Verified Compliance Content: This guide has been technically reviewed and verified for accuracy by our panel of Chartered Accountants (CA) and Company Secretaries (CS) to ensure it meets 2026 regulatory standards.
Minimum Requirements and Eligibility:
- Parent Company’s Financial Criteria:
- Minimum net worth of USD 50,000 or equivalent.
- Profitable track record for the preceding 3 financial years.
Required Documentation from Parent Company:
- Certificate of Incorporation.
- Audited financial statements (last 3 years).
- Net-worth Certificate (certified by auditor).
- Board resolution authorizing LO setup in India.
- Permissible Activities:
- Promotion, market research, and networking.
- Building relationships, communication, and liaison activities.
- No income-generating activities or commercial trading permitted.
- Restrictions and Conditions:
- Cannot earn income or conduct direct commercial/trading activities.
- Expenses must be fully funded by the foreign parent through inward remittances.
- Must operate within the scope approved by RBI.
- Application Process and Timeline:
Activity | Approx. Timeline |
Preparation and submission of documents to AD Bank | 1-2 weeks |
RBI Approval through AD Bank | 3–6 weeks |
ROC Registration and filing Form FC-1 | Within 30 days of RBI approval |
Obtaining PAN & TAN (Tax numbers) | 1–2 weeks |
Bank Account Opening | 1–2 weeks |
- Taxation:
- Income Tax: No taxes if activities comply with RBI guidelines (no income generation). File a Nil income tax return annually.
- GST: Generally not required, as no revenue-generating activities occur. (However, GST registration can be required in rare cases if LO provides certain specific services.)
- Employment and Payroll:
- Can employ both local and foreign nationals.
- Payroll must be financed by the parent company through remittances.
- Liable for payroll compliances (EPF, ESI, TDS) in India.
- Local Office Requirements:
- Must have a local registered office address in India.
- Lease or rental agreement required for approval.
- Requirement of Local Resident Director/ Representative:
- Not compulsory to have an Indian director, but RBI strongly recommends appointing a local representative or manager who is resident in India for smooth operations.
- Personnel and Visa Considerations:
- LO can employ both local and foreign nationals.
- Expat employees require appropriate employment visas.
Summary of Minimum Criteria for Quick Reference:
Criteria | Requirement |
Parent Company’s Net Worth | Minimum USD 50,000 or equivalent |
Parent Company’s Profitability | 3 consecutive profitable years |
Commercial Activities Allowed | None |
Income generation | Not permitted |
Funding of LO Operations | Through inward remittance only |
Mandatory Local Director or Employee | No. But usually appoint local representative |
Employees Allowed | Yes, local and expatriate |
GST applicability | Usually not applicable |
Income Tax | Nil returns mandatory |
Office Space | Mandatory local registered office |
RBI Approval Validity | Typically 3 years, renewable |
1. What is a Liaison Office (LO)?
A Liaison Office acts as a representative office of a foreign company in India, primarily intended to explore business opportunities, promote business interests, and communicate between the foreign parent company and Indian entities.
2. Can a Liaison Office earn income in India?
No, a Liaison Office cannot earn income or engage in any direct commercial, trading, or industrial activities.
3. What are the permissible activities of an LO in India?
- Representing the parent company/group companies.
- Promoting exports/imports.
- Promoting technical and financial collaborations.
- Market research and communication.
Commercial activities are strictly prohibited.
4. Is there a minimum net worth requirement for the foreign company?
Yes. The foreign parent company must have a minimum net worth of USD 50,000 or equivalent and a profitable track record for the preceding three years.
5. Is appointing an Indian resident as a representative mandatory?
A Liaison Office acts as a representative office of a foreign company in India, primarily intended to explore business opportunities, promote business interests, and communicate between the foreign parent company and Indian entities.
About Rohit Lohade
Rohit Lohade is a Chartered Accountant with 15+ years of experience. He has assisted more than 300 Gobal Companies with India Entry Strategy