TaxTMI 
TaxTMI 
TaxTMI 
Master Circular on Establishment of Liaison / Branch / Project Offices in India by Foreign Entities.
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....Branch Offices (D) Application for Undertaking Additional Activities or Additional Branch / Liaison Offices (E) Annual Activity Certificates to be Submitted by Branch/Liaison Offices (F) Closure of Branch/Liaison Offices (G) Project Office (H) Other General Conditions Applicable to Branch / Liaison / Project Offices of Foreign Entities in India Annex 1 FNC Annex 2 Format of the Letter of Comfort Annex 3 Appendix List of Notifications/Circulars consolidated in this Master Circular Establishment of Branch/Liaison/Project Offices in India by Foreign Entities (A) GENERAL A body corporate incorporated outside India (including a firm or other association of individuals), desirous of opening a Liaison Office (LO) / Branch Office (BO) in India have to obtain permission from the Reserve Bank under provisions of FEMA 1999. The applications from such entities in Form FNC (Annex-1) will be considered by Reserve Bank under two routes: * Reserve Bank Route -- Where principal business of the foreign entity falls under sectors where 100 per cent Foreign Direct Investment (FDI) is permissible under the automatic route. * Government Route -- Where principal business of the fo....
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....ished 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 offices in India. (B) LIAISON OFFICE b.1 Permissible Activities for a Liaison Office A Liaison Office (also known as Representative Office) can undertake only liaison activities, i.e. it can act as a channel of communication between Head Office abroad and parties in India. It is not allowed to undertake any business activity in India and cannot earn any income in India. Expenses of such offices are to be met entirely through inward remittances 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. Permission to set up such offices is initially granted for a period of 3 years and this may be extended from time to time by an AD Category I bank. A Liaison Office can undertake the following activities in India: * i. Representing in Indi....
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....t Foreign Direct Investment policy. (C) BRANCH OFFICES c.1 Permissible Activities a).Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to set up Branch Offices in India with specific approval of the Reserve Bank. Such Branch Offices are permitted to represent the parent / group companies and undertake the following activities in India: * i. Export / Import of goods.1 * ii. Rendering professional or consultancy services. * iii. Carrying out research work, in areas in which the parent company is engaged. * iv. Promoting technical or financial collaborations between Indian companies and parent or overseas group company. * v. Representing the parent company in India and acting as buying / selling agent in India. * vi. Rendering services in information technology and devel­opment of software in India. * vii. Rendering technical support to the products sup­plied by parent/group companies. * Foreign airline / shipping company. Normally, the Branch Office should be engaged in the activity in which the parent company is engaged. b) Retail trading activities of any nature is not allowed for a Branch Office in Indi....
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....its Offices in India as the Nodal Office, which will coordinate the activities of all Offices in India. (E) Annual Activity Certificates to be Submitted by Branch/Liaison Offices Branch Offices / Liaison Offices have to file Annual Activity Certificates (AAC) (Annex 3) from Chartered Accountants, at the end of March 31, along with the audited Balance Sheet on or before September 30 of that year. In case the annual accounts of the LO/ BO are finalized with reference to a date other than March 31, the AAC along with the audited Balance Sheet may be submitted within six months from the due date of the Balance Sheet to the designated AD Category I bank and a copy to the Directorate General of Income Tax (International Taxation), New Delhi. The certificates are to be filed by the following offices as applicable: * In case of a sole BO/LO, by the BO/LO concerned; * In case of multiple BO/LO, a combined Annual Activity Certificate in respect of all Offices in India by the Nodal Office of the BO/LOs. The designated AD Category - I bank shall scrutinize the Annual Activity Certificate and ensure that the activities undertaken by the BO/LO are being carried out in accordance with the....
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....h a declaration stating that all the necessary documents submitted by the BO / LO have been scrutinized and found to be in order. If the documents are not found in order or cases are not covered under delegated powers, the AD Category - I bank may forward the application to the Reserve Bank, with their observations, for necessary action. All the documents relating to the BO / LO operations may be retained by the AD Category - I bank for verification by the internal auditors of the AD / inspecting officers of the Reserve Bank. (G) PROJECT OFFICE g.1 General Permission 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 * i. the project is funded directly by inward remittance from abroad; or * ii. the project is funded by a bilateral or multilateral International Financing Agency; or * iii. the project has been cleared by an appropriate authority; or * iv. a company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank in India for the project. However, if the above cri....
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.... (i) The foreign company establishing a Project Office in India is to furnish report through the concerned AD branch, to the concerned Regional Office of Reserve Bank of India under whose jurisdiction the Project Office is set up, incorporating the following details. * Name and address of the Foreign Company, * Reference Number and date of letter awarding the contract referred to in clause (ii) of Regulation 5 of Notification No. FEMA 22/2000-RB dated May 3, 2000, * Particulars of the authority awarding the projects / contract, * The total amount of contract, * Address / e-mail address / telephone number / fax number of the Project Office, * Tenure of Project Office, * Brief details of the Project undertaken, * AD branch with whom the account has been opened and the foreign currency in which the account is opened, (i) An undertaking to the effect that the Project Office is eligible to avail of the General Permission under Regulation 5(ii) to RBI Notification No.22 / 2000 - RB dated May 3, 2000 read with Notification No. FEMA 95 dated July 2, 2003 showing the reason thereof. This Report shall be forwarded through the AD branch to the Regional Office concerned of th....
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....es not include any profit on revaluation of the assets of the branch. (vii) Authorised Dealers can allow term deposit account for a period not exceeding 6 months in favor of a branch/office of a person resident outside India provided the bank is satisfied that the term deposit is out of temporary surplus funds and the branch / office furnishes an undertaking that the maturity proceeds of the term deposit will be utilised for their business in India within 3 months of maturity. However, such facility may not be extended to shipping/airline companies. (viii) Regularisation of LO / BO established during pre-FEMA period Under the provisions of FEMA 1999 foreign entities are permitted to establish a branch or liaison office in India with permission of the Reserve Bank of India. Liaison / Branch Offices established in pre FEMA period without approval of Reserve Bank of India and those that have not been allotted a Unique Identification Number by the Reserve Bank of India may approach the Reserve Bank through their ADs to regularise the offices under FEMA 1999. Annex 1 FNC Application for Establishment of Branch/Liaison Office in India A. General Instructions to Applicants: The ap....
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....k / designated AD Category - I bank from time to time. v) We, hereby commit that we are agreeable to a report / opinion sought from our bankers abroad by the Government of India /Reserve Bank. vi) We understand that the approval, if granted, is from FEMA angle only. Any other approvals / clearances, statutory or otherwise, required from any other Government Authority/ Department/ Ministry will be obtained before commencement of operations in India. vii) We have no objection to the Reserve Bank placing the details of approval in public domain. viii) We enclose the following documents: 1. Copy of the Certificate of Incorporation / Registration attested by the Notary Public in the country of registration [If the original Certificate is in a language other than in English, the same may be translated into English and notarized as above and cross verified/attested by the Indian Embassy/ Consulate in the home country]. 2. Latest Audited Balance sheet of the applicant company. [If the applicants' home country laws/regulations do not insist on auditing of accounts, an Account Statement certified by a Certified Public Accountant (CPA) or any Registered Accounts Practitioner by any na....