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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