Doing Business in India: The Complete Guide for UK Companies

UK companies entering India can use the India-UK Double Taxation Avoidance Agreement (DTAA) to reduce tax leakage and optimize withholding rates. This page walks through the full journey — entity choice, incorporation, FEMA compliance, and claiming your DTAA treaty rate — with links to the full depth on each step below.

Our regulatory compliance practice handles FEMA and RBI filings for our foreign-owned subsidiary clients — including the DTAA documentation UK entities need to claim treaty rates.

Choosing a Structure: Subsidiary or Branch Office?

Most UK companies planning to actually sell into the Indian market go the wholly-owned subsidiary (Private Limited Company) route — full commercial flexibility, liability limited to the subsidiary's own assets, and the automatic FDI route for most sectors, typically clearing in 4-6 weeks against 8-12 weeks under the Government Route. A branch office is legally an extension of the UK parent, requires specific RBI approval before commencing operations, and is taxed as a foreign company's permanent establishment — roughly 36-38% effective versus a subsidiary's ~25.17% concessional domestic rate, with PE profit attribution a recurring point of dispute with Indian tax authorities.

See the full subsidiary vs. branch office comparison for the complete tax and timeline breakdown.

Incorporating From the UK: What Actually Slows Things Down

Incorporation follows the standard Companies Act, 2013 process — DSC and DIN for the proposed directors, name reservation, the integrated SPICe+ filing, and the Certificate of Incorporation. The UK-specific bottleneck is FCDO apostille: the UK parent's certificate of incorporation, board resolution, and any power of attorney need FCDO (Foreign, Commonwealth & Development Office) apostille before Indian authorities will accept them, and that process runs on UK turnaround times independent of anything happening on the Indian side. Starting the apostille process in parallel with, not after, Indian name reservation is what actually compresses the timeline.

See our step-by-step incorporation guide for the full process, or our sitewide company registration guide for the general mechanics.

Claiming Your India-UK DTAA Treaty Rate

The India-UK DTAA caps withholding well below India's 20% domestic rate: 10% on dividends generally (15% for certain property-income distributions), 10% on interest paid to a bank/financial institution (15% otherwise), and 15% on royalties and fees for technical services (10% for equipment royalties). None of that applies automatically — a valid Tax Residency Certificate (TRC) from HMRC is mandatory before the Indian payer can apply the treaty rate instead of the domestic one, alongside a Form 10F self-declaration. The most common way UK companies lose the treaty benefit isn't eligibility, it's timing: if the TRC isn't in place before a payment is processed, the Indian payer defaults to the higher domestic rate and reclaiming the difference afterward is a separate, slower process.

Full rate table and TRC/Form 10F detail: India-UK DTAA & withholding rates.

Ongoing FEMA and RBI Compliance

Once the subsidiary receives FDI from the UK parent, three RBI filings become recurring: Form FC-GPR reports share allotment within 30 days of the investment, Form FC-TRS reports any later transfer between resident and non-resident, and the annual FLA return is a standing yearly obligation regardless of whether any transaction occurred — the filing most foreign-owned subsidiaries forget once initial setup is done. FEMA compliance and DTAA treaty benefits are handled by different authorities (RBI vs. Indian tax authorities) but depend on the same underlying paperwork discipline — a subsidiary with clean FEMA filing history has an easier time when the UK parent later needs a TRC cross-check. Full detail: FEMA compliance for UK companies.

Cost and Timeline: What Actually Drives It

Real drivers: entity structure (subsidiary vs. branch carry different registration, audit, and compliance costs), sector and FDI route, the number of UK-based directors needing FCDO apostille (each one adds time more than cost), and whether the engagement is incorporation-only or includes ongoing accounting, payroll, tax, and FEMA/DTAA compliance. For a standard automatic-route subsidiary, the FCDO apostille step is typically the pacing item, not the Indian filing. See our full cost and timeline breakdown.

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