One of the simplest ways to establish your presence in India is by setting up liaison offices and branch offices with permission from the Reserve Bank of India (RBI). These structures are among the most popular choices for our clients who are entering the Indian market for the first time and want to set up a company in India. They are preferred for their ease of establishment and operation, making them ideal for companies looking to 'explore' the Indian market.
A Liaison Office (LO) is a representative office established primarily to investigate and comprehend the business and investment climate. A Liaison Office also known as a Representative Office can only conduct certain operations, that is, operate as a communication conduit between the Head Office overseas and the Parties in India. As a result, the purpose of such offices is limited to gathering information about potential market prospects, and sources of supply, and presenting information about the parent firm and its goods to prospective Indian consumers or vice versa. Expenses for such offices are to be covered fully by inbound remittances from the Head Office outside of India.
If you are in the same circumstance, KDP is the appropriate solution for all of your problems related to setting up a liaison office or branch office in India because we are one of the most prestigious business consulting services, and all of our employees are highly skilled and capable of providing value-added services to register a company in India. As a reputable FEMA Consultant, we understand our client's diverse needs and can help foster connections between parent companies and Indian businesses. If you'd like to learn more, feel free to contact us.
Setting up a Liaison Office in India involves a systematic process with key steps that foreign companies must follow. First, obtaining prior permission from the Reserve Bank of India (RBI) is essential. Then, the company must select a suitable office location and appoint an Authorized Representative who will liaise with Indian authorities. Detailed documentation, including a letter of intent from the parent company, financial statements, and a business plan, should be submitted to the RBI for review. Once approved, the Liaison Office can be established, and the RBI will issue a unique identification number. Compliance with annual reporting requirements and adhering to the stipulated scope of activities are crucial for the smooth functioning of the Liaison Office in India.
Read MoreDrawing from our experience in assisting foreign companies with setting up a liaison office in India, we've compiled a set of frequently asked questions (FAQs) that address various aspects. These include inquiries about the process of opening Liaison/Branch offices, permissible activities for such offices, eligibility of Foreign Insurance Companies/Banks to set up Liaison Offices, the procedure for establishing Branch Offices, allowed activities for Branch Offices, and more.
Read MoreThis document aims to provide an overview of several essential registrations needed under Income Tax, FEMA, and the Companies Act to Set up a liaison office in India. This includes registrations necessary for Liaison Offices (LO) and Branch Offices (BO) under different laws, Value Added Tax (VAT), and Profession Tax (PT) obligations. It also covers the filing of forms and declarations with the Reserve Bank of India (RBI) as mandated by the Foreign Exchange Management Act (FEMA).
Read MoreA PAN (Permanent Account Number) is a distinct 10-character alphanumeric code allocated to every taxpayer in India by the Income Tax Department. It is mandatory for most financial dealings within India, as well as for enrollment with various government bodies. Unique application forms exist for residents and non-residents, with distinct document requirements for each category. Document specifications also vary based on the entity's status, such as trusts, partnership firms, limited liability companies, or individuals.
Read MoreThe Indian Income Tax Act specifies certain payments where the person making the payment needs to deduct and send the tax (TDS) on behalf of the person receiving the payment. It's important to include the Tax Deduction and Collection Account Number (TAN) whenever you submit TDS/TCS returns, payment challans, or issue certificates. If you don't follow the rules for applying for a TAN or other requirements mentioned in this section, there are penalties outlined in The Income Tax Act.
Read MoreThis phase entails adhering to banking regulations to initiate the process of opening a bank account in the name of the Liaison Office/Branch Office. All registered LO/BO entities in India must establish a bank account with a financial institution and deposit funds as stipulated by the Reserve Bank of India (RBI).
Read MoreAll entities engaged in importing goods into India or exporting goods out of India are obligated to obtain an Import Export Code (IEC). The IEC application process entails submitting necessary forms and documents to the Directorate General of Foreign Trade (DGFT).
Read MoreLiaison Office have fundamental duties that they must fulfill. These include abiding by the regulations outlined in the Companies Act, maintaining financial transparency by keeping accurate records and undergoing audits, paying taxes, practicing corporate governance, ensuring the rights of their employees, and following regulations related to environmental protection, consumer rights, data privacy, and specific rules for their industry. All of these responsibilities work together to ensure that these companies operate ethically and sustainably.
Read MoreAfter the Liaison office is set up, the next steps consist of regular tasks. These tasks include maintaining accounting records and meeting legal requirements, submitting quarterly returns by the Income Tax Act, filing returns for Service Tax/VAT, and managing payroll services.
Read MoreAn audit is a legally required review of a company's financial records to ensure accuracy. It examines data like bank balances, transactions, and bookkeeping. A concise report is then submitted annually to the Income Tax Authorities. Indian firms must also electronically file an Annual Return with the Registrar of Companies, sharing necessary information. Additionally, they should submit forms/returns under the Foreign Exchange Management Act (FEMA).
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