Closure To close the LO, an application is to be submitted with the Authorised Dealer Bank along with a tax clearance certificate from the Income tax authorities and an Auditor’ s certificate computing the amount repatriable. Besides, intimation is to be made to the ROC.
3.2.2 Project Office( PO)
Foreign companies planning to execute a project in India can set-up temporary project / site offices. Generally, POs are set-up for turnkey or installation projects.
Scope of Activities
( i) |
Activities restricted to those incidental to the project |
( ii) |
Permitted to operate a bank account in India |
( iii) |
The project can be funded by bilateral / multilateral / international financing agencies |
Set-up Process
In specified cases, a PO is allowed to be set-up under the automatic route, otherwise a prior approval is required from the RBI. Subsequently, one is required to obtain a certificate of establishing a place of business in India from the ROC.
Compliance
PO may remit the surplus revenue from the project subject to payment of applicable taxes in India. PO is considered an extension of the foreign company and taxed at 40 per cent( plus surcharge and cess). Surcharge will be 2 % or 5 %, depending upon whether income is in excess of Rs 10 Million or Rs 100 Million respectively). Besides, it is required to meet compliance requirements viz. income tax, tax withholding, audit, etc.
Closure
On completion of the project and to repatriate balance funds, an application is to be submitted with the Authorised Dealer Bank. The application is to be accompanied with a tax clearance certificate from the Income tax authority which is issued only once the entire verification process, namely assessments, is completed.
3.2.3 Branch Office( BO)
A foreign company may consider establishing a branch to carry out trading, business dealing, etc. on behalf of the head office.
Scope of Activities
( i) |
Export / import of goods |
( ii) |
Rendering professional or consultancy services |
( iii) Research work linked to activities of the parent |
( iv) |
Promoting technical or financial collaborations between Indians and parent |
( v) |
Representing the parent company in India and acting as buying / selling agents in India |
( vi) |
Rendering services in information technology including software development |
( vii) Technical support in respect of products supplied by the parent |
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