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liasion office

HOW TO FORM A LIASION OFFICE IN INDIA?

Posted By admin on December 25, 2013 No Comments

Companies incorporated outside India, desirous of opening a Liaison office in India have to make an application in form FNC-1 to the Reserve Bank of India.

Documents required to form liasion office:

  • Letter from the Principal officer of the Parent Company to RBI
  • The latest audited Balance Sheet of the Parent Company.
  • Letter of Authority from the Parent Company in favour of local representative.
  • English version of the certificate of incorporation
  • Two copies of the English version of the Memorandum and Articles of Association (Charter Documents) of the Parent Company attested by Indian Embassy/Notary Public in the country of registration.

Time to form the liasion office- Normally 30 working days are required after completion of documents to obtain approval.

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Contact us at 9818092002
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TAXATION PROVISIONS REGARDING LIASION OFFICE

Posted By admin on December 25, 2013 No Comments
  • Foreign companies planning to do business in India set up a liaison office for undertaking promotional work as a prelude to actual commercial activities.
  • Since the liaison office is not permitted to do any commercial activities, it is generally taken that the existence of a liaison office will not make any difference in taxability of the foreign company in India.
  • It may be clarified that where the liaison office creates a Permanent Establishment or establishes a business connection, the foreign company would become liable to pay tax on the profits, which can be attributed to the liaison office. But if liaison office doesn’t create any of the aforesaid relationship, liaison office will not attract any income tax in India.
  • It can be concluded that the role of liaison office is very dicey as far as Indian tax law is concerned. If proper care is taken regarding the activities a liaison office should perform, tax incidence can be avoided.

In case you need any further information

Contact us at 9818092002
Email : info@companyindia.co.in

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RESTRICTION ON LIAISON OFFICE

Posted By admin on December 25, 2013 No Comments
  1. Liaison office cannot undertake any commercial activity directly or indirectly.
  2. It can neither borrow, nor lend money
  3. It can not open any other bank account but a special account – QA22C account- that only allows inflows from abroad.
  4. Office expense must be met from inward remittance in special account opened by liaison office.
  5. It must file regular returns to the RBI. Such returns must
  6. include Audited Annual accounts and an Annual Activity Certifcate from a Chartered Accountant. The Certifcate is obtained to ensure that the Liaison Office has undertaken only those activities that have been approved by RBI.

In case you need any further information

Contact us at 9818092002
Email : info@companyindia.co.in

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