Setting up an India centre for a US software group
A US software group wanted an engineering centre in India. We set up the entity and the compliance around it in the order that let hiring start on time.
A US software group wanted to open a captive engineering centre in India and start hiring within a quarter. It had not decided on the entity type, the location or how the centre would be paid for its work.
Each of those choices affects tax, foreign exchange reporting and how soon the first employee can be put on payroll.
What we did
- Step 1
Choose the entity and the structure
We compared a wholly owned subsidiary with the other options available to a foreign group, and recommended the one that fitted the plan to hire, own intellectual property and bill the parent.
- Step 2
Incorporate and open the accounts
We prepared the incorporation documents, the registrations and the foreign-currency bank account for receiving the parent’s investment.
- Step 3
Record the investment correctly
We made sure the inward investment was reported through the authorised bank and to the regulator within the time allowed under FEMA.
- Step 4
Set the intercompany arrangement
We drafted the service agreement and a transfer pricing approach, so the centre earned a documented margin on its work for the group.
An India entity ready to hire, bill and report from week one.
The centre could start payroll as soon as the registrations arrived, because payroll, tax and provident fund registrations had been planned in parallel with incorporation.
The group received a compliance calendar for the first year: filings under company law, tax, GST, payroll and foreign exchange, each with a date and an owner.
An entity chosen on reasons
The structure was matched to hiring, intellectual property and billing.
A correct foreign investment record
Inward investment was reported on time.
A first-year calendar
Every filing had a date and an owner.
Setting up is quick. The work that lasts is the compliance calendar and the transfer pricing, which should exist before the first invoice.
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