India market entry · Project office FEMA compliance
FEMA and RBI Compliance for Project Offices in India
Prepared by S U and Company's CA-led advisory team · Published 27 October 2026 · About S U and Company
Everything about a project office's FEMA compliance points toward one eventual event: closing cleanly and remitting the surplus once the contract is done. A missed certificate along the way, or an improper remittance, does not just sit quietly — it can directly delay that final remittance when the project actually ends.
Quick answer
What ongoing FEMA and RBI compliance does a project office have in India?
A project office operates under FEMA and the terms of its Form FNC approval. It must carry out only the project's own activity, receive funds through banks, file an Annual Activity Certificate from a Chartered Accountant each year (normally by 30 September), and remit any surplus only on completion, with the right certificates and an undertaking that project completion is not affected.
1. The FEMA and RBI calendar
| When | What |
|---|---|
| Before setting up | Form FNC and approval (see our registration guide) |
| Each remittance | Inward remittance records; surplus paperwork |
| By 30 September | Annual Activity Certificate |
| On contract change | Intimation to the authorised dealer bank |
| At completion | Closure and surplus remittance |
2. The Annual Activity Certificate
Every year the project office is active, it submits an Annual Activity Certificate from a Chartered Accountant to its authorised dealer bank, normally by 30 September, confirming that it has carried out only the activity the project contract actually covers — not a broader scope that may have crept in as the engagement evolved.
3. Funding and contract changes
A project office is funded by inward remittances from the foreign company, or by project receipts under the contract, with expenses confined to the project itself. Where the contract's term, value or scope changes materially, the authorised dealer bank should be informed and updated documents filed, since the original approval was granted against the contract as it stood at the time — not whatever it later becomes.
4. Surplus remittance on completion
Once the project is finished, the project office may remit its net profit — the surplus — to the foreign company after paying Indian taxes, through its authorised dealer bank. The bank typically asks for a Chartered Accountant's certificate showing how the surplus is calculated, proof that taxes are paid, the project completion documents, and an undertaking that the remittance itself will not affect the project's completion (that is, that nothing outstanding on the project side is being left unfunded by sending the surplus home too early).
Payments running the other direction — the foreign company charging the project office for head office costs — are subject to the same deduction limits and tax-paperwork requirements (Forms 15CA and 15CB) as a branch office's head office charges; see our branch office FEMA compliance guide for the comparable detail.
5. Closing a project office
Closure runs through the authorised dealer bank, with a Chartered Accountant's certificate that liabilities are paid or provided for, tax clearance, and the ROC formalities completed, before the surplus is remitted. See our guide to closing a branch, liaison or project office for the fuller process shared across all three structures.
6. The rules may change
In October 2025 the RBI released draft regulations covering how foreign entities set up offices in India generally, including project offices. These were not confirmed as formally notified at the time of writing, so the 2016 regulations continue to apply until a formal notification supersedes them.
Frequently asked questions
What is the Annual Activity Certificate for a project office?
A project office submits an Annual Activity Certificate from a Chartered Accountant to its authorised dealer bank each year, normally by 30 September, confirming that it carried out only the project’s own activity.
When can a project office remit its surplus to the foreign company?
On completion, after paying Indian taxes, through the authorised dealer bank, supported by a Chartered Accountant’s certificate showing how the surplus is worked out and an undertaking that the remittance will not affect project completion.
What documents are needed to remit the project surplus on completion?
A Chartered Accountant’s certificate showing the surplus calculation, proof that taxes are paid, the project completion documents, and an undertaking that any shortfall will be met by a further remittance from abroad if needed.
What if the project contract is extended or changed?
The project office should inform its authorised dealer bank of changes to the contract term, value or scope, and file updated documents where the change is material enough to affect the original approval.
How does a project office close in India?
Through the authorised dealer bank, with a Chartered Accountant’s certificate that liabilities are paid, tax clearance, and the ROC formalities completed, after which the surplus is remitted to the foreign company.
Are the FEMA rules for project offices changing?
They may be. In October 2025 the RBI released draft regulations on how foreign entities set up offices in India generally. These were not confirmed as formally notified at the time of writing, so the 2016 regulations continue to apply in the meantime.
How S U and Company can help
We prepare the Annual Activity Certificate, manage contract-change intimations, and handle the certificates needed to remit a project's surplus on completion. See our project office registration guide and tax, GST and transfer pricing guide, or explore the US-to-India entry guides.
Sources and further reading
- Reserve Bank of India — FEMA regulations for project offices.
- Ministry of Corporate Affairs — company-law resources.