"Project Office" means a place of business of a foreign Company who has secured a project in India.
The project office is the option to operate its office in India and have its presence for a limited period of time with the limited purpose for executing a specific project. Foreign comPANies engaged in turnkey construction or installation normally set up a project office for their operations in India.
A foreign corporation, which has secured a contract from an Indian Company to execute a project in India, is allowed to establish a project office in India without obtaining prior permission from RBI. The RBI has granted general permission to a foreign entity for setting up a project office in India subject to the following conditions:
It has secured from an Indian Company a contract to execute a project in India; and
The project is funded by inward remittance from abroad; or
The project is funded by a Bilateral International Finance Agency; or
The project has been cleared by an appropriate authority; or
A Company or entity in India awarding the contract has been granted Term Loan by a Public Financial Institution or a bank for the project
RBI has also granted general permission to foreign entities to remit the surplus on winding up/completion of projects through Authorised Dealers.
Registrar of ComPANies needs to be intimated about the setting up of a place of business in India.
With respect to the tax treatment of Project office, it is treated as an extension of the foreign Company in India and is taxed at the rate applicable to a foreign Company.