1. Entity formation under the Companies Act, 2013
Most India GCCs are incorporated as a private limited company (Pvt Ltd) under the Companies Act, 2013, registered with the Ministry of Corporate Affairs (MCA). The Pvt Ltd form caps shareholders at 200 and bars public-share offerings, but is favoured for foreign-parent subsidiaries because it allows 100% foreign ownership in most sectors via the automatic route, simpler governance than a public company, and a clean exit pathway. Standard requirements include a minimum of two directors (at least one resident in India per § 149(3)), a registered office address, Memorandum & Articles of Association, board resolutions, and director KYC (DIN, DSC). MCA filings are made through the V3 portal (SPICe+ for incorporation; AOC-4, MGT-7, DIR-3 KYC, MSME-1 thereafter).
Once incorporated, statutory annual filings include audited financials (AOC-4) and the annual return (MGT-7) within prescribed days of the AGM, plus quarterly board meetings under § 173. Director responsibilities under § 166 are personal and joint — non-compliance carries monetary penalties and, in serious cases, disqualification under § 164.
2. Foreign investment, FEMA, and repatriation
Foreign Direct Investment (FDI) into a GCC subsidiary is governed by the Foreign Exchange Management Act, 1999 (FEMA) and the RBI Master Direction on FDI. For most GCC sectors (IT, ITeS, professional services), 100% FDI is permitted under the automatic route — meaning no prior government approval, only post-facto reporting. Reporting requirements include filing Form FC-GPR within 30 days of share allotment via the FIRMS portal (RBI), and an Annual Return on Foreign Liabilities and Assets (FLA) by 15 July each year. External Commercial Borrowings (ECB) — common for funding ramp-up — are governed by the ECB Master Direction with separate end-use restrictions and minimum-average-maturity rules.
Repatriation of profits to the foreign parent is permitted post-tax but subject to dividend distribution mechanics under the Income Tax Act. Royalty and management-fee remittances require a Form 15CA/15CB (CA certificate) and are scrutinised under transfer pricing rules.
3. Transfer pricing & TP audits
India's transfer pricing regime under § 92 of the Income Tax Act applies to every related-party transaction between the GCC and its foreign parent (or any associated enterprise). The rules require the GCC to charge an arm's-length price for the services it provides — typically a cost-plus markup for captive R&D and back-office work, calibrated against comparable Indian companies through a transfer pricing study. Documentation under Rule 10D, including a Master File and Country-by-Country (CbC) reporting for groups above prescribed revenue thresholds, must be maintained contemporaneously.
Indian tax authorities are aggressive on TP; cost-plus markups for IT/ITeS GCCs typically benchmark in the 12–18% range, with material adjustments common in audit. Advance Pricing Agreements (APA) — unilateral or bilateral — are increasingly used to lock in the markup for 5–9 years and remove audit risk. Form 3CEB (TP audit report) must be filed annually by the chartered accountant.
4. Direct tax & GST
Indian Pvt Ltd companies pay corporate income tax at the headline rate under § 115BAA (22% + surcharge + cess; effective ~25.2%) if they elect the new regime. GCCs typically operate under § 115BAA. Minimum Alternate Tax (MAT) and dividend distribution mechanics apply within the standard framework. The GCC must register for a Permanent Account Number (PAN), Tax Deduction Account Number (TAN), and deduct TDS on local payments.
Goods and Services Tax (GST) registration is mandatory for any business with annual turnover above the prescribed threshold (₹20 lakh services / ₹40 lakh goods, with state variations) or making interstate supplies. GCCs providing services to a foreign parent typically qualify as "export of services" under § 2(6) of the IGST Act — taxable at zero rate, with refund of input tax credit (ITC) on inputs. Monthly returns include GSTR-1 (outward supplies), GSTR-3B (summary return), and an annual GSTR-9. The Letter of Undertaking (LUT) under Rule 96A enables exports without IGST payment.
5. SEZ vs STPI vs DTA — choose your zone
India offers three operating zones for GCCs, each with different tax and operational tradeoffs:
- Special Economic Zone (SEZ) — under the SEZ Act, 2005. Historically the most generous: customs-free imports, deemed exports, and (until 2020) a 100% income-tax holiday for the first 5 years tapering thereafter under § 10AA. The income-tax sunset clause withdrew new exemptions for units commencing operations after March 31, 2020, so the historical tax draw is largely closed for new GCCs. SEZ remains attractive for the customs and operational benefits, plus state-level fee waivers in many cases. Strict bookkeeping required (separate books, SOFTEX filings).
- Software Technology Park of India (STPI) — administered by MeitY. 100% FDI, customs-free imports of capital goods for R&D, and a streamlined export-tracking regime. No income-tax holiday since 2011, but lower compliance overhead than SEZ and easier to set up. STPI registration is often the default for tier-2 city GCCs.
- Domestic Tariff Area (DTA) — the standard regime. No special incentives, but no zone-specific compliance either. Most flexible operationally; suitable when state IT/ITeS policy incentives compensate for the lack of zonal benefits.
State-level incentives (capital subsidies, stamp-duty exemption, electricity tariff rebates, payroll subsidies) are available in addition to the zone choice and can outweigh zone-level differences.
6. DPDP Act & data residency
The Digital Personal Data Protection (DPDP) Act, 2023, in force, governs the processing of personal data of Data Principals (individuals) in India. A GCC processing personal data — including HR records of Indian employees and customer data routed through India — is a Data Fiduciary, subject to obligations including notice and consent (or one of the listed legitimate uses), data minimisation, purpose limitation, security safeguards, breach notification to the Data Protection Board, and an Indian Data Protection Officer for Significant Data Fiduciaries. Cross-border transfer is permitted to any country except those notified in the negative list.
Sectoral data-residency rules continue to apply alongside DPDP: RBI (storage of payments data only in India), IRDAI (insurance), SEBI (capital markets), and CERT-In (incident reporting within 6 hours). For GCCs serving regulated US/EU verticals, alignment with HIPAA, GDPR, and SOC 2 controls is typically maintained on top of the Indian regime.
7. Labour codes, EPF, ESI, gratuity
India's four consolidated Labour Codes (Wages; Industrial Relations; Social Security; Occupational Safety, Health & Working Conditions) replace 29 prior central labour laws and are operationalising state-by-state. Until full rollout, the legacy statutes continue to apply alongside parts of the new codes. Mandatory employer contributions for full-time staff include Employees' Provident Fund (EPF) — typically 12% of basic+DA, matched by the employee — and Employees' State Insurance (ESI) where wages fall below the threshold (currently ₹21,000/month).
Gratuity becomes payable to employees with five or more years of continuous service at 15 days of basic+DA per year of service, capped per the Payment of Gratuity Act. State-specific Professional Tax, leave entitlements (Earned, Sick, Casual), and statutory bonus under the Payment of Bonus Act all apply. Contract labour engagement is governed by the Contract Labour Act and the new Industrial Relations Code, with sector-specific licensing depending on state.
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Schedule a regulatory briefingDisclaimer: This brief summarises Indian regulation as of 2024-Q4 / 2025-Q1 and is not legal, tax, or compliance advice. Engage qualified Indian counsel and chartered accountants for any binding decision.