How can an NRI register a company in India? Here is a quick setup guide

India has become a hotspot to start a business amongst NRIs and OCIs. India is the fastest-growing economy currently and is an ever-developing country for decades now. India is a promising destination to start a new business. Currently, the manufacturing sector is booming and also backed up by vast skilled and cheap labor, consumption demand remains strong and hence, the investors get attracted to company registration in India and to invest in the country.

Not only this but for making India a place for “Ease of Doing Business” the Government has always tried to make it easy for not only Indian residents but also for the NRIs or OCIs. The Ministry of Commerce and Industry created the Foreign Investment Promotion Board (FIPB) to bypass all the difficulties of doing business in India and ensure smooth sailing for all potential foreign investors.

How can an NRI enter India for doing business?

The following are the lawful entities in which non-resident Indians can be registered in India:

• Sole Proprietorship Firm
• Partnership Firm
• One Person Company
• Limited Liability Partnership
• Private Limited Company

However, In the case of a ‘Non-resident Indian’ (NRI), and Overseas Citizens of India (OCI), the Private Limited Company registration in India could be considered as the ideal kind of business that could be registered in India.

Reasons for choosing Private Limited Company registration in India by an NRI or OCI

• A Private limited company can be started with as little as two shareholders.
• Private limited companies are seen as particularly ideal for non-Resident Indians due to the nature of their legal and capital requirements.
• Compliance of a private limited company is much simpler compared to that of a Public limited company.
• There is no requirement of prior approval from the Government or the Reserve Bank of India for directing foreign investments into a private limited company.

Prerequisites for Private Limited Company registration in India

• 2 directors
• 2 shareholders
• An office address in India. (one of the directors must be an Indian Resident)
• For becoming a director of an Indian Company one should obtain Directors Identification Number (DIN) and Digital Signature Certificate (DSC). Most of the forms filed with the Registrar of Companies (ROC) must be signed with the DSC.
• In order to register a Private Limited Company or Public Limited Company by an NRI, identity proof, address proof as well as documents regarding Indian origin are required. Every one of these documents is required to be attested through the Indian embassy or notary public.

FEMA Regulations for NRI and OCI for Company registration in India

• To ease investment in India, the government permitted NRIs as accepted entities for investment as per the Regulations notified under Foreign Exchange Management Act, 1999.
• NRIs as per current FDI/FEMA legislation in India includes persons who are resident outside India but are citizens of India or are persons of Indian origin.
• NRIs can invest in India either by purchasing shares of an Indian company or investing in the capital of any existing entity or by registering a new business in the country.
• The FEMA regulations for NRIs and OCI wanting to invest and register a company in India are described in Schedule 4 of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017.

Process of Company registration in India by an NRI or OCI

Registration of a Private Limited company in India is done via an online process. Recently the MCA has replaced the earlier SPICe form with a new web form called SPICe+ (SPICe Plus). Hence, Incorporating a Private Limited Company is even easier now.

Now you can Incorporate a Private Limited Company, with a Single application for Name reservation, Incorporation, DIN allotment, Mandatory issue of PAN, TAN, EPFO, ESIC, Profession Tax (Maharashtra), and Opening of Bank Account.

SPICe+ is divided into two parts

1. Part A: Apply for the name reservation of the company in Part A of the form Spice+. it can be used for taking the name approval of the proposed Company and also for filing Company registration in one go.

2. Part B: In Part B of the Form Spice+, apply for the following services.

• Incorporation
• DIN allotment
• Mandatory issue of PAN
• Mandatory issue of TAN
• Mandatory issue of EPFO registration
• Mandatory issue of ESIC registration
• Mandatory issue of Profession Tax registration(Maharashtra)
• Mandatory Opening of Bank Account for the Company and
• Allotment of GSTIN (if so applied for)

You may either choose to submit Part-A to reserve a name first and then submit Part B for incorporation & other services or you can File Part A and B together at one go for incorporating a new company and availing the bouquet of services as above.

Documents required for Company registration in India by Non-Resident Indians (NRI)

The tax liability on dividends received by non-residents (NRI) for Company registration in India?

In the case of dividends paid to non-resident shareholders, taxes are to be deducted at rates in force under Section 195 of the IT Act.

• The Finance Act provides for a withholding tax rate of 20% (plus applicable surcharge and cess) for dividends paid to non-residents.
• However, where the non-resident shareholder is a resident of a jurisdiction with which India has entered into Double Taxation Avoidance Agreement (DTAA), and the non-resident is eligible to benefit from the provisions of such DTAA, the withholding tax rate prescribed in the relevant DTAA for taxing dividend would be applicable.