Liaison Office Registration in India

A Liaison office operates as a representative office. Setting up a liaison office in India is the initial stage of exploring and understanding the business and investment type of the country. A Liaison Office can take part in liaison activities like building communication between parties in India and the Head Office in foreign countries.

So the role of such office is limited to acquiring enough information on possible market opportunities in India, providing adequate details of the parent company and its products, rendering enough particulars on the source of supply to the Indian consumers, or vice versa to its vendor.

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What are the procedures to set up a Liaison Office in India?

For all the Foreign companies who are willing to establish a Liaison Office in India, they need to obtain prior approval from the Reserve Bank of India. This whole process may take up to 3 to 4 weeks for processing the application. The life span of this approval will be 3 years, and it can be renewed on expiry. If a body corporate, which is incorporated outside India, wants to open a Liaison Office, it must obtain such permission through an application in Form FNC. This application needs to be supported by-

Certificate of Registration/ Incorporation, or AOA & MOA attested by Indian Notary Public/ Indian Embassy in the country of registration
The latest audited balance sheet of the applicant

What activities can a Liaison Office undertake?

Representing the parent companies in India
Promoting the technical or financial collaborations between the parent company and companies in India
Promoting export or import services from or to India
Acting as the only bridge of communication between the parent company and Indian companies

RBI imposed Eligibility Criteria to sanction a Liaison Office in India

Reserve bank of India has imposed certain criteria to set up a Liaison Office in India. These are-

The parent company must hold a track record of profit-making during the preceding 3 taxation years.
The total net worth of the foreign applicant company has to be equivalent to USD 50,000 or more than that, including Paid-up capital and free reserves.
Every Liaison Office, which is registered with RBI, has to be registered under the Ministry of Corporate Affairs as a corporate entity. The registration of the Liaison Office is meant to establish a foreign company in India. The registrar will assign a Corporate Identity Number (CIN) to these companies.Note: In case, the foreign applicant company fails to satisfy the above-mentioned criteria and is a subsidiary of another company, it can submit a Letter of Comfort from the parent company, given that the parent company meets the eligibility criteria as set by RBI. After a proper checking, AD bank must forward the application to the Reserve Bank along with their comments. Once the application gets approval from RBI, the applicant will be allotted a UIN (Unique Identification Number). After that, they shall obtain PAN (Permanent Account Number) from the Income Tax Authorities for setting up the Liaison Office in India.

Salient features of Liaison Office

The name of the Liaison Office should be given after the name of the parent company
Reserve Bank of India or AD banker will be the governing body for the Liaison Office
This office doesn’t have any kind of ownership; instead, it’s an extension of the existing foreign parent company
Liaison Office is the best for the foreign companies who are looking to build a temporary office in India to liaison the existing business with Indian clients
All the expenses of Liaison Office come from the head office located abroad, so the funds must be credited from the head office account only
Liaison Office in India is not liable to pay tax in India as the Income-tax department doesn’t have any mechanism to check whether the undertaken liaison activities are subjected to pay tax or not

Restrictions on operation of the Liaison Office

Liaison Office is not allowed to undertake any kind of direct or indirect trading, commercial, or industrial activity; so they can’t earn any money in India
A Liaison Office can’t borrow or lend money in India
It cannot hold, acquire, dispose or transfer any immovable property of India without any prior approval of RBI

How can VJM & Associates LLP help you in setting up a Liaison Office in India?

We can assist you through the process of establishing a Liaison Office in India. We can help you in-

Obtaining approval from the Reserve Bank of India
Acquiring CIN for your Liaison Office
Getting your Liaison Office registered with the Registrar of Companies
Maintaining the Financial books of Accounts of your Liaison Office
Doing Annual Audit of Books of accounts
Payroll processing
Reporting of the Liaison Office on an annual basis with the concerned authorities
Getting the Statutory Compliances done within the stipulated time

What people say about us

By taking care of our Internal control policies and procedures, VJM Team have made sure that experience is hassle free.

sachin JainCFO, mahle filter system (i) pvt limited

Very professional approach from VJM Team, they got associated with us late in the financial year but were able to conduct an in depth audit and highlight the areas to be addressed within a short span of time. What gives us confidence is that they are available for consultation on any financial matter and are quick to find and implement the resolution

Shobit BhatnagarGradeup.co

VJM team is a thoroughly professional chartered accountants equipped with all resources and with deep understanding of GST and other contemporary arenas of corporate consultancy. Have interacted with them for various tax and corporate law related matters and found the interaction quite useful.

Pawan LadhaFreecharge

Know more about our complete portfolio of services for foreign companies in India

Business setup in India

The global economic growth has already started its journey of shifting towards developing nations. Being one of the fastest-growing economies in the world, India offers plenty of opportunity to businesses looking to expand their operations in India. A physical existence is what you need to break into India’s developing business sector. However, the right kind of presence can be the make or break.

Branch Office

A foreign company can smoothly operate in India by opening a Branch Office. The parent company must obtain approval from the Reserve Bank of India, and get the registration done with ROC prior to branch office setup. A corporate body formed outside India willing to open their branch office in the country needs to get permission from the Reserve Bank under the FEMA act 1999.

Project Office

Foreign companies looking for a limited presence in India should opt for setting up a project office in the country. It is the ideal method for companies who have the objective of completing a project within a specific time frame. Foreign companies need to get approval from the Reserve Bank of India and register themselves with the RoC if they have a contract to execute a project in India.

Transfer Pricing

Transfer pricing is all about determining the nature, treatment and taxability of intra-group transactions across several geographies. The transaction is put to test by the determination of arm’s length price of the transaction as per the prescribed transfer pricing methodologies.

FEMA Advisiory

If you are looking for a trustworthy partner or a reliable FEMA advisior, we will be the right fit for you. We keep a world-class pool of professional FEMA consultants to provide you with a complete solution, covering almost all areas of FEMA, bookkeeping and accounting tasks, GST returns etc.

Taxation of Expatriates

We are the market leaders to deliver a higher-quality accounting and reporting solution to our clients more quickly and efficiently in an environment of technological change, digital demonstration, could computing, online bookkeeping and GST filing, and increased regulatory changes and scrutinizes.

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