India - US Cross Border Business - A Guide to Indian Tax & Regulatory Aspects

India is considered to be the fastest growing economy in the world, with an estimated growth rate of 7.3% for the current financial year 2015-16 inspite of uncertain global outlook.

India continues to remain the ‘outsourcing destination of choice’ of the world in sectors such as Information Technology, Pharmaceuticals, Banking and Finance, Insurance, Gems and Jewellery, Manufacturing, etc. This is mainly due to the ample availability of competent and cost efficient workforce. Increased emphasis has been laid by the policy makers on further integration of the economy with the global markets, viz. adopting convergence of the financial reporting standards with International Financial Reporting Standards (IFRS), laying foundation for implementation of the Goods and Services Tax (GST) and measures aimed at improving ‘ease of doing business’

India-US has improved their relationship significantly over the last decade and more specifically over the past one year. The Honourable US President Barack Obama has described the strategic relationship between India and US as the “defining partnership of the 21st Century”, while our Honourable Prime Minister Narendra Modi has characterized India-US partnership as a “natural alliance.”

This publication is aimed to bring out the potential for business between India-US and provide a broad outline of foreign investment regulations, tax and legal aspects in India, which can have a material impact on decision about making investment and conduct of business in India, specifically from the view point of US investors. In the last decade, we have seen several Indian companies making investments in the US for manufacturing,

distribution and service activities. This publication also endeavours to provide an outline of the Indian tax, exchange control and other regulations relevant for such cross border investment.

In this publication, we have endeavoured to provide a quick overview of the following significant aspects, which are of interest to foreign investors contemplating investment in India:

  • Foreign Exchange Regulations - Foreign Investments in India (including Permissible / Prohibited Sectors)
  • Alternative Structures - Company / Liaison office / Project Office / Branch Office / LLP
  • Tax Rates - Corporate & Employee Perspective
  • Tax Incentives for Businesses in India
  • Transfer Pricing Regulations in India
  • Foreign Tax Credit
  • Funding Options (including ECB)
  • Repatriation of Profits

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