/ Foreign Clients · Entity Comparison · Updated 2026-10-13
Branch vs Liaison vs WOS, which India entity fits.
Foreign company evaluating India entry has five legal options. Each has different RBI approval, permitted activities, tax position, FDI treatment, and closure complexity. The right choice depends on scope + duration + revenue model + risk appetite. For 90% of companies, WOS Pvt Ltd is the answer. For the 10% exceptions, here's the detailed comparison.
DC
Written by CA Durgesh Chavda
Chartered Accountant (ICAI) · Founder, Bharat Quantum Prospera · US incorporation, India-US DTAA, FEMA ODI, NRI taxation, cross-border structuring · LinkedIn
/ The five options at a glance
Comparison table.
| Feature | WOS Pvt Ltd | Branch Office | Liaison Office | Project Office | LLP |
|---|---|---|---|---|---|
| Legal status | Separate entity | Extension of parent | Rep office only | Time-bound | Separate entity |
| Can invoice? | Yes | Yes (narrow) | NO | Project-specific | Yes |
| RBI prior approval | No (automatic FDI) | YES | YES | YES | No (automatic in specific sectors) |
| FDI permitted | Most sectors 100% | N/A (not FDI) | N/A | N/A | Limited |
| Tax rate | 25% / 22% (115BAA) | 40%+ (branch tax) | No tax (no income) | 40%+ branch rate | 30%+ (slab/alternate) |
| Resident director | YES (min 1) | No (authorised rep) | No (authorised rep) | No | YES (1 designated partner) |
| Repatriation | Dividend / royalty / buyback | Remittance of profits (post tax) | No profits (reimbursement) | Project surplus | Distribution to partners |
| Closure complexity | Medium | High (RBI approval) | Simpler (RBI approval) | Project-end | Medium |
/ When each entity makes sense
Decision scenarios.
WOS Pvt Ltd — the default (90% of foreign entrants):
- Want to invoice Indian customers.
- Will hire Indian employees for operational roles.
- Long-term India plan (3+ years).
- Need brand / IP / data residency presence.
- Want flexibility in exit (M&A, IPO, buyback).
Branch Office:
- Narrow operational scope (export/import, consultancy, R&D, agent).
- Parent prefers direct accountability (branch's acts bind parent legally).
- Sector where branch form is traditional (banks, insurance, airlines).
- Short-medium term presence; parent OK with branch tax rate (~40% vs 25% WOS).
Liaison Office:
- Exploratory market presence; no revenue plan for next 2-3 years.
- Market research, representation, communication with Indian customers.
- Expenses funded by parent remittance (not from local income).
- Must upgrade to WOS or Branch once commercial activity begins.
Project Office:
- Specific project with Indian client (typically government infrastructure, long-duration construction).
- Project duration generally < 2-3 years.
- Automatically closes at project completion.
LLP:
- Rare for foreign parents.
- FDI permitted only in automatic-route sectors (not all).
- Smaller / professional services setup where limited liability + pass-through tax desired.
/ Branch Office specifics
Setup + operation.
Branch Office setup under FEMA:
- RBI prior approval via Form FNC filed through AD-I category bank.
- Timeline: 2-4 months typical approval cycle.
- Permitted activities (specified in RBI Master Direction):
- — Export/import of goods.
- — Rendering professional/consultancy services.
- — R&D activities.
- — Promoting technical / financial collaboration between Indian / foreign companies.
- — Representation as buying/selling agent in India.
- — IT and software services.
- — Technical support services.
- — Foreign airline/shipping company agency.
- Tax: 40% + surcharge + cess (branch of foreign company) = ~43.68% effective. Materially higher than WOS 25%.
- No separate legal entity — branch's acts legally bind foreign parent.
- Annual filings: audit, Income Tax, Form 29B (if MAT applicable), FLA Return.
/ Why most foreign companies choose WOS
The economics.
Over 95% of foreign-origin new Indian entities in 2024-25 are WOS Pvt Ltd. Reasons:
- Lower tax: 25% (standard) or 22% (Section 115BAA) — vs 40%+ for Branch.
- No RBI prior approval: automatic FDI route for most sectors → 30-45 day setup vs 2-4 months for Branch.
- Operational flexibility: can enter any lawful business, hire employees, sign long-term customer contracts, raise local debt, IPO in India later.
- Exit flexibility: sell shares to Indian / foreign buyer, buyback, voluntary winding up — all simpler than Branch closure.
- Liability shield: WOS liability stays with WOS; doesn't automatically extend to foreign parent.
- Lower post-closure overhead: WOS is a standalone entity; closure doesn't trigger foreign-parent tax issues.
Exceptions where Branch/Liaison still make sense: specific regulated sectors, narrow commercial scope, short-term exploratory presence, or specific tax-treaty optimisation.
Last updated: 2026-10-13.
/ Ready when you are
Comparing India entity options for your foreign company?
90% of foreign entrants choose WOS Pvt Ltd (25% tax, 30-45 day setup, no RBI prior approval). For the 10% that fit Branch / Liaison / Project / LLP, we scope the right route and execute end-to-end.
FAQ
Common questions, answered.
Why would a foreign company choose Branch Office instead of WOS?
Narrow permitted scope aligns with parent's needs (consultancy, R&D, buying/selling agent, foreign airline/shipping agency). Parent prefers direct accountability (branch's acts bind parent). Some regulated sectors (banks, airlines, insurance) traditionally use branch form. However, Branch has higher tax rate (~43.7% effective vs 25% WOS) and RBI prior approval (2-4 months) - most foreign entrants prefer WOS.
What's the difference between Branch and Liaison Office?
Branch Office can conduct commercial activity (invoice Indian customers for permitted activities, generate revenue). Liaison Office cannot - purely representational (market research, communication, promotion). Liaison's expenses funded by parent remittance; no local income. Both require RBI prior approval. Liaison is typically precursor to upgrading to Branch or WOS once commercial activity planned.
Can a foreign company open an LLP in India?
Yes - with restrictions. FDI into LLP permitted via automatic route in sectors where 100% FDI is allowed without any performance-linked conditions. Most IT / SaaS / services sectors qualify. Not permitted in sectors with FDI conditions (defence, insurance, retail trading). For foreign-parent entrants with pure services business, LLP can be an alternative to Pvt Ltd WOS - but rare in practice.
Which entity has the lowest tax rate for a foreign company in India?
WOS Pvt Ltd under Section 115BAA: 22% + 10% surcharge + 4% cess = 25.17% effective. Branch Office of foreign company: 40% + 5% surcharge + 4% cess = 43.68% effective. LLP: 30% + surcharge + cess = ~34.94% effective (plus 30% alternate minimum tax on adjusted total income). WOS Pvt Ltd is materially the most tax-efficient.
How long does Branch Office setup take?
2-4 months typical: Form FNC filing to AD-I bank (1 month compilation of parent docs + apostille), RBI review + approval (1-3 months). Add 1-2 months for bank account opening + PAN + GST post-approval. End-to-end 3-6 months. Compares with 30-45 days for WOS - a key reason WOS is preferred when parent flexibility is on timeline.
Does BQP handle all five entity structures for foreign companies?
Yes - WOS Pvt Ltd (default, 90% of our foreign-client work), Branch Office (RBI Form FNC coordination + ongoing compliance), Liaison Office (FNC filing + annual reporting), Project Office (specific project + closure), LLP (where appropriate). Structure recommendation + end-to-end execution + annual compliance under one engagement. WhatsApp +91 78018 87130.
Related reading