Nexonova Engineering Corp, a foreign company, operates a Branch Office in Pune. During the financial year ending 31st March 2026, the Branch Office earned significant profits from its Indian and overseas clients. The Hea

CS Executive · Setting Up of Business, Industrial and Labour Laws · PYQS · June 2026
Nexonova Engineering Corp, a foreign company, operates a Branch Office in Pune. During the financial year ending 31st March 2026, the Branch Office earned significant profits from its Indian and overseas clients. The Head Office, located in Zurich, now intends to remit 50% of the profit earned in India to its parent company abroad. Before initiating the remittance, the Branch Office wants to ensure full compliance with Indian foreign exchange regulations. Explain the compliances that the Indian Branch Office must complete before remitting the surplus profit to its foreign Head Office.

Answer & Explanation:

Remittances of profit or surplus earned or generated in India, by a Branch Office of a foreign company is permitted, subject to fulfilment of the following conditions: Remittance amount is permitted subject to net of taxes. Following documents to be submitted with AD Bank: Certified copy of audited balance sheet and profit and loss account for the relevant year. Chartered Accountant certificate certifying: the manner of arriving remittable profits; that the remittable profit has been earned by undertaking permitted activities; that the profits do not include any profit on revaluation of assets of the branch. Once these conditions are satisfied, the Branch Office may remit the surplus profit to its foreign Head Office.

Topics: Foreign Exchange Management Act (FEMA)

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