Is government liasioning legal in India?

In India, the concept of a liaison office is legal and regulated under the Foreign Exchange Management Act (FEMA). A liaison office is a representative office of a foreign company that acts as a communication channel between the parent company and entities in India. It is not allowed to engage in commercial, trading, or industrial activities directly or indirectly345.

Key Legal Aspects:

1. Approval and Registration: To establish a liaison office in India, prior approval from the Reserve Bank of India (RBI) is mandatory. The office must also register with the Registrar of Companies (ROC) and obtain a Permanent Account Number (PAN) from the Income Tax Department23.

2. Permitted Activities: Liaison offices can represent the parent company in India, promote export/import activities, facilitate technical/financial collaborations, and act as a communication channel between the parent company and Indian entities145.

3. Taxation: Generally, a liaison office is not liable for income tax in India as it does not generate income locally. However, if it becomes a permanent establishment, it may be taxed as a foreign entity5.

4. Restrictions: Liaison offices cannot engage in profit-generating activities and must sustain themselves through funds received from abroad45.

In summary, government liaisoning through a liaison office is legal in India, provided it adheres to the regulations and limitations set by FEMA and other relevant laws.