Global Capability

Centre (GCC) in India

Tax and regulatory considerations

October 2024
Preface
Global Capability Centres (GCCs), also known as Global In-house Centres (GICs) or
captive centers, have become a cornerstone of India's IT and IT-enabled services
(ITES) sector. Bengaluru, our home city, hosts the largest concentration of GCCs in the
country, playing a pivotal role in this thriving ecosystem.

As I sat down to write this preface, the Government of Karnataka unveiled the nation’s
first-ever GCC Policy, with an ambitious goal to establish 500 GCCs by 2029, thereby
creating approximately 350,000 jobs. Karnataka is not alone in this pursuit—many
other Indian states are actively fostering the growth of GCCs, and the Government of
India has been equally supportive in encouraging these centers as engines of
innovation and employment.

Historically, GCCs were primarily set up to provide IT services, software development,

and business process outsourcing (BPO) support to their parent entities. However, in
recent years, we’ve witnessed a significant shift, with high-end services like
engineering design, data analytics, and advanced technology solutions increasingly
being offshored to India.

At Tax Compaas, we have had the privilege of working closely with numerous GCCs
since our inception. Our involvement spans the entire lifecycle—from assisting with
the initial setup to managing complex operational issues such as contracting
structures, transfer pricing models, and tax litigation. We have also supported clients
through strategic restructuring, exit strategies, and profit repatriation.

We are thrilled to present this publication, which draws on our extensive experience in
advising GCCs in India. This document provides high-level insights into the tax and
regulatory landscape, offering practical considerations for those looking to establish
or expand their GCCs in the country.

We trust that you will find the information insightful and valuable. We welcome your
comments and feedback, and look forward to engaging in further discussions.

Ajay Rotti
Founder and CEO
Tax Compaas

2
Table of content
Overview of GCCs in India 4

Ownership considerations 10

Regulatory considerations 13

Tax considerations 16

Concluding thoughts 22

Our experience 24

How can we help 26

Annexure 28

3
Overview of
GCCs in India

4
Overview of GCCs in India

In recent decades, India has earned The Government of India has also
the title of the "office of the world." In been supportive of setting up GCCs,
the early 2000s, multinational providing various incentives and
corporations, particularly from the initiatives to attract foreign
United States and Europe, began to investment, including the
view India as an appealing location establishment of Software Technology
for establishing offshore centers. Parks (STPs) and Special Economic
Zones (SEZs), which further facilitated
The main attraction was cost the growth of these centers. The
efficiency, as India provided access to Government has also implemented
a vast pool of highly skilled talent at policies to promote innovation and
a lower cost compared to developed research and development, which has
markets. helped captive centres in India to
Global capability centres, also known develop cutting-edge technologies
as GCCs or GICs or captive centers, and services.
are offshore units of multinational GCCs have undergone a significant
corporations that operate across the transformation. They have grown
globe. These centres are set up for beyond their initial roles, becoming
providing various support services, influential players in the Indian tech
such as Information Technology (IT), sector. Multinational corporations
finance, human resources, and have started leveraging on India not
analytics, to their parent entities. The just for cost advantages but also for
first GCCs were primarily focused on quality and expertise of talent pool.
IT services, software development, Today, GCCs are recognized as major
and business process outsourcing tech hubs, deeply integrated with
(BPO). Companies like GE, American their parent organizations and
Express, and Citibank were among serving as strategic assets that offer
the pioneers, setting up their captive extensive access to digital talent.
centers in cities like Bangalore,
Hyderabad, and Pune.

5
This evolution has repositioned GCCs Vietnam and Malaysia, Central and
from being mere support centres to Eastern Europe, China and
pivotal global hubs of strategic Philippines. It is interesting to note
operations carrying out more complex that India accounts for over 50% of
and value-added functions such as the global GCC market. Further, it is
research and development, product also interesting to note that 22%
engineering, and knowledge process Forbes Global 2000 Companies are
outsourcing within the tech industry. present in India and 60% of Forbes
Over time and with the advent of Global 2000 Companies who have
technology, GCCs are now at the GCCs in India are set up in
forefront of global innovation, Bengaluru1.
creating cutting-edge solutions in the
areas of Artificial Intelligence, GCCs are a key part of India's
Machine Learning, Cloud computing, economy, providing high quality
Cyber engineering, Advanced employment opportunities and
analytics and Data sciences. contributing to the country’s Gross
Domestic Product. At present, GCCs
Based on a research carried out by in India account for more than 1% of
ANSR, cost delivery centers have been the country’s GDP and the share is
set up globally, which include Mexico, expected to grow further2
Colombia, Brazil, Ireland, UAE

1 As per the report released by ANSR Global dated March 2024 on GCC Quarterly Landscape Q4’23 and Karnataka, Leading the Way for
GCCS 2024
2 As per the report released by ANSR Global dated March 2024 on GCC Quarterly Landscape Q4’23

6
Key highlights3

Facts on GCCs

India currently hosts Market size for Between 2018-19 Expected revenue by
around 1,600 GCCs, GCCs has reached and 2023-24, GCCs 2030 – USD 121
with the number $60 billion, up from created over billion
expected to rise to $19.6 billion in 600,000 new jobs,
1,900 in the next 2014-15 and more bringing the total to
year than doubling to more than 1.6
$46 billion in 2022- million
23, reflecting an
11.4% compound
annual growth rate
(CAGR)

Geographical locations4
GCCs are established in several cities across India. We have listed the locations and
their corresponding percentage to the total GCCs in India.

Tier II cities* Bengaluru is the most preferred

Chennai 5% location with almost 30% of GCCs
9% Bengaluru set up here.
Pune 30%
10% Gujarat International Finance
Tec-City (GIFT City, Ahmedabad)
is emerging as an attractive
Mumbai
12% destination for establishing
GCCs. Entities established in
19% GIFT SEZ are also eligible to
15%
Hyderabad claim benefits such as a tax
Delhi holiday, ease of doing business,
comparatively lower operational
* Jaipur, Vadodara, Ahmedabad, Mysore, Trivandrum, costs and state-of-the-art
Coimbatore, Vizag, Bhubaneshwar, Kolkata, Nagpur
infrastructure.
3 As per the report released by ANSR Global dated March 2024 on GCC Quarterly Landscape Q4’23
4 As per the report released by ANSR Global dated March 2024 on GCC Quarterly Landscape Q4’23

7
Key drivers to outsourcing

Access to Lower Competitive

skills that are operational edge in the
unavailable locally costs market

Better use of Improved Accelerated

internal business for business
resources customer focus processes

Sectors attracting GCCs

Healthcare Manufacturing Software and

engineering

Transport and Media and Banking, financial

logistics entertainment services,
insurance

8
Advantages of outsourcing activities in India

Multinational corporations are increasingly choosing India as a destination for setting

up GCCs. The primary reasons are provided below -

Key facts (Based on publicly available data)

• Approximately 3,00,000 jobs are being outsourced by various

US companies to India and China
• On an average 30% of the overhead cost is reduced by outsourcing
• 80% of European and US outsourcing firms ranked India as their number one
outsourcing destination

Tax benefits
• Low corporate tax rate
• GST not applicable on exports
• Robust and good tax treaty network

Workforce
• Trained and skilled workforce easily available

Cost efficiencies
• Low-cost labour as compared to other countries
• Ease of access to technology

Flexible labour laws

• Labour laws provide adequate flexibility in terms of working hours
and working on public holidays
• Largely determined by the company policies and the employment contract

Stable environment

• Politically stable environment

9
Ownership
Considerations

10
Ownership considerations for GCCs in India
The following structures are typically adopted by companies in India:

1. Direct Ownership
Under this business model, the overseas company locates its own dedicated resources
in another entity in India for a project or a process to be executed remotely. The
overseas company retains complete control and ownership over the GCC entity and
outsources only those tasks/ processes that require specialised local support. The
entity could be set up as a wholly owned subsidiary, joint venture company, branch
office or a limited liability partnership. Each of these entities have their own governing
legal/ regulatory landscape in India, and hence would require regulatory approvals,
compliances, disclosures from the parent overseas company, and most crucially
restrictions/ limitations on permissible activities, transferability of funds from the
overseas company to and/or from the GCC.

Overseas company to remunerate the captive on

an arm’s length (generally cost plus mark-up
basis) for services rendered by the captive

Indian subsidiary
Overseas
of Overseas
Company
company

Overseas company to enter into a service

contract with the captive Indian subsidiary of the
overseas company for the required services

• A dedicated delivery center to be set up as a group company

• Select processes would be transitioned to the team in India
• Overseas company only to be involved in supervising the services delivered by the captive unit
• This structure is typically adopted when significant operations are proposed to be set up and a
larger number of skilled resources are proposed to be hired for a long-term objective
• This model could significantly lower costs of operation
• Internal support functions or software maintenance or customer support type of business
processes are well suited for this model

11
2. Build-Operate-Transfer model (“BOT Model”)

The Build Operate Transfer model is a business arrangement or contractual framework

that enables companies to outsource the design, construction, operation, and
eventual transfer of a project or operation to a specialized partner. Under this model,
a third-party service provider, either wholly or partly, sets up (builds) the GCC,
operates the centre, and gradually transfers ownership and control to the overseas
company.

Client of
Specified project of the
Overseas
client allocated to Overseas
company
company

Indian subsidiary of
Overseas Company
Overseas company

Overseas entity delegates the Indian

operations to the Indian vendor Vendor Transfer of ownership
on BOT basis for an exit charge

Build Operate Transfer

• Overseas company to partner • Vendor to set up a dedicated • At the end of the contract
with third-party vendors to development team and run period the ownership is
establish and stabilize centre, the operations for a specified transferred to the Indian entity
in India period of time (usually 3-5 of the Overseas company for
years), in India. an exit charge.
• Vendor is responsible for • Transfer could be by way of
operations of the captive slump sale/asset
centre during the predefined acquisition/demerger
period of time.

Finally, the Overseas company takes over the captive centre, tailored to its specific needs,
through its Indian arm.

12
Regulatory
Considerations

13
Regulatory considerations

A multinational corporation setting up a GCC in India would need to comply with

various local laws. This includes compliance with corporate laws on the type of legal
entity to be set up for incorporating the GCC and contract laws for governing the GCCs
contractual relationships, corporate structuring, regulatory interventions, etc. A few
key aspects which need to be considered are highlighted below:

Corporate law compliances Special Economic Zones/

International Financial Services
The compliance requirements differ Centres/Software Technology
depending on how the GCCs have Park regulations
been organised in India, i.e., the type
of legal entity and the corporate No specific regulations exist for
structure i.e., whether a direct setting up of GCCs, however, GCCs set
ownership or BOT model. The choice up in Special Economic Zones or
of form of legal entity is influenced by International Financial Services
various parameters such as flexibility Centres, would have to comply with
in the form of capitalisation and level regulations under the respective laws.
of compliance. For example, if Special Economic Zones or
incorporated as a Company under the International Financial Services
Companies Act, 2013, and within its Centres offer certain concessions,
rules, the GCC would also need to including custom duties, indirect
comply with various requirements taxes on goods and services [income
including composition of board of tax benefits no longer available for
directors, review and preparation of Special Economic Zones and Software
charter documents and company Technology Park].
policies, routine and event based
reporting/filings, etc.

14
Regulatory framework

Labour laws Indian Exchange Control

Regulations
Individuals (irrespective of their
citizenship) recruited/hired to work Under the Indian foreign exchange
with the GCC would be rendering laws, foreign entities are permitted to
services in India. Accordingly, the GCC conduct business in India only
in India would be governed by labour through an established ‘place of
laws in India. The GCC is required to business’ in the country. A ‘place of
ensure compliance with labour laws, business’ may be a branch office,
including but not limited to project office, wholly owned
establishing necessary policies and subsidiary or limited liability
systems to prevent and redress partnership. Conducting business
employee-related grievances at the operations for an offshore entity that
workplace. The GCC can employ does not have a ‘place of business’ in
Indian citizens and foreign nationals, India may violate foreign exchange
but it should carefully evaluate and laws. The compliance requirements
undertake additional compliances differ depending on how the GCCs
related to recruiting foreign nationals, have been set up. Further, it will be
for e.g., visa requirements, crucial to evaluate whether approvals
requirement to contribute to social would be required from the Reserve
securities in India, like employee’s Bank of India depending on the
provident fund and tax implications sectors in which the GCC operates.
for the foreign nationals. India has Relevant compliances also need to be
stringent laws on retiral benefit, carried out for making and receiving
prevention of sexual harassment at remittances to and from GCCs.
workplace, working conditions in the
office, etc.

15
Tax
Considerations

16
Tax considerations

Taxation has a significant impact on GCCs, as it does on other industries. Setting up a

GCC requires meticulous tax planning considering both domestic and international tax
laws and foreign exchange requirements. Given that the GCC will primarily serve the
overseas company or the group, i.e., non-resident entity, some additional
considerations – permanent establishment risks, transfer pricing, secondment
arrangements, indirect tax benefits, etc. require an in-depth analysis.

Holding
structure for
Forms of business Regulatory Modes of
the proposed
presence laws funding
investment in
India

• Operating as an • Foreign Direct • Capital • Overall tax

Indian entity - Investment instruments on costs to be
Wholly owned norms - investment considered
subsidiary, LLP, Automatic
Joint venture, route/ Approval • Other funding • Tax efficiency
with an Indian route, Sector options on repatriation
partner (equity specific • Tax and • Single layer or
stake) conditions to be regulatory multi-layer
fulfilled implications structure to be
• Operating as a
Foreign considered
Company with
a presence in
India – Liaison
office, Branch
office, Project
office

17
Business structure and form of business presence
Establishing a “place of business” is
The form of capitalisation i.e., debt
crucial for a GCC’s tax structuring.
vis-à-vis equity is also an important
Where a separate entity is formed in
aspect to be kept in mind in
India, the entity could be set up as:
determining the optimal capital
Wholly owned structure. A private limited company
subsidiary – (PLC) and a limited liability
Company treated as partnership (LLP) are the most
a separate legal prevalent legal forms of GCCs set up
entity in India. A brief summary of the key
Limited liability distinguishing features of a Company
partnership – Hybrid vis-à-vis LLP vis-à-vis project
entity which is a office/branch office are provided as
body corporate an Annexure.

With respect to taxation, a PLC

Joint venture - with
an Indian partner structure has a lower effective tax
(equity stake) rate (25.17%) compared to an LLP
structure (34.94%). However, the
distribution of profits from the PLC is
subject to tax in the hands of the
Though not desirable, the GCC could shareholder, depending on the
also operate as a foreign entity with jurisdiction of the holding entity. On
a presence in India, through: the other hand, there is no tax on
profits distributed by an LLP.
Liaison office – Cannot Accordingly, determination of the
engage in revenue business structure is the most
generating activities
important aspect for the GCCs as this
would also have implications on
Branch office – Can repatriation of profits by the GCCs to
engage in revenue the overseas company. Further, the
generating activities but
there are restrictions feasibility of claiming foreign tax
credit in the jurisdiction of the parent
Project office – set up company is also something which
for specific projects in should be kept in mind.
India

18
Transfer pricing
TP documentation, Intercompany APA, Safe Harbour: To mitigate
agreements: Having an Inter- uncertainties in transfer pricing and
Company Agreement aligned with the reduce compliance risks or potential
functions of the GCC is essential. This litigation, foreign entities should
agreement should clearly define all consider utilizing mechanisms such as
terms and conditions, including pricing safe harbour rules and advance
mechanisms, as well as the roles and pricing agreements (APAs). These
responsibilities of each party. A options provide greater certainty and
thorough analysis of the functions simplify compliance with Indian tax
performed, assets utilized, and risks regulations, helping ensure smoother
borne by the GCC and its associated operations for GCCs.
enterprises (including the overseas
parent company) is critical. This Cost base components and
analysis forms the foundation for related aspects: There is
determining an arm’s length margin, considerable litigation around the
ensuring compliance with transfer components of cost to be captured
pricing regulations. and recorded in the Indian arm or the
GCC in India. Items such as assets
Remuneration methodology: GCCs are provided free of cost, access to
typically compensated on a cost-plus common IT tools, internal IPs, etc
markup basis for the services they need attention and evaluation before
provide to their foreign parent entities. implementation.
As GCCs now operate across diverse
sectors beyond IT and ITES, it is
important to carefully assess the
functions performed, assets employed,
and risks assumed by the GCC. This
evaluation helps determine the
appropriate arm’s length margin.
Comprehensive transfer pricing
documentation is essential to
substantiate the arm’s length price for
various transactions, particularly in
the event of scrutiny by Indian tax
authorities.
19
Other tax considerations

Permanent establishment (‘PE’) home jurisdiction to the host

taxation risk jurisdiction on secondment/short-
term assignments. This could trigger
Owing to expat movement and nature a PE exposure of the foreign entity in
of service provided to the overseas India and hence requires a detailed
company, there could be potential analysis.
Permanent Establishment (PE) risks
for the GCCs’ overseas group Documentation with respect to
companies in India, that may need to secondment arrangements should be
be evaluated. It is important to maintained and carefully drafted to
evaluate if the GCC is constituting a ensure there are no tax leakages.
PE, given that the taxable profits of Secondment arrangements could
such PEs are subject to 40% tax on have an impact from a GST
taxable profits of such PEs, along perspective as well and would require
with an increased compliance burden a detailed analysis. In the recent
in the form of filing of tax returns, past, we have seen the tax
maintaining books of accounts, authorities assess the GCCs control,
withholding taxes and other supervision, and management by the
associated obligations. To avoid such overseas company, particularly on
PE risks, it is crucial to establish clear how employees in India report to the
standard operating procedures for employees of the overseas company.
GCC employees interacting with
Incentives for retention of
foreign entities, including appropriate
employees – ESOPS/ shadow
documentation and clear bifurcation
stocks
of responsibilities.

Secondment arrangement Often, employees are offered stock

options/shadow stock by employers
Evaluating tax implications is crucial as an award to the employees in
when engaging employees of order to retain top talent.
overseas company moving from the

20
ESOPs entitles the option holder to the Indirect tax
right to subscribe to the shares of the
foreign parent company at a concessional GCCs primarily offer services to their
rate. Shadow stock in the form of a overseas group entity and all their
deferred compensation plan, provide an sales are exported to overseas entity.
option to the employees to defer a certain Monthly and annual compliances as
percentage of their bonus and can opt to required to be carried out under the
share in the growth of the company. Tax Goods and Services Tax (GST) laws.
and regulatory implications, both for the Under the GST laws, exports are
GCCs and the employees, would have to be categorised as zero rated supply. Zero
examined for issue of ESOPs/ shadow rated supply means the entire value
stocks to employees of the GCCs of the supply is exempt from tax and
Withholding taxes on foreign GST will not be levied on any kind of
payments good or services

Typically, GCCs enter into contracts with The exporter has the option to export
group entities for license fees, royalty under bond/letter of undertaking
payments, common administrative costs, without payment of tax and claim
reimbursement of costs etc. GCCs would refund of input tax credit [input tax
need to assess the withholding tax credit means the GST paid, on any
obligation/equalization levy obligations purchase of goods/ services that are
under the provisions of domestic tax law availed during the course of carrying
and the tax treaties on business], or pay GST by utilising
input tax credit at the time of export
Impact of Two Pillar solution and BEPS and claim refund of GST paid, subject
Action Plans to specified conditions.

The GCC in India would be a part of the

Multi National Enterprise and the impact
of the recent developments in International
Taxation particularly the Two-Pillar
solution need to be borne in mind while
determining tax aspects relating to the
contracting and ownership structure of the
GCC in India

21
Concluding
thoughts

22
Concluding thoughts
As GCCs continue to play a pivotal role in driving economic growth and creating
employment opportunities in India, it is essential for policymakers to foster a more
supportive and conducive environment for their expansion.

The release of India’s first GCC policy by the Government of Karnataka underscores
this commitment and highlights the growing importance of GCCs in the country’s
economic landscape. The policy outlines several key initiatives, including the
establishment of three new technology parks, tailored incentives for mega projects,
the development of nano GCCs and GCCs in areas beyond Bengaluru, fast-track
approvals within 45 days, and a dedicated support unit for GCCs. This draft policy
remains open for stakeholder input until November 11, 2024.

NASSCOM projects that India’s GCC market will grow to $105 billion, with the number
of GCCs reaching 2,200 by 2030. For multinational companies planning to establish
GCCs, now is an opportune moment to make that move.

However, foreign entities looking to set up a GCC in India must conduct a thorough
analysis of regulatory and tax considerations to ensure an optimal operational
structure.

Critical areas for evaluation include managing risks related to permanent

establishment status, adhering to transfer pricing regulations, structuring secondment
arrangements, offering ESOPs, and identifying potential direct and indirect tax
benefits.

23
Our experience

24
Our Experience • Full-Service Advisory for a Top US
CPA Firm: We Project Managed the
Navigating India’s complex tax
establishment of a GCC for one of
landscape, particularly in the context of
the top US CPA firms. This
the global-services model of GCCs,
engagement involved determining
requires ongoing expert advice on
the form of business presence,
transfer pricing, GST, FEMA regulations,
determining the optimal capital
and taxation. Over the past few years,
structure, setting up operations,
we have amassed significant experience
and handling all ongoing tax,
in assisting GCCs across a range of tax,
accounting, and regulatory
regulatory, and compliance needs.
compliances.
Here are some key examples of our • GCC for a Leading US Business
experience: Solutions Firm: We successfully
managed the complete tax, finance,
• Advisory and Compliance Services:
and regulatory functions for a GCC
We have served as tax advisors to a
set up by one of the top 40 US
GCC established in India, providing
business solutions firms, providing
comprehensive services covering all
end-to-end support to ensure
transactions, business restructuring,
smooth operations in India.
and tax compliances.
• Recent GCC Setup in Bangalore and
• Litigation Support: We provide
Chennai: We recently assisted a
litigation services to a GCC
US-based accounting and
established by a prominent American
consulting firm in setting up GCCs
multinational computer technology
in both Bangalore and Chennai. We
corporation, ensuring compliance and
helped the US firm inhouse the
addressing tax disputes as needed.
team from a third Indian party
• GCC Setup for US Firms: We assisted Indian service provider. We continue
an affinity group comprising six of the to provide tax, accounting, and
Top 100 US-based accounting and regulatory compliance services.
consulting firms in establishing their
Through our extensive experience, we
GCCs. Our support included
have helped GCCs navigate the
determining the optimal structure,
complexities of India’s regulatory
implementing and setting up the GCC,
environment while ensuring
and advising on transfer pricing issues
compliance and effective tax
to ensure smooth operations.
strategies.
25
How can we help

26
How can we help
Entry strategy

• Assistance in evaluating the appropriate ownership structure including

evaluating BOT model, etc
• Evaluating the most appropriate entity structure
• Evaluation of most optimal capital structure and contracting structure for
the GCC in India
Implementation – Set up

• Drawing up a plan and acting as Project Managers to help the MNC

through the entire process of setting up their GCC in India
• We would also assist is setting up the entity, obtaining all the required
tax and regulatory registrations
• Assistance in completing all paperwork including regulatory filing relating
to the initial capital infusion, leases, etc
Managed operations – Finance, tax and secretarial

• Assist the GCC in India with the initial set up of tax operations, finance
operations and managing the same
• Being responsible for all operational compliance – tax filings, accounting
filings, secretarial compliance, etc
• Assistance in coordination with the appointed statutory auditor of the
entity to have the mandatory audit completion

Intercompany – Documentation, Transfer Pricing

• Assist to MNC in determining the appropriate transfer pricing method to

ensure arms’ length pricing for all transactions
• Assistance in completion of inter company documentation including
agreements and SOPs

MIS and Group reporting

• Share timely reports accurately reflecting the financial results of the GCC,
including the balance sheet and profit and loss account for evaluation

27
Annexure

28
Annexure

Project
Particulars Company LLP
office/Branch office
Prevailing Companies Act, 2013 Limited Liability Foreign Exchange
law Partnership Act, 2008 Management Act
and regulations
thereunder
Number of Minimum 2; Maximum - 200 Minimum 2; Maximum - Not applicable
Members [for a private limited No Limit
company]
Legal status/ Separate legal entity/ Separate legal entity/ Represents the
members Limited Limited parent company/
liability Not applicable
Body Yes/ Perpetual Yes/ Perpetual Depends on the
Corporate/ parent company
Existence
Board/ Requirements for holding Governed by LLP Not applicable
Shareholders minimum number of board agreement - No
Meetings meetings/ shareholder requirement for approvals/
meetings minimum meetings
Compliance Higher Lower Lower
requirements
Exchange • Regulations governing • Permissible only where • Approval for
control investment in India in the the LLP operates in setting up Project
regulations form of equity, debt, quasi sectors under 100% office/ Branch
debt. Two routes for Automatic Route with no office depends on
investment into India FDI linked performance the sector in which
depending upon the sector conditions (subject to the foreign parent
i.e. either the automatic or applicable pricing and entity operates
approval route other conditions) (Automatic or
• Compliances to be • IT/ITES sector – 100% Approval)
undertaken automatic route • Certain
• Also subject to compliances
compliance of conditions needs to be
under the LLP Act, 2008 undertaken
• Investment only in the
form of capital
contribution/ acquisition
of profit share

29
 Project
Particulars Company LLP
office/Branch office
Rate of • 25% (plus SC and cess). In • 30% (plus SC and cess) • 40% (plus SC and
income tax certain cases tax rate is • AMT on Adjusted Total cess) on net
22% (plus SC and cess). Income - 18.5% (plus SC income
• Certain beneficial tax and cess). AMT credit
regimes available where available for 10 years
reduced corporate tax rate
applies.
• MAT @ 15% (plus SC and
cess). MAT credit available
for 10 yeas. MAT will not be
applicable in case where
reduced corporate tax rates
are opted for.
Repatriation • Dividends would be taxable Share of profits to partners No tax on
of funds to in the hands of the - Exempt from tax in the repatriation of
shareholders/ shareholders hands of partners in India funds that are
partners • Buy-back of shares subject available after
to tax in the hands of the paying the taxes on
shareholders income earned in
India
Deemed Applicable Not Applicable Not applicable
dividend
under section
2(22)(e)
Interest and Not applicable • Tax deductible in the Not applicable
remuneration hands of the LLP subject
paid to a to thin capitalization
Partner rules and exchange
control regulations
• Taxable as business
income in the hands of
the Partners subject to
tax treaty provisions

30
Notes

31
 www.taxcompaas.com

GCC EXPERT GROUP

Ajay Rotti
Founder & CEO
ajay.rotti@taxcompaas.com

Nimita Gandhi
Associate Director
nimita.gandhi@taxcompaas.com

Neha Sanklecha
Manager
neha.sanklecha@taxcompaas.com

The information contained herein is in a summary form and is therefore intended for general guidance only. This
publication is not intended to address the circumstances of any individual or entity. No one should act on such
information without appropriate professional advice after a thorough examination of the situation. This publication is
not a substitute for detailed research and opinion.

Taxcompaas Advisors Private Limited disclaims any and all liability for any loss or damage caused to any person from
acting or refraining from acting as a result of any material in this publication.

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