Selling into India and being present in India are different things in law, and the whole question is which side of that line your model sits on. Shipping goods to an Indian buyer who imports them, or licensing software to an Indian company that pays you abroad, is trade. Having a person, an office, a server-side offering aimed at Indian consumers or a local agent who signs deals is presence. Presence triggers three separate regimes, and each has its own filing, so it is easier to answer by model than by statute.
How are you selling?
- Goods or services sold from abroad to Indian businesses, invoiced and paid outside India, with no staff, office or agent here. No Companies Act registration. GST and customs fall on the Indian importer or recipient. Watch the tax permanent-establishment point below if any employee starts spending time here.
- Online sales or subscriptions to Indian customers, including individuals, from servers anywhere. Read Section 2(42) and the "electronic mode" rule below, and register under GST if you supply online information and database access or retrieval services to unregistered persons in India.
- A person or office in India that promotes, supports, negotiates or signs. You are a foreign company with a place of business. FC-1 within thirty days, FEMA approval for the office through a bank, and GST registration if that office makes taxable supplies.
- A real operation: hiring, invoicing, holding stock or contracts in India. Incorporate an Indian subsidiary under the foreign investment rules and stop being a foreign company for that business. Our note on choosing a business structure covers the Indian entity options.
When does the Companies Act call us a foreign company?
Section 2(42) of the Companies Act, 2013 defines a foreign company as a company or body corporate incorporated outside India which has a place of business in India, whether by itself or through an agent, physically or through electronic mode, and conducts any business activity in India in any other manner. Both limbs must be met. The phrase that reaches online sellers is "electronic mode", and Rule 2(1)(c) of the Companies (Registration of Foreign Companies) Rules, 2014 defines it, for the purposes of Section 2(42), as carrying out electronically based transactions whether the main server is installed in India or not, including business to business and business to consumer transactions, web-based marketing, database services, cloud computing and related data communication services. Read literally, a subscription business with Indian customers can satisfy the first limb from a server in another country. The second limb, conducting business activity in India, is where the argument lives. The exposure for getting it wrong is set out in Section 393: non-compliance does not invalidate your contracts, but the company cannot sue, claim a set-off or counterclaim on them in India until it has complied, and Section 392 adds penalties on the company and its officers.
What does registration as a foreign company involve?
- Form FC-1 filed with the Registrar within thirty days of establishing the place of business (Section 380(1) and Rule 3(3)), with a certified copy and English translation of the charter, the registered office address, the list of directors and secretary, the name and address of a person resident in India authorised to accept service, the address of the principal place of business in India, and a declaration that no director or the authorised representative has been convicted or debarred
- An attested copy of the Reserve Bank's approval under FEMA for the office, or a declaration by the authorised representative that no approval is required (Rule 3(3))
- Form FC-2 within thirty days of any alteration in those particulars (Section 380(3) and Rule 3(4))
- Financial statements of the Indian business each year in the Schedule III form, audited by an Indian chartered accountant, with the parent's consolidated accounts, related-party and repatriation statements, filed in Form FC-3 with the list of places of business (Section 381, Rules 4 to 6)
- An annual return in Form FC-4 within sixty days of the end of the financial year (Section 384(2), Rule 7)
- The company's name and country of incorporation displayed outside every office and on all letters and notices, with a statement that members' liability is limited (Section 382)
Section 379 adds a further layer only where fifty per cent or more of the foreign company's paid-up capital is held by Indian citizens or Indian companies: such a company must comply with the prescribed provisions as if it were incorporated in India. Section 383 makes service on the person named in FC-1 good service on the company.
Which FEMA route do we use for an office?
Establishment of a branch, liaison or project office is governed by Notification FEMA 22(R)/2016-RB and the Reserve Bank's Master Direction on the subject, and applications go through an Authorised Dealer Category-I bank in Form FNC rather than to the Reserve Bank directly, except for applicants from a short list of countries and sectors. A liaison office may only represent the parent, promote exports and imports, promote technical or financial collaboration and act as a communication channel, and it cannot earn income in India. The Master Direction asks for a profit-making track record of three years and a net worth of not less than USD 50,000 for a liaison office, and five years and USD 100,000 for a branch office. A branch office may export and import goods, render consultancy services, provide IT services and act as buying or selling agent for the parent. Liaison office approvals generally run for three years. That approval is the document Rule 3(3) wants attached to FC-1. A subsidiary, by contrast, is an Indian company that receives foreign investment under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 within the sectoral caps and entry routes, and files its own returns as an Indian company.
Do we need GST registration if we have no office?
Possibly, and this regime catches overseas sellers most often. Section 2(77) of the Central Goods and Services Tax Act, 2017 defines a non-resident taxable person as one who occasionally undertakes transactions involving supply of goods or services in India but has no fixed place of business or residence in India. Section 24 lists persons who must register irrespective of turnover, and it includes non-resident taxable persons making taxable supply (clause (v)) and every person supplying online information and database access or retrieval services from a place outside India to a person in India other than a registered person (clause (xi)). Section 2(17) of the Integrated Goods and Services Tax Act, 2017 defines those services: delivery mediated by information technology over the internet, essentially automated with minimal human intervention, and includes cloud services, software and e-books supplied over networks, data storage and online gaming. A non-resident taxable person must apply at least five days before commencing business, under the proviso to Section 25(1). The rates are the rates in force and belong with your tax adviser. Our guide to GST registration covers the documents.
What is the permanent establishment risk everyone mentions?
It is the risk that your Indian activity makes your foreign profits taxable in India, under the Income-tax Act, 2025 and the tax treaty between India and your home country. The usual triggers are a fixed place through which business is carried on, a dependent agent in India who habitually concludes contracts or plays the principal role in concluding them, and employees who spend substantial time here. It is stated here as a risk, not a rule, because the analysis turns on the treaty text and on facts such as who signs, where, and on whose authority. Take advice on it before the first hire.
What I tell overseas founders
Decide what India is for. If it is a market, sell from abroad, keep contracts and payment offshore, register for GST where the law requires it, and keep staff visits short and documented. If it is an operation, form the subsidiary and stop pretending the sales manager in Bengaluru is a visitor. The expensive middle is the undocumented agent who has been closing deals for two years on a foreign company's letterhead, which the Registrar, the tax officer and the customer who refuses to pay all discover at the same time. The registration of an Indian entity takes weeks, and Section 393 is a reason to do it before the first dispute.