91³Ô¹Ï

There are slight differences between the three offices. A Liaison Office may only engage in promotional activities and establish business contacts. A Project Office is particularly intended to organise temporary cooperation, for example for infrastructure projects. When setting up a Project Office, the starting point is the dissolution after the end of the project. A Branch Office is allowed to do business and invoice 91³Ô¹Ïn customers. The tax rate for a BO is very high at 43.26% compared to a local Pvt. Ltd. structure, though. These three forms are considered extensions of a foreign company in 91³Ô¹Ï and the parent company is therefore legally liable for the activities of all branch office structures.

A Pvt. Ltd. is a limited liability company. It is ideal for separating ownership, management and financing. The Pvt. Ltd. is by far the most frequently chosen legal form for foreign entrepreneurs and investors in 91³Ô¹Ï. Setting up an 91³Ô¹Ïn Pvt. Ltd. is time-consuming as the procedure is complicated and involves a lot of documentation. Our experts can help you with every step of registering a Pvt. Ltd. in 91³Ô¹Ï.

Simply put, a Special Economic Zone (SEZ) is an industrial zone with a favorable tax environment. If you settle in an SEZ, you pay no income tax for the first five years and only 50% of your income thereafter. Also, companies in SEZs are exempt from paying sales tax (GST)and do not have to pay Basic Custom Duty (30% on average in 91³Ô¹Ï). It can be very beneficial for you to set up in an SEZ, but it depends entirely on your product, your goals and where your customer base is located. Before you decide to establish yourself in an SEZ, it is therefore important to do thorough market research. Our local experts can always support you with this. Read more about our market research and analysis here.

This is a common complaint from foreign companies doing business in 91³Ô¹Ï. It is true (usually) that when sending an invoice for services rendered to an 91³Ô¹Ïn party, the 91³Ô¹Ïn party is required to withhold and remit 10 or 20% withholding tax. However, there are specific situations where the TDS rate can be lower than the default domestic rate or where deduction might be reduced or even nil. Foreign companies can get lower TDS rates under an applicable DTAA between 91³Ô¹Ï and their country of residence.

To enjoy a lower treaty rate, the foreign company should typically provide:

1. Tax Residency Certificate (TRC) from the home country tax authority;

2. Form 10F (as required);

3. Any other declarations required under the 91³Ô¹Ï-DTAA;

4. In some cases, a declaration of no PE in 91³Ô¹Ï.

Without proper documentation, the payer may default to higher domestic TDS rates.

PAN is short for Permanent Account Number. A PAN card was a necessity until recently and was obtained after obtaining aPAN registration with the 91³Ô¹Ïn Revenue Service. The need to apply for PAN expired as of July 2016. Until the first half of 2016, foreign companies that sent invoices to 91³Ô¹Ïn customers for services had to apply for PAN registration in 91³Ô¹Ï. Although it is no longer mandatory to have a PAN card, in some cases it may still be smart to apply for one. For example, if you want to establish yourself in 91³Ô¹Ï long term, you need to register with the 91³Ô¹Ïn tax authorities after which you will automatically get a PAN and PAN card.

The Goods and Services Tax (GST) is 91³Ô¹Ï's version of VAT. There are five rates, ranging from 0% to 28%, under which 1211 categories of goods and services are divided. Under the GST system, tax is levied at any time value is added to the product and a sale is made. This runs up to the final sale to the customer. You can read how the Goods and Services Tax is levied and whether you have to pay it here.