiling include? Such as the submission of government reports, the sending of letters, etc.
Ans: We at Ebizfiliing have a secretarial compliance package which would serve all your requirements. Our retainership package will take care of it.
34. How much will the address registration Cost? Can we register virtual address or sharing address?
Ans: The address registration would be included in Ebizfiling’s incorporation process packages and sharing address is required. However, virtual address can not be used for the registration
35. Whether there is a difference in the timing of registering a company. For example, if the individual is a shareholder company and the company is a shareholder company, is there any difference between foreign capital, joint venture and local?
Ans: No there is no difference in the timing of registering a company. The timings for registration of the company would be the same irrespective of the shareholder company i.e. the individual or company.
36. Could Non-Indian be the sole director or shareholder for India company registration? Could the same person register several companies one time?
Ans. Non-Indian can be a director and shareholder in Indian company but can not be sole director/shareholder. There must be at least one Indian Citizen as a director in Company. Same person can register several companies at one time.
37. Could we only appoint Non-Indian be both the director and 100% shareholder? Or we should appoint less than two persons, one is the director, one is the shareholder?
Ans. There should be a minimum of two shareholders. Both may be Non- Indian. There should be a minimum of two directors. At least one should be an Indian Resident.
38. Should India company registration need a local director or shareholder? If yes, what is the fee for the local director or shareholder?
Ans. Indian Company registration does not need Local Shareholders. However, there must be a Local director. Fees for the local director would range from INR 48000/- p.a. to INR 144000/- p.a. depending on the nature of the activity of business.
39. What is your fee for India company registration? Does your company registration fee include the Registered Office fee?
Ans. Company Registration and FEMA compliances (which are mandatory) – we charge INR 70000/- for the same.
Registered office assistance is charged at INR 10000/- However, payments to virtual office vendor will have to be done by you separately. These range from INR 48000/- p.a. to INR 120000 p.a. depending on vendor chosen.
40. What is your fee for Secretary service and Audit Service every year? Does the Secretary service contain providing us a phone number and contact person?
Ans. We provide Comprehensive retainership plan which will take care of book-keeping, legal advisory, accounting, admin, transfer pricing, and statutory requirements, including returns, audits and advisory. This will eliminate a need for you to co-ordinate with different consulting agencies. Across India, there are only a handful of agencies like EbizFiling.com which are engaged in end-to-end compliance and advisory services.
Company audit fees depend on several factors such as nature of business, turnover, no. of employees etc. You may let us know about these numbers and we will share fees quote.
41. What is your fee for Accounting and Bookkeeping if there is no transaction?
Ans. If there are no transactions, company still needs to do certain filings. These are normally priced at INR 40000/- p.a. depending on nature of business, capital of business and other factors.
42. Most of our customers prefer trading company, may I know the mainly involved taxes?
Ans. Mostly GST and Income taxes would be applicable. GST is charged on goods sold. However, company can claim credit of GST paid on purchases. It is a value added tax. Income tax is payable by companies on their net profits. Income tax rates are in the range of 22-28%.
43. Is there any government website for us to search the company information? What information will show on the website?
Ans. There is a government website governed by the Ministry of Corporate affairs, India from there you can search any company details after it gets incorporated. The website is www.mca.gov.in which shows general details of company like its identification number, registration number, authorized capital, paid up capital, date of incorporation, registered office address, details of directors and annual filing status.
44. What is the fee if we rent a phone number in India?
Ans. Technically, once a company is registered, you can apply for a phone number in the company’s name. Ebizfiling will help you obtain the same at nominal fees.
45. Is there any government fee we should pay every year?
Ans. Yes there are fees payable to the government every year on account of filings annually. These fees are very negligible, but dependent on Share capital.
46. Once a foreign company is incorporated in India, what files will the parent company receive?
Ans. following will be the Inclusions and deliverables from Ebizfiling.com, once the foreign company is registered in India:
- 1 DSC + 1 DIN (Indian Director)
- 1 DSC + 1 DIN (Foreign Director)
- 1 Name Approval Application under RUN Services
- Stamp duty payment receipt on INR 1 Lakh Authorized Capital
- Company Incorporation Certificate
- GST Registration certificate
- E-Form INC-20A ack receipt
Documents of FEMA Compliances as follows:
- Certificate of Chartered Accountant
- Certificate from Company Secretary (Confirming compliance with FEMA regulations)
- Share Valuation Report
- Filing of form FC-GPR
- Documentation for all above
- Correspondence with RBI & Authorized Dealer Bank (your Designated Bank)
- Responding upto Two Queries from RBI
- Share Issuance/ Share allotment by Board Resolution
- Hard copy of Share Certificate
- Letter of Refund (in case of excess funds received)
Apart from this, you will also be provided with the following:
- Debit Authority Note
- 15CA & 15 CB
- Form A2 with Purpose Code
- Declaration on Penalty/ Interest
- Declaration on Reason for Refund
47. How can we make payment for your Professional charges? can we transfer our money to you via our foreign personal account?
At ebizfiling, we accept payments via wire-transfers and Paypal. As far as transfering money via your foreign personal bank account is concern, You can do the same.
Open an Indian Subsidiary Company in India with Ebizfiling
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