Liaison Office & Branch Office Registration in India

Liaison Office & Branch Office Registration in India

Liaison Office & Branch Office Registration in India

Expanding a foreign business into India requires choosing the right entry structure. The most common options are Liaison Offices (LO), Branch Offices (BO), and Project Offices (PO), each governed by RBI regulations and FEMA compliance requirements.

We help foreign companies establish a compliant presence in India through Liaison Offices, Branch Offices, and Project Offices. Our team manages the entire process end-to-end—from RBI approval and ROC registration to ongoing regulatory compliance—ensuring a smooth and hassle-free setup.

1. Regulatory Framework

Foreign entities setting up offices in India are governed by:

  • Reserve Bank of India (RBI)
  • Foreign Exchange Management Act, 1999 (FEMA)
  • Ministry of Finance, Government of India

👉 Applications are not submitted directly to RBI. They must be routed through an Authorized Dealer (AD Category-I Bank).

2. Application Procedure (Form FNC)

To establish a Liaison Office or Branch Office in India, foreign companies must:

Step-by-Step Process:

  • Submit Form FNC via an AD Category-I bank
  • Attach required documents:
    • Certificate of Incorporation
    • Memorandum & Articles of Association
    • Audited financial statements (last 3–5 years)
    • Board Resolution
    • Banker’s Report

Approval Routes:

Automatic Route (RBI Route)
  • Applicable where 100% FDI is permitted
Government Route
  • Required for restricted sectors
  • RBI consults relevant ministries before approval

3. Eligibility Criteria

Liaison Office (LO)

  • Profit-making track record: Minimum 3 years
  • Minimum Net Worth: USD 50,000

Branch Office (BO)

  • Profit-making track record: Minimum 5 years
  • Minimum Net Worth: USD 100,000

4. Approval & Registration Process

Once approval is granted:

  • RBI issues a Unique Identification Number (UIN)
  • Registration required with Registrar of Companies (ROC) under Companies Act, 2013
  • Obtain:
    • PAN (Permanent Account Number)
    • Bank account with AD Category-I bank

5. Permitted Activities

A. Liaison Office (LO) – Non-Commercial Presence

A Liaison Office acts as a communication bridge and cannot generate income in India.

Permitted Activities:
  • Represent the parent company
  • Promote import/export activities
  • Facilitate technical or financial collaborations
  • Act as a communication channel
Restrictions:
  • ❌ No commercial or trading activities
  • ❌ No manufacturing or revenue generation

B. Branch Office (BO) – Commercial Operations Allowed

A Branch Office can conduct business activities in India.

Permitted Activities:
  • Export/import of goods
  • Consultancy and professional services
  • Research and development
  • IT and software services
  • Technical support for parent company products
  • Acting as buying/selling agent
Restrictions:
  • ❌ No retail trading
  • ❌ No manufacturing (direct or indirect)

6. Validity & Extension

  • Liaison Office: Typically approved for 3 years
  • Branch Office: Longer validity based on business nature

👉 Extensions are processed through the AD Bank.

7. Compliance Requirements

Annual Compliance:

  • Annual Activity Certificate (AAC)
    • Certified by a Chartered Accountant
    • Submitted to:
      • AD Bank
      • Income Tax Department

✔ Must confirm:

  • Activities align with RBI approval
  • Financial statements are compliant

Additional Compliance:

  • Filing with State Police (DGP office)
  • Maintaining proper books of accounts
  • Compliance with Income Tax laws

8. Taxation

Liaison Office

  • Not taxable (as no income generation is allowed)

Branch Office

  • Taxed as a foreign company in India
  • Profits are taxable but can be repatriated after tax compliance

9. Repatriation of Profits (Branch Office)

Allowed subject to:

  • Audited financial statements
  • Chartered Accountant certificate confirming:
    • Legitimate earnings
    • No revaluation gains included

10. Closure Procedure

To close a Liaison or Branch Office:

Submit the following to the AD Bank:

  • RBI approval copy
  • Auditor’s certificate (assets/liabilities clearance)
  • Tax clearance certificate
  • Declaration of no legal proceedings
  • ROC compliance report

11. Bank Account Rules

Liaison Office

  • Only one bank account allowed
  • Funds must come from the parent company

Branch Office

  • Can receive:
    • Parent company funds
    • Business revenues
  • Allowed to remit profits abroad

12. Project Office (PO) – Quick Overview

A Project Office can be established without prior RBI approval if:

  • A contract is secured from an Indian company
  • Funding is through:
    • Foreign remittance
    • International agency
    • Indian bank loan

13. Key Restrictions

  • Prior RBI approval required for entities from certain countries
  • Foreign partnership firms cannot establish LO/BO
  • Restrictions apply on property ownership

14. Practical Insights (2026 Update)

  • RBI approvals are now streamlined via AD Banks
  • Increased scrutiny on:
    • Beneficial ownership
    • AML/KYC compliance
  • Digital filings and compliance tracking are standard
  • UIN is mandatory for all offices

15. Summary Comparison

Feature Liaison Office Branch Office
Income Generation ❌ Not Allowed ✅ Allowed
Taxation ❌ No ✅ Yes
Activities Limited Broad
Net Worth Requirement USD 50,000 USD 100,000
Track Record 3 Years 5 Years

Why Choose the Right Structure?

Choosing between a Liaison Office and Branch Office depends on your business objectives:

  • Market research & representation? → Liaison Office
  • Revenue generation & operations? → Branch Office

We assist foreign companies with:

  • End-to-end RBI approval process
  • Documentation & Form FNC filing
  • ROC registration & compliance
  • Tax and regulatory advisory

👉 Get in touch for a seamless setup in India.