Liaison Office (LO) / Branch Office (BO) in India by Foreign Entities – Reporting to Income Tax Authorities

A. P. (DIR Series) Circular No.24

dated December 30, 2009,

RBI had mandated that Branch Offices (BO) / Liaison Offices (LO) are required to submit Annual Activity Certificate (AAC) from their Auditors to the Central Office / Regional Office of the Reserve Bank, certifying that the BO / LO has carried out only those activities which are approved by the Reserve Bank. With effect from February 01, 2010, this Annual Activity Certificate (AAC) as at the end of March 31 had to be submitted, on or before April 30, to the designated AD Category – I bank with a copy to the Directorate General of Income Tax (International Taxation), Drum Shape Building, I.P. Estate, New Delhi 110002.  The AAC is to be submitted by the following person:

  1. In case of a sole BO/ LO, by the BO/LO concerned;
  2.  In case of multiple BO / LOs, a combined Annual Activity Certificate in respect of all the Offices in India by the Nodal Office of the BOs / LOs.

RBI has now clarified vide A.P. (DIR Series) Circular No. 55  dated 26.11.2012  that copies of the AACs submitted to the DGIT (International Taxation) should be accompanied by audited financial statements. Further, at the time of renewal of permission of LOs by AD banks, a copy of each such renewal should be sent by the AD bank to the office of the DGIT (international Taxation).

(Submitted by Jayalakshmi Anshuman, Chartered Accountant & Company Secretary)

The relevant RBI circular in this regard is appended below:

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RBI/2012-13/311
A.P. (DIR Series) Circular No. 55

November 26, 2012

To

      All Authorised Dealers Category – I Banks

Madam / Sir,

Liaison Office (LO) / Branch Office (BO) in India by Foreign Entities – Reporting to Income Tax Authorities.

Attention of Authorised Dealer Category – I banks is invited to A.P. (DIR Series) Circular No. 24 dated 30.12.2009 in terms of which LOs/BOs are required to furnish copy of the Annual Activity Certificate (AAC) to Director General of Income Tax (International Taxation), Drum Shaped Building, I.P. Estate, New Delhi 110002.

2.  It is clarified that copies of the AACs submitted to the DGIT (International Taxation) should be accompanied by audited financial statements including receipt and payment account.

3. Further, at the time of renewal of permission of LOs by AD banks, they may note to endorse a copy of each such renewal to the office of the DGIT (international Taxation).

4. AD Category – I banks may bring the contents of this circular to the notice of their constituents/customers concerned and ensure compliance.

5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Rudra  NarayanKar)
Chief General Manager

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0 responses to “Liaison Office (LO) / Branch Office (BO) in India by Foreign Entities – Reporting to Income Tax Authorities”

  1. CA. Bhavesh savla says:

    If i am not wrong, the annual activity certificates are to be submitted by target than April

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