Thinking of opening a Liaison Office in India? Here what I found out

Hey everyone,

I’ve been reading about Liaison Offices (LO) in India for foreign companies. It’s basically a “test the waters” setup, so I’m sharing what I learned.

What it can do:

• Represent the parent company in India
• Promote import/export
• Promote technical or financial collaborations
• Act as a communication channel between the parent company and Indian companies

What it can’t do:

• Any commercial, trading, or industrial activity
• Earn income in India
• Borrow or lend money

All expenses have to be met through funds sent from the head office abroad.

Key points on setup:

• Prior approval from the RBI is needed, applied for through an Authorised Dealer bank. It can take around 3-4 weeks.
• Approval is usually for 3 years and can be renewed.
• The parent company generally needs a profit-making record for the last 3 financial years and a net worth of at least USD 50,000.
• After approval, you get a UIN from the RBI. Then you register with the MCA for a CIN, and after that get a PAN and TAN.

Ongoing compliance (easy to miss):

• Annual Activity Certificate from a Chartered Accountant, along with the audited balance sheet
• Form 49C filing
• A report to the state police (DGP) within 5 working days of becoming functional
• Tax withholding and GST (reverse charge), if applicable
• Labour law compliance, if you have employees

Has anyone here set up an LO? How long did the RBI approval actually take for you, and did you later convert it into a subsidiary?

If you need professional help with setup, compliance, or closure of a Liaison Office, you can check out Prakash K Prakash, Chartered Accountants.

Visit this link may help you - https://www.pkpconsult.com/liasion-offices.html