Liaison office reporting and closure — is this a do-it-yourself job?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: the office files annual activity certificates and returns, and its permitted activities are strictly bounded — exceeding them creates a taxable presence.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
What does a liaison office in India have to file each year?
It earns nothing and still reports a good deal. The office files an annual activity certificate and its returns, and the point of that paperwork is to demonstrate that what it did during the year stayed inside the permitted activities. That is the substance of the obligation rather than a formality: the filings are the record you will rely on if the office's status is ever questioned. Where an office has drifted into work that looks commercial, the annual filing is usually the point at which that becomes visible. Preparing it properly means reviewing what the office actually did, not repeating last year's wording.
Can a liaison office in India sign contracts or invoice customers?
No. The permitted activities are strictly bounded, and that boundary is the whole basis on which the office is allowed to exist without being taxed as a business. Negotiating terms, concluding sales, raising invoices and receiving income all sit outside it. The consequence of crossing the line is not merely administrative: activity beyond what is permitted can create a taxable presence for the foreign parent, with the profits attributable to that presence coming into charge. Where the office has been asked to help with anything that sounds commercial, the answer is to check the activity against the permission before it happens.
How long does it take to close a liaison office in India?
Longer than opening one, and the reason is sequencing. Closure needs tax clearance and regulatory approval before the balance in the office's account can be sent to the parent, and neither can be obtained until the filings are complete and the position is clean. So a closure that starts with outstanding returns, unfiled activity certificates or unresolved questions about what the office did becomes a remediation project first and a closure second. Planning backwards from the remittance, rather than forwards from the decision to close, is what keeps the timetable honest.
Why is our bank refusing to remit the closing balance to head office?
Because the balance cannot leave until clearance and approval are in hand, and the bank will not act ahead of them. This surprises people who assume the money is the parent's to take at any time. In practice the funds are the last thing to move, after the filings are up to date, the office's activities over its life have been accounted for, and the clearance confirming that nothing is outstanding has been issued. If the remittance has stalled, the diagnosis is almost always upstream of the bank, in a filing or a clearance that has not yet been obtained.
What happens if our liaison office did work it was not allowed to?
The exposure is a taxable presence for the foreign entity, and profits attributable to it. That is worth confronting rather than hoping the annual filing will absorb it, because closure is exactly when the history gets examined. The work in that situation is to establish what the office actually did, year by year, from its own records rather than from its job descriptions, and to form a view on whether the activities crossed the line and what follows if they did. Knowing the answer before the clearance application is made is considerably better than learning it during.
Should we convert our liaison office instead of closing it?
That is a real question and it turns on what the business now needs to do in India, not on which route is administratively easier. An office that has outgrown the permitted activities is in the wrong structure whichever way you look at it, and continuing as it is remains the option with the exposure attached. The analysis compares what the intended activities require by way of presence against what each structure permits and what it costs to report, and it takes account of the clearance that would be needed on any exit. The decision is written down with the reasoning.
What are Form 15CA and Form 15CB?
They are the certification pair required before certain remittances leave India. Form 15CA is the remitter's declaration filed online; Form 15CB is the accountant's certificate supporting the tax treatment and the rate applied, including any treaty relief. Which combination you need depends on the nature and size of the payment, and banks will generally not process the remittance without them. See Form 15CA.
What is RNOR status and why does it matter to a returning NRI?
Resident but Not Ordinarily Resident is a transitional Indian status that can apply for a limited period after you return, based on how long you were non-resident before. While it lasts, certain foreign income stays outside the Indian net that would be taxed once you become an ordinary resident — which makes the timing of a return date, and of realising foreign gains, a genuine planning decision rather than an administrative one. See the RNOR window.
