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Snapshot of Unincorporated Forms of Business Presence in India


Particulars Contracts & Partnerships Liaison Office (LO) Branch Office (BO)/ Project Office (PO)
Legal status Contractual relationship. Can only act as ‘channel of communication’. Not permitted to engage in business activity to generate revenue. BO: Only permitted to carry out activities explicitly permitted under Indian foreign exchange control regulations. Permitted activities does NOT include manufacturing.
PO: Can be established only for a specific contract awarded by an Indian entity. Cannot be used for undertaking any other project/ purpose in India.
Approval for set-up of office in India Approval for set-up of office in India No prior regulatory/ government approval required. Required from authorized dealer bank (AD bank) i.e. the bank in which the office plans to open its bank account. The approval is subject to fulfilment of certain conditions laid down by Reserve Bank of India (RBI). This can take around 4-6 weeks.
In certain cases, prior approval may be needed from RBI for setting up LO/ BO/ PO in India. This process is time consuming and can take over 12 months.
Compliance requirement Nominal Low in comparison to BO/ PO Higher than LO
Liability On contracting parties Liability may extend to foreign entity as Indian office does not have a separate legal existence in India
Income tax No implications if a tax presence (Permanent Establishment) is not set up. Since LO is not permitted to carry out any business activities, it is not subject to tax in India. Taxable as a non-resident entity in India. Income earned in India is liable to corporate tax at 40% plus applicable surcharge and cess.

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