What are the Features of a Foreign Project Office in India?

Some of the most trending in-demand features and benefits of running a Foreign Project Office (FPO) in India are as follows:

• Limited scope: FPOs have a limited scope and can only undertake activities related to the execution of the specific project for which they are established.

• Temporary setup: FPOs are set up for the duration of the project and are required to be closed once the project is completed.

• No commercial activity: FPOs are not allowed to engage in any commercial activity in India.

• Taxation: FPOs are taxed only on the income earned from the project in India.

• Local presence: FPOs provide foreign companies with a local presence in India for the purpose of executing a specific project.

• Cost-effective: FPOs are a cost-effective way for foreign companies to establish a presence in India, as they do not require a large investment or long-term commitment.

• Local expertise: FPOs can access local expertise and resources in India to execute the project efficiently.

• Taxation: FPOs are subject to a lower tax rate compared to other forms of business entities in India.

• No capitalization requirement: FPOs do not require any minimum capitalization, making it easier for foreign companies to establish a presence in India.

Note: It is important to note that FPOs have certain limitations and are subject to specific regulations and guidelines laid down by the Reserve Bank of India (RBI) and the Ministry of Corporate Affairs (MCA). It is advisable to seek the assistance of a professional consultant or legal expert before setting up an FPO in India. Compliance Calendar have a team of Professionals who can help you navigate through all the compliance hassle to start or close your Foreign Project Office.

What are the Documents Required for Setting Up a Foreign Project Office in India?

The documents required for Foreign Project Office (FPO) registration in India are as follows:

• A certified copy of the Memorandum and Articles of Association of the foreign company establishing the FPO.

• A letter from the foreign company authorizing the establishment of the FPO and specifying the nature of the project for which it is being set up.

• A letter of support from the project authority or the client in India, confirming the nature of the project, the scope of the FPO's work, and the duration of the project.

• A declaration from the proposed directors of the FPO, confirming that they are not disqualified from acting as directors under the Indian Companies Act, 2013, and that they have not been convicted of any offence involving moral turpitude.

• A certified copy of the Certificate of Incorporation or Registration of the foreign company, attested by the Indian Embassy or Consulate in the country of origin.

• A letter from the bank where the foreign company has an account, confirming that the foreign company has a net worth of at least USD 50,000.

• A certificate of compliance from the foreign company's auditors, confirming that the foreign company is solvent and meets its financial obligations.

• A board resolution of the foreign company, authorizing the establishment of the FPO and nominating the proposed directors.

• A power of attorney in favour of one of the proposed directors, authorizing him or her to act on behalf of the foreign company and the FPO in India.

Note: It is important to note that the exact requirements may vary depending on the location and nature of the project. It is advisable to consult a professional consultant or legal expert to ensure compliance with all applicable regulations and requirements.

What is the Procedure for Foreign Project Office Registration in India?

For foreign Project Office Registration, there are certain conditions which needs to be fulfilled while making the application as stated below:

1. Application – File the application for registration of foreign project office with the Reserve Bank of India (RBI) through Category 1 AD Bank (Authorised Dealer) in form - FNC with complete set of documents as required to be routed by the AD Bank.

2. Attestation – the documents need to be attested to be in legal form and are required to be filed with RBI of the foreign Company. The documents which need to be attested are:

• Certificate of Incorporation
• Board Resolution
• Memorandum and Articles of the foreign Company
• Documents of the authorised signatory of the foreign company duly legalised either through an Indian Embassy or apostilled per Hague convention.

3. Verification – The verification process of the KYC is done after the form FNC is filed with the AD Bank by the banker of foreign company, also called swift based verification. The application is submitted for RBI’s approval post confirmation of receipt from foreign bank. The RBI may call for additional information or documents as required to be submitted while examining the application for approval.

4. RBI’s Approval for Registration – Once RBI Approves the registration in India, the company needs to open a bank account ensuring the FDI has been received within 180 days of incorporation with prior intimation to banker. Post receiving the investment adequate filings with the RBI is to be complied.

5. Registration with the ROC – Registration of foreign project office should be done with the Registrar of Companies (ROC) within 30 days from RBI approval date through e-filing of the form. If there is any Indian Directors, then DIN is required and authorised signatory’s digital signature is mandatory for the statutory filings.

6. Allotment of PAN– A unique Permanent Account Number (PAN) is allotted along with Tax Deduction Account Number (TDAN) which are essential for tax compliances and significant identification. The bank account can be opened after allotment of PAN by the IT department.

7. License and Registration – Once the foreign project office registration is completed and operational, there are other event-based compliances required applicable to be adhered to. For example, EPF & Employee State Insurance Act (ESIC), Goods and Services Tax (GST), Professional Tax Act, etc.