A Project Office is one of the most practical and reliable ways for foreign EPC, engineering, and infrastructure companies to begin operations in India. Many international companies choose this route because it allows them to work on a specific contract, hire employees, manage day-to-day project activities, and operate legally without going through the lengthy process of forming a full Indian subsidiary.
This setup works especially well for EPC, construction, oil and gas, renewable energy, and government-related infrastructure projects where an on-ground presence is necessary. At TaxLegit, we support Foreign Companies and NRIs with a complete Project Office setup in India. From RBI approval to MCA filings, GST registration, PAN and TAN allotment, accounting, and all post-registration compliance, our team manages everything so you can stay focused on delivering your project.
What Is a Project Office?
Before choosing the right structure, it is important to clearly understand what is a project office and why it is used globally.
A Project Office is a temporary establishment set up by a foreign company in India to execute a specific contract awarded by an Indian company or government authority. Under FEMA, a project office in India is permitted only when there is a valid project, an approved funding source, and a clear project lifecycle. A project office is widely preferred because:
It operates only for that particular contract
It allows full on-ground execution
It carries taxation benefits
It does not require a full subsidiary formation
It is also commonly referred to in global practice as a temporary representative office, but with the special purpose of executing a contract rather than general liaison functions.
What is a project office under FEMA?
It is simply a project-specific presence for foreign entities to run operations legally, receive payments, hire teams, and execute the contract professionally.
Why Foreign Companies & NRI Investors Open a Project Office in India?
Understanding why global businesses use this structure helps investors choose the right legal path. Foreign companies and NRI-owned overseas firms prefer a project office in India because it provides a legitimate, fully compliant presence for executing EPC and infrastructure projects. Whether it is a smart-city project, metro development, a renewable energy plant, or an oil & gas construction contract, this model allows real operational execution.
Advantages
Mandatory for many government/EPC projects
Fully legal under FEMA & RBI guidelines
Allows hiring staff, engineers, and project teams
Permits import of machinery or specialized equipment
Can issue invoices and receive payments from Indian clients
Ideal for short-term or single projects
NRIs invested in foreign engineering or EPC companies can use this model easily
For many foreign groups, this structure acts as a project-driven representative office that allows them to comply with local taxation, banking, and regulatory norms.
Eligibility Criteria for Foreign Companies / NRI-Owned Companies
Before beginning the Project Office Registration process, a foreign company or an NRI-owned overseas company must meet FEMA norms. A project office in India can be established only when:
1. The foreign company has a valid project contract in India:
This is the core condition. The contract can be from:
This is the core condition. The contract can be from:
A government department
A PSU
A private Indian company
A multilateral funding agency
A bilateral international agency
2. Funding criteria are satisfied:
Any one of the following must apply:
Any one of the following must apply:
The project is funded through inward remittance from abroad
A multilateral/bilateral financing agency funds the project
The project has been approved by a government authority
The Indian company awarding the project has arranged financing
3. Financial soundness of the parent company:
The foreign parent must show:
The foreign parent must show:
Satisfactory net worth
Audited financial statements
Clean banking records
International project execution capability
4. NRIs with foreign companies can also open a project office:
If an NRI owns or partly owns an overseas company, that company can apply for Project Office Registration, provided other FEMA conditions are met. This structure, although not exactly a representative office, allows limited-purpose operation dedicated to one contract.
If an NRI owns or partly owns an overseas company, that company can apply for Project Office Registration, provided other FEMA conditions are met. This structure, although not exactly a representative office, allows limited-purpose operation dedicated to one contract.
Activities Allowed for a Project Office in India
Foreign companies often treat this model like a functional project-based representative office, but with complete operational freedom within the contract scope.
Before applying for Project Office Registration, businesses must know what operations are permitted under FEMA. A project office in India can:
Foreign companies often treat this model like a functional project-based representative office, but with complete operational freedom within the contract scope.
Before applying for Project Office Registration, businesses must know what operations are permitted under FEMA. A project office in India can:
Execute the specific project mentioned in the contract
Manage day-to-day project supervision & execution
Hire local engineers, labour, vendors, and contractors
Import machinery and equipment needed for the project
Open multiple bank accounts (vendor, payroll, project-dedicated)
Raise invoices to Indian clients
Receive payments in India
Make project-related expenses
Conduct site management, reporting, and review
Activities NOT Allowed
Once the project is finished, the office must be closed following RBI’s prescribed exit rules. Knowing the limitations helps businesses avoid compliance issues or penalties. A project office in India cannot:
Once the project is finished, the office must be closed following RBI’s prescribed exit rules. Knowing the limitations helps businesses avoid compliance issues or penalties. A project office in India cannot:
Execute any activity outside the approved project
Take up new contracts without fresh approval
Conduct trading or commercial business unrelated to the project
Expand the scope without permission
Continue operations after project completion
Carry on general activities similar to a liaison or representative office
Common RBI Rejection Reasons for Project Office in India
Many Project Office applications get rejected simply because companies aren’t aware of RBI’s exact requirements and documentation expectations.
Incomplete or Incorrect Documentation: Missing agreements, unsigned forms, incomplete KYC, or inconsistencies in the application.
Insufficient Financial Credentials of the Foreign Company: Low net worth, weak audited financials, or inability to meet RBI’s financial strength criteria.
No Valid Project Contract in India: RBI only approves POs when there is a specific, funded Indian project. Lack of a clear contract or work order leads to rejection.
Project Not Funded by an Indian Entity or International Financing Agency: Projects must be financed by an Indian company, bilateral/multilateral agency, or international funding. Self-financed projects often face rejection.
Mismatch Between Project Scope and Company Profile: When the foreign company’s background or experience does not align with the proposed Indian project.
Regulatory / FEMA Non-Compliance: Any FEMA-related inconsistencies, prior non-compliances, or incorrect category selection in the RBI application.
Red Flags in Parent Company’s Global Operations: Pending legal disputes, financial instability, or compliance issues in other countries.
Non-Resident/Third-Party Project Funding Issues: If the source of funds or payment terms are not clearly stated or appear non-compliant with RBI norms.
Incorrectly Filled FNC Form or AD Bank Queries Not Resolved: Errors in the FNC form, missing annexures, or delayed responses to AD Bank’s queries.
High-Risk Country or Restricted Sector: Applications from jurisdictions flagged for compliance risks or projects in sensitive sectors face higher scrutiny and possible rejection.
Step-by-Step Process for Project Office Registration
Contract Review
The process begins with a careful review of the project contract to understand the exact scope of work, technical requirements, funding structure, timelines, billing terms, and FEMA eligibility. This step ensures the project genuinely qualifies for a Project Office and avoids future compliance issues.
The process begins with a careful review of the project contract to understand the exact scope of work, technical requirements, funding structure, timelines, billing terms, and FEMA eligibility. This step ensures the project genuinely qualifies for a Project Office and avoids future compliance issues.
Document Verification
All required parent company documents, board resolutions, financial statements, and proof of past project experience are thoroughly checked. If the applicant is an NRI-owned entity, additional documents such as a passport and KYC proofs are verified. This helps create a strong, error-free application file.
All required parent company documents, board resolutions, financial statements, and proof of past project experience are thoroughly checked. If the applicant is an NRI-owned entity, additional documents such as a passport and KYC proofs are verified. This helps create a strong, error-free application file.
Application Filing with AD Category-I Bank
A FEMA-compliant application is prepared and submitted to the designated Authorized Dealer Bank. This includes details of the project, foreign company credentials, funding sources, expected expenses, and declarations. The bank evaluates whether the project fits FEMA norms before forwarding it.
A FEMA-compliant application is prepared and submitted to the designated Authorized Dealer Bank. This includes details of the project, foreign company credentials, funding sources, expected expenses, and declarations. The bank evaluates whether the project fits FEMA norms before forwarding it.
RBI Approval
After the bank’s review, the application is sent to the RBI. Once approved, the RBI issues a UIN (Unique Identification Number), which serves as official permission to establish the Project Office in India. This is the most crucial approval in the entire process.
After the bank’s review, the application is sent to the RBI. Once approved, the RBI issues a UIN (Unique Identification Number), which serves as official permission to establish the Project Office in India. This is the most crucial approval in the entire process.
PAN & TAN Application
With the UIN in hand, the Project Office applies for PAN and TAN to enable tax compliance, vendor payments, salary processing, and statutory returns.
With the UIN in hand, the Project Office applies for PAN and TAN to enable tax compliance, vendor payments, salary processing, and statutory returns.
Opening the Project Office Bank Account
A dedicated bank account is opened for managing project funds, payroll, vendor payments, equipment procurement, and daily operations. Multiple accounts may be created depending on the project’s financial structure.
A dedicated bank account is opened for managing project funds, payroll, vendor payments, equipment procurement, and daily operations. Multiple accounts may be created depending on the project’s financial structure.
ROC Registration
Filing of Form FC-1, FC-2, authorised signatory details, and supporting documents with the Ministry of Corporate Affairs. This step legally registers the Project Office as the Indian presence of a foreign company and ensures it is reflected in the MCA records.
Filing of Form FC-1, FC-2, authorised signatory details, and supporting documents with the Ministry of Corporate Affairs. This step legally registers the Project Office as the Indian presence of a foreign company and ensures it is reflected in the MCA records.
GST Registration
If the project involves invoicing Indian clients or requires GST compliance, the Project Office obtains GST registration. This allows smooth billing, tax credit management, and statutory reporting.
If the project involves invoicing Indian clients or requires GST compliance, the Project Office obtains GST registration. This allows smooth billing, tax credit management, and statutory reporting.
Setting Up Accounting System, Payroll, and Vendor Structure
Implementation of accounting software, creation of the chart of accounts, payroll setup, vendor onboarding, TDS structure, and internal approval workflow. This step ensures the project becomes fully operational and audit-ready from day one.
Implementation of accounting software, creation of the chart of accounts, payroll setup, vendor onboarding, TDS structure, and internal approval workflow. This step ensures the project becomes fully operational and audit-ready from day one.
Post-Registration Support
Continuous compliance support including RBI reporting, filing of Annual Activity Certificates, monthly GST filings, TDS returns, payroll processing, accounting, statutory audits, and MCA filings. This ensures the Project Office remains fully compliant throughout the project's lifecycle.
Continuous compliance support including RBI reporting, filing of Annual Activity Certificates, monthly GST filings, TDS returns, payroll processing, accounting, statutory audits, and MCA filings. This ensures the Project Office remains fully compliant throughout the project's lifecycle.
Taxlegit handles the end-to-end execution of Project Office Registration and ongoing compliance for foreign clients.
Post-Registration Compliance
Once Project Office Registration is completed, ongoing compliance is mandatory:
Once Project Office Registration is completed, ongoing compliance is mandatory:
Filing Annual Activity Certificate (AAC) with RBI
ROC annual filings
Income Tax Return
GST filings
FLA reporting
Project audit
FEMA reporting
Closure application after project completion
Taxlegit offers a monthly/quarterly compliance management system for foreign businesses.
Timeline & Deliverables Table for Project Office Registration
Documents Required for Foreign Companies & NRI Investors
A project office in India is set up only after verifying financial credibility and contract authenticity. Before beginning the Project Office Registration process, the following documents are required:
From Foreign Parent Company
Certificate of Incorporation
Charter documents (MOA/AOA)
Audited financial statements
Net worth certificate
Banker's report
Board resolution authorizing the project office
Power of Attorney
Detailed project contract
Identity proof of authorized personnel
From NRI Investors
Passport copy
Overseas address proof
KYC
Shareholding declaration in foreign company
Best Industries for Foreigners & NRIs to Open a Project Office in India
Foreign EPC firms often treat this as a project-based representative office for compliance and execution. This model is ideal for:
Engineering, Procurement & Construction (EPC)
Oil & Gas
Infrastructure
Renewable Energy
Telecom
Metro/Roadways/Smart Cities
Taxation Rules for Foreign Companies / NRIs Operating a Project Office
This structure, although temporary, functions much more than a normal representative office and receives full taxation impact. Before executing activities, companies must understand the tax impact of a project office in India.
Considered a Permanent Establishment (PE)
Income arising from the project is fully taxable.
TDS Applicability
Indian clients will deduct TDS on project payments
GST Impact
Applicable to EPC, engineering, procurement, and construction services, depending on contract structure
Annual Audit Mandatory
All books of accounts must be maintained and audited.
DTAA Benefits
Foreign companies may avail DTAA relief to reduce tax burden.
Why Choose Taxlegit for Project Office Registration in India
TaxLegit is trusted by foreign companies, global EPC players, international consultants, and NRI-owned firms because we deliver a seamless, controlled, and fully compliant experience for setting up a Project Office in India.
At TaxLegit, we handle everything, from documentation to RBI liaison, so foreign companies and NRI investors can focus 100% on project execution while we take care of compliance and regulatory formalities.
Frequently Asked Questions
A project office in India is a temporary establishment opened by a foreign company to execute a specific contract. Any overseas company or NRI-owned foreign entity with a valid project can open one.
Yes, Approval is obtained through an AD Category-I bank and is mandatory for all foreign companies.
Yes, It can hire engineers, labourers, project managers, and contractors.
Yes, It can raise invoices and receive payments for the approved project.
If project activities fall under GST-eligible services, GST registration will be required.
It stays active until the project is completed. After that, it must be closed.
No, It cannot take new contracts unless fresh approval is obtained.
Yes, If they operate or own a foreign company, they are eligible under FEMA rules.
Foreign companies are taxable as per Indian corporate tax norms, with DTAA benefits available.
No, but functionally it behaves like a project-focused version of a representative office with added operational powers.