Compliances to be done by BO, LO & PO in India

In case of foreign company registration in India in the form of unincorporated entities like branch office, liaison office and project office, post registration, certain compliance need to be completed under Income  Tax Act, GST, Companies Act and Foreign Exchange Management Act. 

In this write up, we have covered list of compliance to be completed by BO, LO, PO post company registration in India. 

These compliances are very important since any default in same may lead to huge penalty under various statutes. 

TAX COMPLIANCE 

1.      Annual Income Tax Return 

Every foreign company in India, except the Liaison Office, is required to file an annual Income Tax Return with the tax department. This is to be done within the provided time period which is either 31st October or 30th November of each year depending upon the company’s provisions on transfer pricing and its applicability. 

2.      Filing of Annual Activity Certificate with DGIT 

It is mandatory for all the branch office in India to obtain Annual Activity Certificate (AAC) from the company’s auditor for certifying its operations and activities to comply with the prescribed guidelines by Reserve Bank of India (RBI). This is to be filed with the Director General of Income Tax (DGIT) annually on or before 30th September of each financial year. 

3.      Filing of Form 49C 

Particulars are to be reported by every Liaison Office in India in Form 49C, to be filed with tax department annually, on or before 30th May. 

4.      Withholding Tax Return 

Every BO, PO and LO are required to withhold taxes on certain payments made to Residents and Non-Residents, as prescribed by the Act. These payments include-

 

a.       Paid rent

b.      Salaries

c.       Professional fees

d.      Interest

e.       Dividend

f.       Contractual fees

g.       Brokerage

h.      Commissions

The taxpayer is required to pay the withheld taxes to the tax authorities within the provided time line. They are also required to file their Tax Deducted at Source (TDS) withholding tax return with the revenue department.

 

5.      Goods & Services Tax Return 

Every Company in India is required to prepare their GST Return and file them either monthly or quarterly. The companies must compute their GST Liability and then deposit the amount with the authorities on a monthly basis. 

6.      Personal Income Tax Return 

An Income Tax Return is required to be filed by each and every employee, directors, local and expatriate staff of Branch, Project or Liaison Office in India for their taxable income on or before 31st July of every financial year.

REGULATORY COMPLIANCE 

Compliances prescribed by the Companies Act, 2013:

The Companies Act, 2013 has prescribed the following compliances that a branch office established in India must comply

1.      Filing Form FC-1 

Every Branch Office setup in India is required to intimate the Registrar of Companies (ROC) through filing Form FC-1 and providing the details of principal place of business. This is to be done within 30 days from the date of establishing the business.

2.      Filing of Annual Form FC-3 

Every Branch Office in India is required to file its annual accounts, consolidated financial statements of the parent holding company and the list of all the places of business in India through the Annual Form FC-3 with the ROC on or before 30th September of each fiscal year.

 

3.      Filing of Annual Return Form FC-4 

The Branch Offices in India are required to file Annual Returns in Form FC-4 on or before the due date i.e. 30th May of each year.

 

Compliances prescribed by the Foreign Exchange Management Act (FEMA):

As per the FEMA guidelines, the following compliances must be fulfilled by the Branch Office, Liaison Office in India-

1.      Filing of Annual Activity Certificate with RBI and DGIT

As per the RBI Guidelines every Branch Office established in India must obtain Annual Activity Certificate from the company’s auditor. This is to certify its business operations in India. The BOs must file this with the RBI through its Authorized Dealer Bank (ADR) annually, on or before 30th September.

2.      Intimation to Director General of Police (DGP)

It is mandatory for all the foreign companies or organizations setting up Branch Office or Liaison Office in India to submit a report to the DGP within 5 days of being functional about it operation commencement in the area.

Thus, it is evident from above that lot of compliance need to be completed by every BO,LO and PO post company registration in India under tax and regulatory laws and noncompliance may lead to monetary fine and penalty.