Residential status of a branch

This query is : Resolved

Share Report Follow Query Ask a Query

Bhavya Haria

Bhavya Haria (Querist)
Follow

27 August 2012 What is the residential Status of an Indian Branch of a Foreign Bank under Income Tax?

S Sivasalapathy

S Sivasalapathy (Expert)
Follow

27 August 2012 U/S 6 of IT act,A company is said to be resident in India in any previous year, if—

(i) it is an Indian company ; or

(ii) during that year, the control and management60 of its affairs60 is situated wholly in India.

Bhavya Haria

Bhavya Haria (Querist)
Follow

29 August 2012 A. It is an Indian Company

Ans : A branch shall not be an Indian Company

B. Control and Management

Ans : The management and affairs shall be wholly controlled from outside India.

Conclusion : Non-Resident.

Am I Correct on the analysis ?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
Follow

22 July 2025 Yes, you are correct in your analysis of the residential status of an Indian branch of a foreign bank under the Income Tax Act, 1961.

Detailed Analysis:
As per Section 6 of the Income Tax Act, the residential status of a company (including a branch) is determined by the following two criteria:

Indian Company: A company that is incorporated in India is treated as an Indian company, and it is automatically considered a resident in India.

However, in the case of a branch of a foreign bank, it is not a separate entity but merely an extension of the parent foreign bank, which is incorporated outside India.

Therefore, a branch of a foreign bank in India is not considered an Indian company.

Control and Management: A company is said to be a resident in India if its control and management are wholly situated in India during the relevant previous year.

In the case of a foreign bank's branch in India, the overall control and management of the parent foreign bank's affairs will typically be located outside India.

The Indian branch of a foreign bank is a part of the foreign entity and does not have the authority to make significant management decisions independently. The key decision-making authority still lies with the parent company outside India.

Conclusion:
Since the branch of a foreign bank is not an Indian company and its control and management of its affairs are not wholly in India (as the decisions are made by the foreign parent), the Indian branch will be considered a non-resident under Indian income tax laws.

Final Residential Status:
The Indian branch of a foreign bank will be treated as a Non-Resident for the purpose of Income Tax under Section 6 of the Income Tax Act.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Join the CA Students WhatsApp Community for ICAI Updates, Trending Courses & Notes!

Similar Resolved Queries

Unanswered Queries

Popular
Recent

Trending Online Classes

Direct Tax Laws & International Taxation May 26,Sept 26 & Jan 27

CA Arvind Tuli

Enroll Now
Audit Fast Track Recorded Batch For May 26,Sept 26 & Jan 27

CA Aarti Lahoti

Enroll Now
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English

CA Bhanwar Borana & CA Shubham Keswani

Enroll Now

view all classess

Meet our CAclubindia PRO Members

John Ravindran Moses

ABHISHEK AGRAWAL

Prashant Kotecha

Sanjay Ratnani

Vinod Patil

Subscribe Now

Residential status of a branch

Similar Resolved Queries

Trending Online Classes

Meet our CAclubindia PRO Members

Quick Links

Browse by Category

Latest Job Openings

Senior Executive

Manager- Finance and Compliance

GST CONSULTANT

GST CONSULTANCY

Accountant

CA Final

Article Assistant

Associate CA