Tuesday, January 25, 2011
GENERAL RESTRICTION FOR OPENING OF BRANCH / LIAISON /PROJECT OFFICE IN INDIA BY A FOREIGN ENTITY
GENERAL RESTRICTION FOR OPENING OF BRANCH / LIAISON /PROJECT OFFICE IN INDIA BY A FOREIGN ENTITY.
No citizen of Afghanistan, Pakistan , Iran ,Bangladesh , Sri Lanka and China can establish in India branch /Liaison / project office or any other form of business without prior approval from Reserve Bank .
No branch/Liaison/branch office is allowed to be established in India by the partnership or proprietorship business set up abroad.
Business entities from Nepal are allowed to set up a Liaison office in India under the general permission category of Reserve Bank of India.
Branch / Project offices of a foreign company , excluding a Liaison Office are permitted to acquire property for their own use and to carryout permitted /incidental activities but not for leasing or renting out the property.
However, entities from Bangladesh, Pakistan, Sri Lanka, Afghanistan, Bhutan, Iran or China are not permitted to buy immovable property in India even for Branch office purpose. These entities are allowed to lease such property for a period of not exceeding five years.
Authorised Dealers are permitted to open non-interest bearing INR current accounts in India by the Branch /Project /Liaison Offices.
With a specific approval from the Central Office of the Reserve Bank, transfer of assets of Branch / Liaison Office to subsidiaries or other Liaison /Branch Offices is allowed.
Branch Offices of foreign entities are permitted to remit outside India any profit earned by such branch in India by netting off applicable Indian taxes , on submission of the following documents to the satisfaction of the Authorized dealer through whom such remittance is made;
· A Certified copy of the audited Balance Sheet and Profit and Loss account for the relevant year.
· A Chartered Accountant certificate certifying
a) The manner of arriving at the remittable profit
b) That the entire remittable profit has been earned by undertaking the permitted activities.
c) The profit does not include any profit on revaluation of the assets of that branch .