Establishing a new company/business in India
Any foreign investors can commence business in India as:
Foreign company
- Liaison office – To represent parent company in India
- Branch office – To undertake activities such as export, import of goods, research, consultancy etc.
- Project office – Activities as per contract to execute project
Indian Company:
- Joint Venture or Wholly owned subsidiary – Any investor can enter into a JV or Wholly owned subsidiary as either Private Ltd. or Public Ltd company subject to Companies Act 2013
- Limited Liability Partnership:
- LLP (Subject to provisions of LLP Act, 2008)
- FDI permitted under automatic route in LLPs operating in sectors/ activities where 100% FDI is allowed via automatic route and there no FDI linked performance conditions
Types of permitted business establishments in India:
- One-person company
- Private Ltd. company
- Public Ltd. company
- Sole proprietorship
- Partnership firm
- Limited Liability Partnership
- Foreign company
Taxation
Over the last few years, the government of India and various State (provincial) Governments have undertaken various policy reforms and process simplification towards great predictability, fairness & automation. This has consequently, lead to India’s consistent rise in the World Bank’s Ease of Doing Business (EoDB) rankings over the past few years.1
Key Features of India’s taxation System:
- Taxes in India are levied by the Central Government and the State Governments. Some minor taxes are also levied by the local authorities such as the Municipality and Local Government.
- A resident company is taxed on its worldwide income. A non-resident company is taxed only on income that is received in India, or that accrues or arises, or is deemed to accrue or arise, in India. Company whether Indian or foreign is liable to taxation, under the Income Tax Act,1961.
- Corporation tax is a tax which is levied on the incomes of registered companies and corporations. Taxes in India are primarily into 2 categories - Direct and Indirect Tax.
Goods and Services Tax (GST) is a unified indirect tax across the country on products and services. It is a comprehensive levy on manufacture, sale and consumption. It is a destination-based consumption tax.
- The GST, dual in nature is levied by both the Centre and State. The Central GST (CGST) is levied on intra state supply of goods and / or service by Central Government and State GST (SGST) is levied by the States.
- Integrated GST (IGST) is levied and administered by the Centre on every inter-state supply of goods and services.
- Import of goods or services is treated as inter-state supplies and is subject to IGST in addition to Basic Custom duty.
- CGST, SGST and IGST are levied at uniform rates, mutually agreed upon by the Centre and the States under the aegis of the GST Council (GSTC).
- All goods and services are covered under GST except alcohol for human consumption and specified petroleum products.
- Avoidance of double taxation based on the Double Taxation Avoidance Agreement, signed between India and Slovenia in 2003.
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Source:
Invest India: https://www.investindia.gov.in/setting-up-business-in-india
