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Liaison Office of Foreign Company in India
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Planning to Start a business in India
Sterling Tax Partners is having team of expert professional C.A., C.P.A, Cost Accountant, C.S., Lawyer that will ensure all legal formalities has been taken care of with complete due diligence for starting a business in India.
Our expert team would help to make the decision for structure (Subsidiary company in India, branch office in India or liaison office in India or join venture in India) that a foreign Company need to choose while starting up the business in India. We are here to make your process smooth and ease your business. Shift all your tension to us.
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Liaison Office of Foreign Company in India
Liaison Office is set up to represent the parent company in India. It can't undertake any business activity in India and cannot earn any income in India. Liaison Office is regulated by RBI Regulations.
- Set up to represent parent company
- Work as a channel of communication
- Cannot undertake any business activity
- Cannot earn any income in India
- All expenses are met by head office
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Requirement for liaison office in India by Foreign Company
- Profit making track record immediately preceding three financial years in home country (foreign Country).
- Net worth should be equal to $50,000 or more.
- No income generating activity to be allowed through liaison office in India.
- Name of liaison office should be similar of Parent Company.
- Permission to open the liaison office initially is granted for three years and extended for future.
Documents required for opening of liaison office in India
Information pertaining to foreign Company
- Board resolution of foreign Company
- Certificate of incorporation of foreign Company duly attested in foreign Country.
- Memorandum & Article of Association of foreign Company duly attested in foreign Country.
- 3 years audited balance sheet
- Net worth certificate
- Banker's report
- Details of shareholding
- Power of attorney
- Certified passport Copy of person signing board resolution as well as of authorized signatory
Information pertaining to Authorised signatory
- Passport size of photo
- Copy of passport
- Business visa with immigration
- Copy of national identity
- Address proof
- Board resolution for appointing the authorized signatory
What we offer in opening of liaison office in India
- Certificate of incorporation
- PAN
- TAN
- Bank Account opening
Process for opening of liaison office in India
Apply for Digital Signature of Authorised signatory:
Our expert team at sterling tax partner will help to apply and get the DSC within 1-2 working after completion of all documentation.
Obtaining the approval of AD Bank:
After the DSC of authorized signatory is obtained, as next step, will seek approval for opening the liaison office in India. Here, our expert team at Sterling Tax Partners help to submit the form FNC to AD Category Bank-1. We have network with many Banks in India, which operates as an AD Category-1 Bank for foreign Companies.
Verification of KYC from Banker of Foreign Company:
As mentioned before, liaison offices can be set up in India, usually with the approval of AD Bank itself if 100% FDI is allowed in the sector. However, approval from RBI will also be required if 100% FDI is not allowed in the sector. Our expert team would help to analyse whether the activity pertains to that sector where 100% FDI is allowed or not.
Registration of Liaison Office with the ROC:
After the approval from RBI or AD Bank our expert team at Sterling Tax Partners help to file the form FC-1 for registration of liaison office with Registrar of Company.
Receive Certificate of Incorporation, PAN Card, Tax Deduction Number & Bank A/c Opening
Upon successful registration by the ROC, the liaison office of the foreign company will receive a Certificate of Incorporation from the ROC, a PAN and a TAN from the Income Tax Department to comply with the tax and TDS related provisions of the Income Tax Act of 1961.
Annual Compliance for opening the Liaison office in India
Our team at Sterling tax partners has much expertise to meet the compliance for the liaison office of foreign Company in India. We assist the liaison office to meet all compliance with quality and timely manners.
Filing of Annual Return to ROC.
This return is due within 60 days of the financial year's end, or by May 31.
Annual Activity Certificate (AAC)
This certificate is due on or before September 30 each year. It's issued by a chartered accountant (CA) and states that the RBI permitted the LO's activities for the financial year.
Foreign Liabilities and Assets (FLA) return
This return is due by July 15 each year if the LO has foreign assets or liabilities. It must be based on the LO's audited or unaudited accounts.
Filing Annual Financial Statements
Annual Financial Statements will have to be filed within 6 months from the date of closing of the Financial Year. These must be audited by a practicing Chartered Accountant.
Filing annual Income Tax Returns
Liaison Office is liable to pay income tax on the income it generates from activities which constitute a “business connection” with its parent company. For this purpose, it is considered as a Foreign Taxpaying entity under the Income Tax Act, 1961. So, it will have to pay Income Tax and file Income Tax Returns before the 31st of July every financial year for the previous financial year.
Frequently Asked Question
A liaison office is a representative office that a foreign Company can set up to to understand the business or market in India.
A Liaison office of a foreign parent company is not treated as a separate and distinct entity in India and for tax purposes, the Indian government taxes such entities with tax rates applicable to a foreign company, viz. 35%, exclusive of surcharges and education cess or secondary and higher education cess, on income generated by conducting activities which constitute a “business connection” with the parent company.
Yes, Liaison Offices can open a non-interest bearing, INR current account in its AD Category-1 bank in India.
Yes, but a prior approval of the RBI will be required.
The liaison or representative office of a foreign company can be opened if the applicant foreign corporation has a track record of profit generation for the past 3 years and it is financially sound.
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