The common architecture
A foreign parent or group company incorporates and owns an Indian private limited company. The India entity employs local staff, holds local contracts and provides defined services to overseas group entities under an intercompany agreement. Capital funds the early build; service revenue supports ongoing operations. Governance sits through the board, delegated authorities and group-control framework.
Corporate layer
Shareholding, directors, constitutional documents, delegated authority, board calendar, statutory records and beneficial-ownership analysis.
Foreign-investment layer
Sector eligibility, entry route, valuation where relevant, receipt of funds, allotment and reporting through the prescribed RBI systems.
Intercompany layer
Services, assets, personnel, IP, pricing, invoicing, currency, risk allocation, data access and termination.
Operating layer
Employment, payroll, workplace, technology, procurement, privacy, cyber, insurance and local management responsibility.
FEMA: treat reporting as part of the transaction.
Foreign investment into the Indian company must fit the applicable sector, entry route and conditions. The company then needs a disciplined record of receipt, issue and allotment of equity instruments and the related reporting. RBI guidance provides for FC-GPR reporting following the issue of equity instruments and an annual Foreign Liabilities and Assets return for entities with qualifying foreign investment.
Do not leave this as a post-closing clean-up. Banking documents, board approvals, valuation support, constitutional records and reporting should tell the same story.
Transfer pricing: the mark-up is not the model.
Many GCCs operate as captive service providers and are remunerated on a cost-plus basis. But the answer is not simply “choose a percentage”. The analysis begins with functions performed, assets used and risks controlled. It then defines the cost base, exclusions, pass-through treatment, allocation keys, service recipients, invoicing and evidence that services were actually delivered.
- Describe the services at a level that matches operational reality.
- Align decision-making language with who actually controls material risks.
- Set cost-allocation rules before shared costs begin accumulating.
- Maintain agreements, invoices, working papers and benefit evidence as one system.
- Review the model when the GCC moves from execution to product ownership or strategic control.
India's income-tax portal identifies Form 3CEB as the accountant's report relating to international and specified domestic transactions under section 92E. Filing and documentation requirements must be confirmed for the relevant year.
Tax and compliance questions that belong in design
| Area | Design question | Why it matters |
|---|---|---|
| Corporate tax | What income, costs and incentives sit in the India entity? | Shapes the effective model and forecasts. |
| GST | Do services satisfy the current conditions for export treatment? | Affects invoicing, cash flow, documentation and refund processes. |
| Withholding | Which domestic and cross-border payments require analysis? | Missed deductions create interest, disallowance and compliance exposure. |
| Permanent establishment | Could India activity create a taxable presence for another group entity? | Authority, contracting and personnel behaviour matter beyond written terms. |
| Payroll and equity | How are salary, benefits, secondments and overseas share plans administered? | Employee experience and tax/reporting obligations intersect. |
| Data and IP | Who owns, develops, accesses and exports data or intellectual property? | Contracts, tax, privacy and cyber controls must align. |
A governance file worth maintaining
Keep a current operating-model note, structure chart, intercompany agreement set, delegated-authority matrix, board calendar, FEMA tracker, transfer-pricing policy, statutory compliance calendar, key control map and evidence index. The purpose is not paperwork. It is ensuring that the legal story and the operating reality remain connected as the centre grows.