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FAQ's on - Liaison / Branch / Project Offices of foreign entities in India (Updated upto March 26 2015)

Dated:- 31-3-2015 - Q.1. How can foreign companies open Liaison /Branch office in India? Ans. A. With effect from February 1, 2010, foreign companies/entities desirous of setting up of Liaison Office / Branch Office (LO/BO) are required to submit their application in Form FNC along with the documents mentioned therein to Foreign Investment Division, Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai through an Authorised Dealer bank. This form is available at www.rbi.org. .....

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under this category and those from Non - Government Organisations / Non - Profit Organisations / Government Bodies / Departments are considered by the Reserve Bank in consultation with the Ministry of Finance, Government of India. C. The following additional criteria are also considered by the Reserve Bank while sanctioning Liaison/Branch Offices of foreign entities: • Track Record For Branch Office - a profit making track record during the immediately preceding five financial years in the .....

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or its equivalent. D. Permission to set up Liaison offices is initially granted for a period of 3 years and this may be extended from time to time by the Authorised Dealer in whose jurisdiction the office is set up. The Branch / Liaison offices established with the Reserve Bank's approval will be allotted a Unique Identification Number (UIN) (www.rbi.org.in/scripts/Fema.aspx ). The BOs / LOs shall also obtain Permanent Account Number (PAN) from the Income Tax Authorities on setting up the o .....

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from the due date of the Balance Sheet. LOs/BOs are required to furnish copy of the Annual Activity Certificate (AAC) to Director General of Income Tax (International Taxation), Drum Shaped Building, I.P. Estate, New Delhi 110002.Copies of the AACs submitted to the DGIT (International Taxation) should be accompanied by audited financial statements including receipt and payment account. Further, at the time of renewal of permission of LOs by AD banks, they may note to endorse a copy of each such .....

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ittances of foreign exchange from the Head Office outside India. The role of such offices is, therefore, limited to collecting information about possible market opportunities and providing information about the company and its products to the prospective Indian customers. A Liaison Office can undertake the following activities in India: Representing in India the parent company / group compa­nies. Promoting export / import from / to India. Promoting technical/financial collaborations be&sh .....

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anking Operations and Development (DBOD), Reserve Bank of India. Q. 4. What is the procedure for setting up Branch office? Ans. Permission for setting up branch offices is granted by the Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai. Reserve Bank of India considers the track record of the applicant company, existing trade relations with India, the activity of the company proposing to set up office in India as well as the financial position of the company while scruti .....

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/ Import of goods. Rendering professional or consultancy services. Carrying out research work, in areas in which the parent company is engaged. Promoting technical or financial collaborations between Indian companies and parent or overseas group company. Representing the parent company in India and acting as buying / selling agent in India. Rendering services in information technology and devel­opment of software in India. Rendering technical support to the products sup­plied by p .....

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nch Offices are permitted to remit profit outside India? Ans. Branch Offices are permitted to remit outside India profit of the branch net of applicable Indian taxes, on production of the following documents to the satisfaction of the Authorised Dealer through whom the remittance is effected : a. A Certified copy of the audited Balance Sheet and Profit and Loss account for the relevant year; b. A Chartered Accountant s certificate certifying - i. the manner of arriving at the remittable profit i .....

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oval from the sectoral regulator(s) for establishing the BO / LO. b) Auditor s certificate - i) indicating the manner in which the remittable amount has been arrived at and supported by a statement of assets and liabilities of the applicant, and indicating the manner of disposal of assets; ii) confirming that all liabilities in India including arrears of gratuity and other benefits to employees, etc., of the Office have been either fully met or adequately provided for; and iii) confirming that n .....

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up of the Office in India. f) Any other document/s, specified by the Reserve Bank while granting approval. Q.8. What is the procedure for setting up Project Office? Ans. The Reserve Bank has granted general permission to foreign companies to establish Project Offices in India, provided they have secured a contract from an Indian company to execute a project in India, and the project is funded directly by inward remittance from abroad; or the project is funded by a bilateral or multilateral In .....

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India, Central Office, Mumbai for approval. Q.9. What are the bank accounts permitted to a Project Office? Ans. AD Category - I banks can open non-interest bearing Foreign Currency Account for Project Offices in India subject to the following: The Project Office has been established in India, with the general / specific permission of Reserve Bank, having the requisite approval from the concerned Project Sanctioning Authority concerned. The contract, under which the project has been sanctioned, .....

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onal financing agency. The responsibility of ensuring that only the approved debits and credits are allowed in the Foreign Currency Account shall rest solely with the branch concerned of the AD. Further, the Accounts shall be subject to 100 per cent scrutiny by the Concurrent Auditor of the respective AD banks. The Foreign Currency accounts have to be closed at the completion of the Project. Q.10. What are the general conditions applicable to Liaison / Branch / Project Office of foreign entiti .....

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fices in India. (iii) Entities from Nepal are allowed to establish only Liaison Offices in India. (iv) Branch/Project Offices of a foreign entity, excluding a Liaison Office are permitted to acquire property for their own use and to carry out permitted/incidental activities but not for leasing or renting out the property. However, entities from Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran, Bhutan or China are not allowed to acquire immovable property in India even for a Branch Office. Thes .....

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