Project Office Registration in India

Foreign companies awarded contracts in India often choose to establish a Project Office in India to manage and execute their operations locally. If you’re considering this route, understanding project office registration in India, eligibility conditions, and compliance requirements is essential.

What Is a Project Office?

A Project Office is a business presence set up by a foreign company in India for the limited purpose of executing a specific project. Unlike a liaison office, a project office can engage in commercial activities, provided they are directly related to the assigned project.

When Is Project Office Registration in India Required?

A foreign company is eligible to establish a project office if:

• It has secured a contract with an Indian company.
  
  

• The project is funded by inward remittance from abroad or by an international/multilateral agency.
  
  

• The Indian entity awarding the project has obtained a term loan from a public financial institution or bank in India.
  
  

• The project is approved by a relevant government authority.
  
  

In other cases, prior approval from the Reserve Bank of India (RBI) may be required.

Process of Project Office Setup in India

The key steps for project office setup in India are:

1. File an application (Form FNC) with an Authorised Dealer (AD) Category-I Bank.
   
   

2. Submit supporting documents such as the contract, parent company incorporation certificate, and audited financials.
   
   

3. Obtain approval from the AD bank or RBI.
   
   

4. Register the Project Office with the Registrar of Companies (ROC) within 30 days of establishment.
   
   

5. Acquire PAN, TAN, GST, and other registrations, if applicable.
   
   

6. Begin project operations within six months of receiving approval.
   
   

Taxation and Compliance

• Income earned from the project is taxable in India.
  
  

• Annual filings with the Income Tax Department and Registrar of Companies are mandatory.
  
  

• FEMA compliance includes filing of an Annual Activity Certificate (AAC).
  
  

• After the project is completed, surplus funds may be repatriated after meeting tax obligations.
  
  

Challenges in Setting Up a Project Office

While the model is efficient, challenges include:

• Additional approvals if the parent company is from certain countries or the project office is in sensitive regions.
  
  

• Detailed KYC and documentation requirements.
  
  

• Ongoing compliance with tax and foreign exchange laws.
  
  

Conclusion

For foreign businesses awarded contracts, setting up a project office in India is a practical way to execute projects while maintaining a local presence. With proper planning and timely compliance, project office setup in India ensures smooth project execution and adherence to regulatory requirements.