What is a project office in India?
A project office is a temporary office a foreign company sets up in India to execute a specific project awarded by an Indian entity, such as construction or supply. It operates only for that project, follows RBI and tax rules for foreign companies, and is closed once the contract is complete.
Key takeaways
- A project office is tied to one awarded contract
- Funding and eligibility conditions are checked by the authorised bank
- It is taxed under foreign company rules and has its own registrations
- Plan closure and remittance of surplus funds early
Foreign engineering, construction and equipment suppliers often win contracts in India long before they decide whether to build a permanent presence. A project office lets them mobilise a team for one contract without forming a company. Here is how it works and what to prepare.
1. What a project office is
A project office is a temporary place of business set up by a foreign company to execute a specific project in India. Like other offices of a foreign company, it is not a separate legal entity, so the parent is responsible for it. It is created because a contract has been awarded, not as a general market-entry step.
2. Who qualifies
The main requirement is a contract awarded by an Indian entity for work in India. The project is usually funded by inward remittance from abroad, by a loan from an Indian bank or an international financing agency, or is cleared by a statutory authority. The authorised dealer bank checks the contract documents and funding sources before approving the office.
3. Approvals and documents
Depending on the case, the office may be set up under general permission by informing the bank, or may need a specific RBI approval. Typical documents include the contract or letter of award, parent company incorporation papers and audited financials, board resolution, authority letters and details of the project and funding. Our project office registration service coordinates these filings with the bank and the registrar.
4. Registrations after setup
After approval the office obtains a PAN and tax registrations, registers with the registrar of companies as a place of business of a foreign company, and opens a bank account. Depending on the work, it may also need GST, labour and local authority registrations, and compliance with the Indian contract's own conditions.
5. Taxation basics
Income attributable to the project office is taxed under the rules for foreign companies, and the parent's treaty position may matter for how profits are attributed. Tax deducted at source applies to payments, and GST applies to supplies. Because the tax position depends on contract structure and treaty terms, get advice at the bidding or negotiation stage rather than after execution.
6. Banking, funding and payments
The project office operates a bank account for receipts and payments in India. Remittances and payments abroad must follow the conditions in the approval. Keeping clean records of funds received and spent is essential, because the bank and the RBI will ask for them when you close the office or remit the surplus.
7. Closing the project office
When the project is complete, the office is wound up. The company closes the books, files final tax returns, obtains tax clearances where required, informs the registrar and applies through the bank for remittance of any balance. Starting this process before the last invoice is raised avoids delays. If you expect more work in India, consider converting to a subsidiary; our guide to starting a business in India explains the options.
Project office registration in India
See how India BizSetup can help: scope, timelines, documents and fees for this service.
Learn moreFrequently asked questions
Who can set up a project office?
A foreign company that has secured a contract from an Indian company to execute a project in India, subject to the conditions on funding and approvals applicable to that contract.
Is RBI approval always needed?
In many cases a project office can be set up with general permission when conditions are met, such as funding by inward remittance or a term loan from an Indian bank, while other cases need specific approval.
How long can a project office operate?
It operates for the duration of the project. When the contract is complete, the office is closed and any surplus is remitted in line with RBI guidelines.
Can a project office take on other work?
No. It should only perform the project it was approved for. Additional work generally needs a different approval or a separate structure such as a subsidiary.
This guide is for general information only and is not legal, tax or financial advice. Rules and fees change; confirm current requirements with a qualified professional before acting.
Need help with this in India?
India BizSetup (BizSetups Consulting Pvt. Ltd.) handles incorporation, FEMA/RBI filings, tax and compliance for foreign companies.