Setting Up a Project Office in India from The US: A Guide

Expanding into India from the US presents exciting opportunities, but setting up a project office can be overwhelming, particularly for US businesses unfamiliar with local regulations. In Q2 2025, office space take-up in India reached 20.3 million sq. ft., an 8% increase from the previous quarter. 

This surge highlights the increasing number of companies establishing a presence in India to tap into new markets. But tackling India’s regulatory domain, tax requirements, and ensuring compliance can pose challenges that may hinder smooth expansion. 

This blog will guide you through the essential steps involved in setting up a project office in India. We'll help guide you to make informed decisions that set your business up for success in this growing market, including legal and compliance requirements. Let’s get started. 

Key Takeaways

• A Project Office in India is a temporary setup for managing specific projects and is subject to Indian tax, labor, and regulatory compliance.
• Tax compliance includes obtaining PAN and TAN, filing income tax returns, and registering for GST if applicable.
• Annual filings such as Form FC-3 and Form FC-4 are required, along with regular updates to your AD Bank for fund inflows and project status.
• Labor law compliance is necessary if hiring local staff, with registrations for Provident Fund (PF) and Employees’ State Insurance (ESIC) required.
• A statutory audit is mandatory, ensuring your accounting practices meet Indian standards and all financial transactions are documented correctly.

What is a Project Office?

A Project Office is a temporary business setup used by foreign companies to manage and execute specific projects in India. Unlike a permanent business office, it is solely intended for handling a particular assignment. This setup is typically used when a project is awarded by an Indian entity, making it a project-specific, non-commercial presence. 

The primary goal of a Project Office is to offer comprehensive support, streamline project management procedures, and guarantee the smooth execution of the project. The office is authorized to lease premises, hire staff, and carry out activities directly linked to the project. 

Once the project is completed, the office is closed. This makes a Project Office ideal for businesses seeking to focus solely on a single project in India, while ensuring compliance with local regulations.

A Project Office is a temporary setup designed to oversee specific projects in India. But why choose India for your next project office? Let’s explore the benefits.

Benefits of Setting up A Project Office in India

A project office offers key advantages for foreign companies awarded specific contracts in India, providing both flexibility and control. Here’s a closer look. 

• On-the-Ground Control: Managing your project directly from India gives you better oversight of resources, timelines, and execution, ensuring high-quality results.
• No Full Company Setup Required: A project office allows you to access the Indian market without registering a subsidiary or branch, saving you from long-term commitments and equity investments.
• Clear Legal and Tax Identity: Once recognized under Indian law, your project office can open bank accounts, hire local employees, and operate within the legal framework, ensuring compliance.
• Ideal for Short-Term Projects: If your focus is on completing a single project, a project office is the simplest solution, without the complexities of a full company setup.
• Low Compliance Burden: The compliance requirements for a project office are lighter and project-specific, unlike the more rigorous demands of a Private Limited Company.
• Access to a Growing Economy and Skilled Workforce: India’s expanding economy and skilled labor force make it an attractive destination for executing cost-effective projects with high expertise.
• Infrastructure Opportunities: With significant government investments in infrastructure, a project office allows you to participate in and capitalize on India’s ongoing development projects.

Setting up a project office in India provides a streamlined option to manage projects while tapping into the country’s vast opportunities and growing market potential.

VJM Global’s expertise ensures a smooth setup for your project office in India, handling legal and tax compliance with ease. This allows you to focus on executing your project efficiently, without administrative hassles.

Next, let’s go over the eligibility requirements for setting up a Project Office in India. 

Eligibility Criteria for Setting Up a Project Office in India

Setting up a project office in India from the US requires meeting certain eligibility criteria. Here's a breakdown:

1. Secured Contract: The foreign entity must have a contract with an Indian company to execute a project in India.
2. Funding Source: The project must be funded via inward remittance from abroad or through backing from a multilateral agency, such as the World Bank or ADB. If met, the project can proceed via the automatic route.
3. Government Approval: The project must be cleared by a central or state government authority or a government-approved agency.
4. Track Record: The foreign entity should have a strong history of executing similar projects, proving reliability.
5. Indian Entity Funding: If funded by an Indian company with a loan from a public financial institution or a scheduled bank, the project qualifies under this criterion.

Note: If your situation doesn't meet these criteria, you’ll need to apply for RBI approval, which involves additional paperwork and time.

Meeting these requirements can make it easier for US companies to establish a foothold in India while ensuring compliance with local standards.

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Now that we know who can set up a Project Office, let's look at the steps involved in the setup process.

How to Set Up a Project Office in India

Setting up a project office (PO) in India from the US requires a well-planned approach, starting with documentation and following through with regulatory compliance. Here’s a step-by-step guide to the process:

1. Choosing a Suitable Location

Selecting the right location for your project office is crucial. Factors such as proximity to the project site, availability of skilled labor, cost of living, and the overall business environment should guide your decision. 

Major cities like Mumbai, Delhi, Bengaluru, and Hyderabad are often ideal, but research specific locations within these cities to find the best match for your needs.

2. Documentation and Preparation

Next, ensure that all necessary documents are in place. The documents you will need are as follows:

• Board Resolution: A formal approval from the company’s board authorizing the project office setup in India.
• Covering Letter: Explains the business rationale and objectives for establishing the project office in India.
• Certificate of Incorporation: A certified copy proving the company’s legal existence, issued by the registrar of companies in your home country.
• Project Office (PO) Application: The formal request submitted to the Reserve Bank of India (RBI) with all necessary documentation.
• Memorandum of Association (MOA): Outlines the company’s objectives, activities, and governance structure.
• Articles of Association (AOA): Defines management regulations, including the roles and responsibilities of shareholders and directors.
• Form Part 1: Basic company details, including name, address, and project office location in India.
• Form Part 2 (Declaration): A declaration confirming the accuracy of the information provided and compliance with local laws.
• Applicant’s Background Details: Overview of the company’s history, business type, stakeholders, and other relevant context for the project office.

Gathering these documents early on ensures a smooth start to the process.

3. Application Submission

Once you have the required documents, it’s time to submit your application to an Authorized Dealer Category-I (AD Category-I) bank along with all the documents. The AD Category-I bank will act as the intermediary between your project office and the Reserve Bank of India (RBI).

4. Unique Identification Number (UIN) Allotment

The AD Category-I bank will send your application to the RBI to obtain a Unique Identification Number (UIN) for your project office. This UIN will be used to identify your office in all future transactions.

5. Approval Grant

Once the AD Category-I bank reviews your application and documents, it will conduct a due diligence check. If everything is in order and all compliance requirements are met, you will be issued an approval letter permitting the setup of the project office.

6. E-Form Filing

After approval, you must file an electronic form with the RBI within 30 days of establishing the office. This form provides important details about your office's operations and must be submitted to complete the setup process.

Note: Approval to establish a Project Office is generally valid for six months. If the office is not set up within this period, the approval may expire, and a new application may be necessary.

7. Bank Account Opening

Once you receive the approval letter, the next step is opening a bank account with an AD Category-I bank. This account will be used for all financial transactions related to the project office. Ensure compliance with FEMA and RBI guidelines for remittances and financial transactions.

8. Compliance with Applicable Laws

Compliance with Indian regulations is crucial. Ensure your project office is registered for professional tax and GST, and that you adhere to regulations like the Employees' State Insurance Corporation (ESIC) rules and provident fund laws. Meeting these legal obligations will ensure smooth operations and prevent potential issues in the future.

9. Obtaining Necessary Licenses and Permits

Besides registering your project office with the Registrar of Companies (ROC), you’ll need to obtain a Permanent Account Number (PAN) for tax purposes. You will also need a Tax Deduction and Collection Account Number (TAN) if you're deducting tax at source. 

Depending on the nature of your project, additional permits may be required, including environmental clearances or industry-specific licenses.

10. Setting Up Office Infrastructure

Next, focus on securing office space and setting up your infrastructure. Decide whether to lease a fully furnished office or establish your own setup. Ensure you have the necessary IT systems and office equipment in place to support your team’s operations.

11. Hiring Local Staff

To run your project office effectively, you will need to hire local staff. This includes project managers, engineers, and administrative personnel. Ensure you are compliant with Indian labor laws and regulations when hiring. Offering competitive salaries and benefits will help attract the right talent for your project.

Setting up a project office in India from the U.S can be a complex process. Following these steps and partnering with VJM Global ensures a smooth and compliant expansion. Our team can help you with every stage of this process, from documentation and compliance to banking and staffing. Contact us now to simplify your Project Office setup and focus on your growth.

Once you understand the setup process, you will need a few essential documents for ROC registration. Here's what you'll need.

Documents for ROC (Registrar of Companies) Registration

To complete the registration of your project office with the Registrar of Companies (ROC) in India, you will need to provide the following documents:

1. List of Directors: This document should include the names, addresses, and relevant details of the company’s directors. It is essential for verifying the individuals responsible for the company's governance.
2. List of Shareholders: A detailed list of shareholders, including their names, addresses, and shareholding information, is required. This helps the ROC understand the ownership structure of the company.
3. Declaration under Section 380: The declaration made by the company's directors ensures that the project office’s establishment complies with all relevant laws under the Indian Companies Act, 2013. It’s a key legal safeguard for the company’s operations in India.

These documents are crucial for the official registration process and for ensuring that the project office is recognized as a legal entity under Indian law.

Also Read: Documents Needed For Company Registration In India From The US

A Project Office remains valid for the duration of the project it is associated with. Once the project concludes, the PO must wind up its operations and complete the closure procedures. Here’s how you can do that. 

Procedure for Closing a Project Office (PO)

Closing a Project Office (PO) in India involves several key steps to ensure regulatory compliance:

1. Submission of Documents: The PO must submit the following to the Authorized Dealer bank:
   • Copy of the RBI approval for the PO’s establishment.
   • Audited financial statements for the PO.
   • A confirmation from the parent company that no legal proceedings are pending in India.
2. Remittance of Funds: After settling all liabilities, any surplus funds should be repatriated to the parent company in line with remittance guidelines.
3. ROC Filing: To officially close the PO, necessary documents must be filed with the Registrar of Companies (ROC), removing the PO from their records.

Following these steps helps businesses ensure a smooth, compliant closure of their Project Office in India.

Also Read: How to Close a Registered Company in India: Step-by-Step Guide

Keeping track of compliance is a must for your Project Office. Here’s how you can do that. 

Compliances for a Project Office in India

Once your Project Office (PO) is operational in India, staying compliant with local laws is essential to avoid penalties and ensure smooth operations.

1. Taxes and GST

Even as a temporary setup, your PO must adhere to Indian tax laws, including:

• Income Tax Returns and TDS: Annual income tax returns must be filed, and TDS should be deducted for salary and vendor payments.
• GST Registration: If your work involves the supply of goods or services, GST registration is necessary.

Also Read: Understanding GST Number: Meaning and Format Explained

2. RBI and RoC Filings

Every year, your PO needs to submit:

• Form FC-3: Annual financials to the Registrar of Companies (RoC).
• Form FC-4: For any money remitted out of India, filed with the RBI.
• Regular Reports: Updates on fund inflows and project status to your Authorized Dealer (AD) Bank.

3. Audits and Legal Compliance

You must maintain accurate financial records in line with Indian accounting standards and undergo a statutory audit each year. If you hire local staff, you must comply with labor laws like PF, and register foreign assets or liabilities with the RBI through FLA returns.

Staying compliant with these regulations enables your Project Office to operate efficiently and avoid legal or financial setbacks.

With VJM Global's help, setting up and maintaining your Project Office in India becomes much easier. Let’s explore how we can streamline the entire process for you.

How VJM Global Can Simplify Your Project Office Setup in India

Setting up a Project Office in India from the U.S can be complex, but with VJM Global’s support, you can ensure compliance and smooth operations every step of the way. Here's how we can assist:

• Comprehensive Legal Support: We help you navigate Indian regulations, ensuring your Project Office is fully compliant with Indian law, including RBI, RoC, and labor regulations.
• Tax & GST Compliance: We ensure your office remains tax-compliant and free from penalties, from obtaining PAN and TAN to filing income tax returns and registering for GST. 
• Foreign Currency Transactions: We guide you in managing foreign currency transactions in compliance with FEMA and RBI regulations, ensuring seamless remittances and fund management.
• Statutory Audits & Accounting: Our team handles your statutory audits and ensures accurate accounting, following Indian accounting standards, so you meet regulatory requirements without stress.
• Labor Law Compliance: If you’re hiring local staff, we ensure adherence to Indian labor laws, including PF, ESIC, and registration for foreign assets and liabilities.
• Ongoing Reporting & Filings: We assist with regular filings, including Form FC-3, FC-4, and annual reports to your AD Bank, keeping your business on track and compliant.

VJM Global takes the complexity out of setting up a Project Office in India. With our comprehensive support, you can focus on your business while we manage the regulatory and compliance details. 

Conclusion

Setting up a Project Office in India from the US presents unique challenges, but with the right guidance, it can be a seamless and rewarding experience. Understanding the legal, tax, and compliance requirements enables your business to efficiently tackle the regulatory domain and focus on growth. 

VJM Global’s expertise in accounting, audit support, and company registration ensures that your project office operates smoothly, stays compliant, and avoids costly mistakes.

If you’re ready to expand into India with confidence, VJM Global is here to support you every step of the way. Get started today and ensure your Project Office setup is a success. 

FAQs

1. What exactly is a Project Office in India?

A Project Office (PO) is a temporary setup established by foreign companies in India to oversee specific projects or contracts. It helps manage the execution of projects without the need for a full-scale subsidiary.

2. Do I need to register a Project Office in India?

Yes, if you're planning to manage a project or business activity in India, registering a Project Office is necessary to ensure compliance with local regulations and to handle operations legally.

3. What are the main compliance requirements for a Project Office?

Your Project Office will need to handle tasks such as filing taxes (PAN, TAN), GST registration, and submitting annual reports to the RBI and RoC. Regular audits and labor law compliance are also required if you hire local staff.

4. Can I hire local employees for my Project Office in India?

Yes, you can hire local staff for your Project Office. Ensure compliance with Indian labor laws, like registering for Provident Fund (PF) and Employees' State Insurance (ESIC) for employees.

5. How long can a Project Office operate in India?

A Project Office is typically temporary, established to oversee specific projects. However, its duration depends on the nature of the project, and it can be extended as long as needed, provided compliance is maintained.

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