Liaison office
The liaison office is a vehicle for those foreign entities desirous of having a presence in India. LO is an office established by a foreign body corporate in India to represent the foreign body corporate. This office acts as a Chanel of Communication between the principal place of business or head office and entities in India.
- LO does not undertake any commercial/trading/industrial activity, directly or indirectly.
- All the expenses of LO are to be met by foreign body corporate out of inward remittance.
Permissible Activities for Liaison office in India:
- Representing the parent company / group companies in India.
- Promoting export / import from / to India.
- Promoting technical/ financial collaborations between parent / group companies and India.
- Acting as a communication channel between the parent company and Indian companies.
Eligibility Criteria
- A person resident outside India (PROI);
- Profit making track record during the immediately preceding three financial years ;and
- Net worth USD 50,000 or more.
If PROI is a subsidiary company and fails to satisfy the above-said criteria, its parent company may submit a letter of comfort.
Process Involved
Time Limit for opening of LO
- LO shall be opened within six months from the date of approval letter.
- An extension of six months may be granted by AD category-1 bank for reasons beyond the control of PROI.
- RBI may granted further extension.
Validity Period of LO
- LO may be established for three years from the date of approval;
- The Extension may be granted on an application made before AD category-1 bank, three years from the date of expiry of original approval; and
- No, further extension for entities engaged in construction and development sectors, Non-Banking Finance Companies are permitted to open a Liaison Office for two years only.
Note- LO can be upgraded into Branch Office (BO)
Bank Account
- LO is required to open a bank account in India to receive the remittance from its head office to meet the expenses.
- LO is not permitted to open more than one bank account without the permission of the RBI.
- Bank account to be opened with designated AD category-1 Bank.
Register with the Registrar of Companies
LO must register with the Registrar of Companies as required under the Companies Act, 2013, and shall file all the prescribed documents within 30 days from the opening date of LO.
Permanent Account Number (PAN)
LO shall obtain PAN from the Income Tax Authority.
Annual Activity Certificate
The Annual Activity Certificate (AAC) to be submitted to the designated AD category-1 bank and Director General of Income Tax (International Taxation) shall be submitted within six months from the closure of the Financial Year.
Services offered by us
K2Y India has helped foreign companies in setting up their operations in India. Careful tax planning is required before opening a subsidiary, branch, joint venture, project office or liaison office in India. We can help you in corporate planning and setting up in India. We can help your law firm or company in setting up in India.
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