Liaison / Branch office In India

Setting up liaison offices and branch offices with RBI permission is one of the simplest mode to set up your entity in India -. These are amongst one of the most popular structures adopted by our clients while they are new to Indian market. Preferred for ease of opening and running, these structures are ideal for the companies wishing to 'explore' Indian market.

Our team of Chartered Accountants and Company Secretaries are experienced to understand nuances of forming a branch / liaison office in India for an overseas company. Our team assists you in selecting the correct structure best suited for your needs and requirements.

 Forming a Liaison / Branch office in India - an overview

Liaison Office: A LO is a representative office set up primarily to explore and understand the business environment. It is not permitted to undertake any commercial activities, directly or indirectly, and is required to maintain itself out of the remittances received from parent company through normal banking channels. The LO is permitted to undertake only the following activities:

  • Representing the parent Company in India
  • Promoting export/ import from/ to India
  • Promoting technical / financial collaborations between the parent company and companies in India
  • Acting as a communication channel between the parent company and Indian companies

Branch Office: Branch Office is an extension of Head Office with a right to accrue income. The BO is permitted to take the following activities:

 1. Export/import of goods.

 2. Rendering professional or consultancy services.

 3. Carrying out research work, in areas in which the parent company is engaged.

 4. Promoting technical or financial collaborations between parent / group companies and companies in India.

 5. Representing the parent company in India and acting as buying/ selling agent in India.

 6. Rendering services in Information Technology and development of software in India.

 7. Rendering technical support to the products supplied by parent/group companies.

 8. Foreign airline/shipping company.

Any foreign company intending to open a LO/ BO in India is required to obtain prior approval from the RBI, the apex bank in India. Approval is usually granted for one to three years which can be renewed on expiry thereof.

Note :
  1. Retail trading activities of any nature is not allowed for a Branch Office in India.
  2. A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly.
  3. Profits earned by the Branch Offices are freely remittable from India, subject to payment of applicable taxes.

Suitability of a LO / BO

The LO generally acts as a communication channel for the parent company overseas in India. It can also be used to establish business contacts or gather market intelligence to promote the products or services of the overseas parent company.

The LO cannot undertake any commercial/business activity in India nor earn any income in India. Since the LO is not permitted to earn any income, it is not a taxable entity in India. However, the LO is required to withhold tax from certain payments and hence is expected to comply with the requisite "tax withholding" obligations under the domestic tax law. To open a LO, the parent company has to apply to the Reserve Bank of India and is normally granted permission within 1-2 months.

BO is a simple form of structure having no separate standing of its own. BO are generally engaged in the activities of the parent company with an intention to accrue income. Since BO is permitted to earn income, it is a taxable entity in entity and is treated as a foreign company.

At the time of closure of the LO / BO, RBI grants permission to repatriate the balance in the Indian bank account to the parent company subject to fulfillment of prescribed conditions.

Conditions to be fulfilled -

 A Foreign company wishing to set up a LO / BO needs to fulfill following requirements:

Eligibility Criteria for Establishment of LO in India

1. Automatic Route -

Principal business of the foreign entity falls under sectors where 100 per cent foreign direct investment (FDI) is permissible under the automatic route.

2. Government Route -

Principal business of the foreign entity falls under the sectors where 100 per cent FDI is not permissible under the automatic route. Applications from entities falling under this category are required to obtain special permission from RBI / Government of India.

  • Track Record - a profit making track record during the immediately preceding three financial years in the home country.
  • Net Worth - not less than USD 50,000 (for LO) and USD 100,000 (for BO) or its equivalent. [total of paid-up capital and free reserves, less intangible assets as per the latest Audited Balance Sheet or Account Statement certified by a Certified Public Accountant or any Registered Accounts Practitioner by whatever name].

Initial Registrations required by a LO/BO in India

This document is intended to give you an overview of few of the registrations required under Income Tax, FEMA, the Companies Act, etc.




Registrations required for a LO/BO under various laws: (As applicable)


Value Added Tax (VAT) and Profession Tax (PT)


Service Tax (ST)


Import Export Code (IEC Code)


Permanent Account Number (PAN)


Tax deduction Account Number (TAN)


Necessary actions required immediately on formation of LO/BO :

Apply for PAN/TAN

Open Bank account

Deposit the initial funding in Account.

Filing of Forms and declaration with RBI as required under FEMA

Apply for Import Export Code (IEC)


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Other statutory compliances services

Complying with central and state laws and regulations to keep your company safe from legal trouble has never been more demanding. However, with our assistance, it has become easier. Our compliance services are the effective solutions that can lower your compliance risk profile, reduce fines, save measurable compliance cost and improve effectiveness.

Non-compliance with statutory obligations can result in significant late filing fees for companies, and may even lead to court prosecutions for their directors or managers. We help our clients to be compliant with their filing obligations under the various Acts, Rules, regulations and Notifications of following departments-

  • Income Tax
  • House of companies
  • Reserve Bank of India
  • Value Added Tax (VAT)
  • Service Tax

We conduct the verification exercise of various Acts and Regulations which are either Central Acts or State Acts and are related to finance or economic, or are of pure technical in nature for the due diligence of our clients.

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Dedicated Account Manager services

In order to provide the best service available and form a very close relationship with all of our customers, we assign every customer a Personal Account Manager (PAM). A PAM, who knows your circumstances, understands what you want from our service and can go that extra mile when you need it.

All of our account managers are trained in finance and taxation and you can be confident that you are receiving the best advice for your working needs. When you engage our services, an account manager will work closely with your organization to maintain the books and statements to ensure compliance with regulatory requirements as well as provide you with practical insights and advice for the purpose of taxation and budgeting.