Setting up Liaison Offices in India

The role of a liaison office in India, similar to the role of a representative office in China, is limited to collection of information, marketing of exports and imports (without entering into any contracts) and the facilitation of technical or financial collaboration.

The liaison office cannot undertake any commercial activity, directly or indirectly. All expenses for establishing and running the liaison office must be met through inward remittances, as no income can be generated locally. As the liaison office is not permitted to be engaged in any commercial activity, it earns no income and is therefore generally not liable to pay any income tax. It also needs to be established with the approval of the Reserve Bank of India, which is a standard rubber stamping exercise.

To read the full version of this article, please purchase the March 2010 issue of India Briefing, which can be found in the Asia Briefing Bookstore. Companies requiring assistance may contact any Dezan Shira & Associates' five national offices at india@dezshira.com for advice or visit www.dezshira.com.