Annual Activity Certificate (AAC) from a Chartered Accountant – Explained
- 09/03/2025
- Posted by: admin
- Categories: Company Law, Non Residents
The Ultimate Guide to the Annual Activity Certificate (AAC) for Foreign Offices in India
Foreign companies operating in India through Liaison Offices (LO), Branch Offices (BO), or Project Offices (PO) must comply with regulatory requirements under the Foreign Exchange Management Act (FEMA), 1999. One such crucial compliance document is the Annual Activity Certificate (AAC) Download PDF . This guide provides a detailed breakdown of the AAC, including who needs to file it, deadlines, submission process, and consequences of non-compliance.
What is the Annual Activity Certificate (AAC)?
The Annual Activity Certificate (AAC) is a mandatory compliance document required by foreign offices in India to confirm their adherence to permitted activities under FEMA, 1999. The certificate must be certified by a Chartered Accountant (CA) and submitted to the following authorities:
✔ The Authorized Dealer (AD) Bank – Category I
✔ The Reserve Bank of India (RBI)
✔ Director General of Income Tax (International Taxation) (if applicable)
This certification serves as proof that the LO, BO, or PO has complied with the scope of activities approved by the RBI and has not engaged in unauthorized business activities.
Who Needs to Submit the AAC?
✅ Liaison Office (LO):
✔ Must confirm that it has engaged only in permitted activities such as market research, promotional work, and communication.
✔ Must declare that it has not earned any income in India.
✅ Branch Office (BO):
✔ Must confirm that it has conducted business operations as per RBI approval.
✅ Project Office (PO):
✔ Must confirm that it has worked only on the assigned project and utilized funds correctly.
When Should the AAC Be Submitted?
✔ Deadline: On or before September 30 of each financial year (for the previous financial year ending March 31).
✔ Frequency: Annually.
Timely submission is crucial to maintaining compliance and avoiding penalties.
Where to Submit the AAC?
✔ Authorized Dealer (AD) Bank – Category I
The AD Bank acts as an intermediary and forwards the AAC to the RBI.
✔ Reserve Bank of India (RBI)
Submitted through the AD Bank.
✔ Director General of Income Tax (International Taxation) (if applicable)
Certain foreign entities may be required to submit the AAC to the income tax department.
Contents of the Annual Activity Certificate (AAC)
Annual Activity Certificate
(To be submitted as on March 31,…….on or before April 30,………).
To whomsoever it May Concern
This is to certify and confirm that during the period from __________________to ________________,
the Branch/Liaison Oice/s with PAN No. ———————- of
M/s__________________ (UIN- ) has/ have undertaken only those activities that have
been specifically permitted by the Reserve Bank vide its approval letter/s No/s.
______________________________dated ______________and has/have complied with the terms
and conditions specified in the above mentioned letter/s.
_______________________________
(Signature of the Auditor/s)
(Name of the Chartered Accountant)
ICAI Membership No.:
Address:
Place:
Date:
A Chartered Accountant (CA) certifies the AAC, which includes the following key details:
A. Details of the Foreign Office in India
✔ Name and address of the Liaison Office (LO), Branch Office (BO), or Project Office (PO).
✔ RBI approval reference number & date.
✔ Financial year for which the AAC is being submitted.
B. Financial Information
✔ Total remittances received from the parent company.
✔ Details of expenses incurred during the financial year.
✔ Confirmation that the LO has not generated any income in India.
C. Compliance & Business Activities Confirmation
✔ Liaison Offices (LO): Declaration confirming that the LO has not engaged in commercial activities.
✔ Branch Offices (BO) & Project Offices (PO): Confirmation that business operations comply with RBI approval.
D. Certification by a Chartered Accountant (CA)
✔ The CA certifies that the financials and activities comply with RBI regulations and FEMA guidelines.
Consequences of Non-Compliance
Failure to submit the AAC on time can result in serious consequences, including:
❌ Rejection of renewal applications for LO/BO/PO by the RBI.
❌ FEMA penalties or restrictions on foreign exchange transactions.
❌ Banking restrictions imposed by the AD Bank.
Non-compliance can disrupt business operations and create regulatory hurdles for foreign companies in India.
Conclusion
The Annual Activity Certificate (AAC) is a critical compliance document for foreign Liaison Offices, Branch Offices, and Project Offices operating in India. Since the certificate ensures adherence to RBI & FEMA regulations, companies must prioritize its timely submission with proper Chartered Accountant certification.
Foreign entities should work closely with a CA and their AD Bank to ensure accuracy and compliance in the AAC submission process. By doing so, they can continue operating smoothly in India without regulatory challenges.
Need Assistance with Your AAC Filing? If you need professional assistance in preparing and submitting your AAC, consult a our expert team of CAs today to ensure full compliance with RBI guidelines.