How the options compare
| Structure | Earn revenue? | Tax | Typical time |
|---|---|---|---|
| Employer of record | No | Payroll taxes only; watch PE risk | 1–2 weeks |
| Liaison office | No | No income; annual statements | Bank / RBI processing |
| Branch / project office | Yes (permitted activities) | 35% + surcharge and cess | Bank / RBI processing |
| Subsidiary | Yes | 22% base option (~25.17%) | 1–2 months incl. bank and capital |
| LLP | Yes | 30% + surcharge and cess | Similar to a subsidiary |
Details: liaison, branch or project office · hiring without an entity · doing business in India.
Frequently asked questions
Which is better for a foreign company in India: a branch or a subsidiary?
Usually a subsidiary: it is taxed at a lower rate (22% base option versus 35% for a branch), limits the parent's liability and can do any business allowed under FDI rules. A branch suits companies that must operate as the same legal entity.
Can a liaison office in India earn income?
No. A liaison office can only act as a communication channel — representing the parent, researching the market and promoting collaboration. Its expenses are funded from abroad.
Is an employer of record a substitute for an Indian entity?
For a few hires while you test the market, yes. It does not let you invoice Indian customers, and if staff conclude contracts for you it can create permanent-establishment risk.