Doing business in India June 2020 Foreword

The COVID-19 pandemic is having an overwhelming impact on global fiscal policies. These are testing times for nations. For India and for most other countries, the outbreak presents twin challenges which is not only containing the spread of the virus, but also limiting the economic impact in an already slowing economy. But extraordinary times call for extraordinary measures. A timely evaluated ease out from the lockdown, along with a well-calibrated monetary and fiscal stimulus would be critical to survive the severe blow of the pandemic. India’s growth prospects are also quite challenging as it has entered the crisis on the back of an economic downslide. The first month of FY21, that is, April 2020, has been effectively wiped out, as far as economic activities are concerned, due to the near-complete lockdown. The Indian Government has announced several relief measures, especially on statutory and regulatory compliance matters under Income , Goods and , , Corporate affairs, Insolvency and Bankruptcy Code. Similar measures have been introduced in other sectors. To spur investments, relaxation of Foreign Direct Investment limit in defence, privatization of six more airports, and fully opening coal mining to the private sector, is part of an expansive economic stimulus package to offset the impact of COVID-19 outbreak. This was followed with a relief package announced under the Pradhan Mantri Garib Kalyan Yojana for the poor. To support the hard-hitting economy and all the sections of the society at large, the government announced mega relief packages to create Aatmnirbhar Bharat (self-reliant India). As per the Doing Business Report, 2020 released by the World Bank, India ranked among the top 10 improvers for the third consecutive time. From the 77th rank last year, the country jumped 14 places to the 63rd position. With this improvement, India is making it easier to do business. The economic stimulus packages and current environment present additional opportunities for the private sectors to set up their manufacturing hubs in India as skilled managerial and technical manpower matches the best available in the world at a cheaper price. EY has developed this guide with the intent of giving stakeholders an overview of the demographic profile of India and its key sectors. The report also provides an insight into the regulatory framework, form of business enterprises, funding options and relevant tax regimes in India in a concise manner.

The companies that are doing business in India, or are planning to do so, may be well advised to obtain current and detailed information from our experienced professionals.

Rajiv Chugh Partner and National Leader Policy Advisory & Speciality Services, EY India Inside this report Team

Editorial Board

Rajiv Chugh Ritika Loganey Gupta Ankur Singla Deepti Chamria

Brand, Marketing and Communications

Jerin Verghese Vaibhavi Katiyar

Edit and Design

Dhriti Gandhi Jasmeet Joshi Doing Business in India 4 A Profile Demographic Profile Geographical a glance a India: at Age structure Total area countries Neighboring Median age Airports Waterways Roadways Administration estimates) Population (2020 Capital Railways Natural resources Climate Sex ratio ► ► years (49.26%),65andover (6.57%) 0-14 years(26.16%),15-24 (18.01%),25-64 3.29 millionsq km Nepal, PakistanandSriLanka Afghanistan, Bangladesh,Bhutan,China,Myanmar, Median age:28.43 years 464 14,500 km 5.89 millionkm 28 statesand8unionterritories New Delhi 68,442 km gas, diamondsandlimestone manganese ore,mica,bauxite,chromite,natural Coal (fourth-largestreservesintheworld),ironore, south Temperate inthenorthandtropicalmonsoon 1.08

1.38 billion Population growth 5 6 malesperfemale 4 2 6 3 (urban: 34.5%,rural: 65.5%) 1 (90%land,10%water) 4 : 0.99%(y-o-y) 6 1 India’s fact sheet 6 7 market Financial profile Economic Political profile labor force Education and Labor force exchanges Major stock regulator Capital markets Central bank GDP Prime Minister President Private consumption estimates (FY20 Literacy rate 12 ) ► ► 494.26 million ► ► ► in 1992 Securities andExchange Board of India,established Reserve BankofIndia,established in1935 growth: 6%inFY19 US$2.71 trillion Narendra Modi(tenure:fiveyears) Ram NathKovind(tenure:fiveyears) US$1.61 trillion ► ►

National Stock Exchange established in1992 Bombay Stock Exchange established in1875 Merchandise Trade deficit: US$152.9billion Merchandise : US$314.3billion Merchandise US$467.2billion imports: 74% (male: 82%,female: 65%) system population andawell-developed education India hasoneof theworld’s largest school-age 9 in2019 10 10 (current prices, FY19), GDP (currentprices,FY19),GDP inFY19 11 8 A Doing Business in India 5 B ► ► ► this program include 2020, thekey features towards promoting draft Defence Procurement Procedure (DPP) participation of industry. Asperthe recent in thelast four years to promote greater country. Several initiatives have beentaken development of defence production inthe India program, hasgiven anew impetus to The government, of aspart its Make in the world India hasthefourth-largest armedforces in which isaround 2.1%of its GDP world. Its defence budget isUS$66.9billion importer of defence goodsandservices inthe

(R&D). innovation andresearch anddevelopment development (D&D) andMake-III to promote Additional categories like design and to auniform 50%ormore. applicable, have beenincreased from 40% all procurement categories, wherever Indigenous content percentages (%)in Manufacture inIndia) andLeasing. categories, suchas, Buy (Global – Introduction of new procurement Aerospace anddefence overview Key sectors: 1 . Ithasbecome oneof thelargest 3 : 2 . defence come upwithscheme for promotion of MSMEsin production by industry. The government hasalso only by Ordinance Factory Boards (OFBs) for denotifying several items previously produced licensing requirements for critical items onlyand FDI through automatic route to 74%,restricting Other key policy relaxations include, increase in ► terms of volume by 2026 the world’s third-largest automotive market in set-up inTamil NaduandUttar Pradesh the policy for defence industrial corridors to be The government isworking ontheformulation of by 2026 is expected to reach US$251.4-282.8billion industry (includingcomponent manufacturing) largest intheworld prime drivers of theeconomy andisthefourth Automotive industry inIndiaisoneof the

import substitutions.import indigenous design anddevelopment including spearhead in identifying projects for indigenization organization, whichwill Establishment of aninnovation and Automobile 4 6 . . The Government of Indiaencourages 6 . Indiaisexpected to be 7 . Indianautomotive 5 . banks asof September 2019 cooperative banks and94,384rural cooperative banks, 53regional rural banks, 1,542urban sector banks, 22private sector banks, 46foreign The Indianbanking system consists of 18public sector. corporate governance standards inthebanking capital base, effective riskmanagement andbest and supervisory policies to enableastrong RBI regularly reviews andrefines the regulatory RBI Act, 1934;andtheCompanies Act, 2013. include theBanking Regulation Act, 1949;the sector. Key enactments governing thissector The Reserve Bank of India(RBI) regulates the billion duringApril2000to December 2019 The industry hasattracted FDIworth US$23.89 and allows 100%FDIundertheautomatic route. foreign investment intheautomobile sector of US$1.39billionfor FY20-22 in IndiaScheme Phase IIwithafundrequirement Adoption andManufacturing of ElectricVehicles The Government of Indiaapproved theFaster stood atUS$1,893.77billion trillion by FY19.Deposits asof February 2020, Rate (CAGR) of 11.11% andreached US$1.86 deposits grew ataCompound AnnualGrowth Banking 6 6 . DuringFY07–19, . 9 . 8 . a wholly-owned subsidiary of aforeign bank have to beheldby residents, except incase of times, atleast 26%of thepaid-up capital will approval from thegovernment. Further, atall route andmaximumof 74%after getting an to 49%of thetotal equity undertheautomatic Foreign investment inprivate banks iscapped in thesecurities market. etc.), aswell asprohibits unfair trade practices stockbrokers, merchant bankers, underwriters, intermediaries of thecapital market (such as of thecapital market. Itregulates all securities aswell asto promote development to protect theinterests of theinvestors in the capital market regulator, isestablished Securities andExchange Board of India(SEBI), as secondary capital market inIndia.The much deeperandresilient primaryaswell have culminated intheemergence of a instruments available. Allthese factors transparency, liquidity andthetypes of regulatory framework, market infrastructure, development interms of accessibility, significant progress whichspan into The Indiancapital markets have made Capital market 10 . B Doing Business in India 6 boosting theIndiabrand globally. investor base, better valuations andinturn, and diversified pools of capital, broader exchanges, providing easier access to deeper to directly list oncertain foreign stock 2013 inMarch 2020,allow Indiancompanies amendments madeto theCompanies Act, Asia-Pacific region largest andrapidly growing markets inthe The Indianhealthcare industry isoneof the in terms of numberof IPOs NSE includingSMEs) ranking eighth globally 2020 withIndianstock exchanges (BSEand India recorded 10IPOsinfirst quarter of Pharmaceuticals value world’s production by volume and1.5%by value, thereby accounting for around 10%of pharmaceuticals by volume and13th by ranks third intheworld for production of 50% of global demandfor vaccines. India in global supply by volume. Italso meets medicines globally, occupying a20%share India isthelargest provider of generic focus to thissector. healthcare, COVID-19 hasgiven agreater the government was always focused on hospitals andmedical equipment. While primarily of pharmaceutical, biotech, Pharmaceuticals 50% Meets Healthcare 7 . vaccines. demand for global 7 . Healthcare comprises 11 . The recent Biotechnology states parks inIndiapartnership withtheIndian years, aimsto develop three megabulkdrug with abudget of US$0.4billionfor thenext five Further, for boosting this sector, the government, ► ► the wake of theCOVID-19 pandemic in themonth of March 2020andAprilin India hasundertaken thefollowing initiatives leader inpharmaceuticals, theGovernment of In order to retain India’s position asaworld projects requires government approval. under automatic route andbeyond 74%insuch projects andupto 74%inbrownfield projects FDI ispermitted upto 100%ingreenfield discovery underits PharmaVision 2020 make thecountry ahubfor end-to-end drug The Department of Pharmaceuticals aimsto reach US$150billion Indian biotechnology industry isexpected to DPT, BCG andmeasles vaccines. By 2025,the India isalso theleader intheglobal supplyof 3% share intheglobal biotechnology industry biotechnology intheworld, withapproximately India isamongthetop 12destinations for Biotechnology

been amendedto make itrestriction free. progesterone andchloramphenicol, etc. has and B12,tinidazole, metronidazole, acyclovir, policy forExport APIssuchasvitamins B1,B6 intermediates. pharmaceutical ingredients andbulkdrug expeditiously to projects related to active Environmental clearances to begranted 7 . 7 . 7 : 7 . 7 . Medical devices following initiatives the Government of Indiahasundertaken the To propel thissegment for growth, further medical devices sector. permitted upto 100%underautomatic route in scheme. of medical devices manufactured underthe 20 would beprovided onspecified categories of incremental sales over base year FY2019- of US$0.45billion), thepotential incentive at5% medical devices (with aproposed budget outlet at promotion of domestic manufacturing of Production Linked Incentive Scheme: aimed country. manufacturing of themedical devices inthe facilities, whichisexpected to reduce cost of It would provide for common infrastructure proposed budget outlet of US$0.05billion). of medical device parks inIndia(with a Medical devices park: itisaimedatdevelopment B. A. reach US$50billionby 2025 estimated to beUS$11billionandisexpected to of themedical devices industry inIndiais enterprises (SMEs). The current market size networks, aswell assmallandmedium of large multinationals, withextensive service The Indianmedical devices industry consists Medical devices

12 : 7 . Currently, FDIis Hospitals growing ataCAGR of 16%-17% by 2023from US$61.8billionin2017; industry isexpected to reach US$132billion as well asdomestic investors. The hospital a hugeinvestor demandfrom both global of thetotal healthcare market. Itiswitnessing The hospital industry inIndiaaccounts for 80% the world information technology (IT)companies across India isthelargest offshoring destination for the automatic route. Currently, FDIispermitted upto 100%under accounts for US$135billion from ITservices andBPMfor FY2019-20 grow to US$350billion by 2025.Total revenue at US$177billionin2019andisexpected to sourcing market unique selling proposition (USP)intheglobal times cheaper thantheUS, continues to beits ITeS, whichisapproximately three to four country’s cost competitiveness inproviding five to sixtimes inexpensive thantheUS the world. Ithasalow-cost advantage by being of technical graduates isoneof thelargest in countries around theworld. India’s talent pool over 1,000global delivery centers inover 80 India’s ITandITeS companies have set up and business process outsourcing (BPO). two majorcomponents, namely, ITservices Hospitals Information technology 6 . The ITindustry inIndiaconsists of 7 . The IT-BPM industry stood 7 . 7 . 6 . The B Doing Business in India 7 relaxed. of insurance intermediaries hasalso been of control beingwithIndianresidents incase insurance intermediaries andtherequirement route, 100%FDIhasnow beenpermitted for the automatic route. Undertheautomatic FDI inthissector isallowed upto 49%under years 14%-15% annuallyfor thenext three to five industry inthecountry isexpected grow by reach US$280billionby 2020.Life insurance overall insurance industry isexpected to field for insurance companies inIndia. The number of reforms for creating alevel playing India (IRDA). The authority hasintroduced a Regulatory andDevelopment Authority of The sector isregulated by theInsurance insurance premium to thetotal population. and insurance density iscalculated asratio of as apercentage of insurance premium to GDP has made. Insurance penetration ismeasured reflects thedevelopment theinsurance sector insurance industry’s penetration anddensity 33 are innon-life insurance which 24are inlife insurance business and economy. Itconsists of 57companies of Insurance isanimportant sector intheIndian India. Some of these are: initiatives to promote ITandITes sector in The Government of Indiaistaking various develop India asasoftware product hub. Policy onSoftware Products-2019 to The unioncabinet approved theNational country. leverage itfor development work inthe Intelligencein Artificial (AI) and to help national level program to enableefforts The government plansto set upa Insurance 6 . 6 . The measure of Industry andInternal Trade released by theDepartment for Promotion of 2019 stood atUS$8.71billion,asperdata print media) intheperiod April2000–December information andbroadcasting sector (including The Foreign Direct Investment (FDI)inflows inthe operators. multiple-sim consumers by some of thetelecom account of rationalization anddeactivation of 2019. The fall insubscriptions islargely on in December 2018to 1,154millioninNovember subscriptions decreased 2%from 1,176million tilt towards measurability andperformance content ondigital platforms andmarketers’ in 2019driven by increased consumption of Digital advertising grew 24%to US$2.72billion reach around US$43.93millionby 2024 CAGR of 13.5%over 2019-24andisexpected to its current trajectory, itisset to expand ata in 2019,agrowth of almost 9%over 2018.With over thelast decade. Itreached US$25.7 billion increasing digitization andhigherinternet usage India. The industry hasbeenlargely driven by industry isoneof thefastest growing sectors in The Indianmediaandentertainment (M&E) to 13%in2019to US$0.41billion was 3.3%of thesegment in2017,increased for onlinequality content. Subscription, which subscription revenue grew 106%asIndianspaid Paid digital subscribers crossed 10millionand the world andsecond largest refiner inAsia consumer of crudeoilandpetroleum products in eight core industries. Indiaisthethird largest The oilandgasindustry is among India’s Oil andgas Media andentertainment 8 . 13 . Wireless 6 . 13 6 . . million metro tonnes by 2020 India isaimingto create capacity port of 3,200 In additionto theabove, theGovernment of harbors. construction andmaintenance of and ports the automatic route for projects related to the government hasallowed FDIupto 100%under of Shippingstands atUS$0.25billion In theBudget 2020,allocation to theMinistry Regulatory Authority Act, 2009. Major Port Trusts Act, 1963andtheMajorPorts formulated to govern includethe Indianports state governments. Some of thekey legislations areIndia, whilenon-majorports administered by aremajor ports governed by theGovernment of the concurrent list of theIndianconstitution. The areIn India,ports undertheadministration of 0.82% the previous year, showing anoverall growth of handled duringthecorresponding periodof million tonnes asagainst 699.10milliontonnes fromports Aprilto March 2020 was 704.63 major ports encompasses 12majorand205notified non- world withcoastline of about7,517km,which India isthe16thlargest maritimecountry inthe Authorities Bill, 2020ispendingwiththelower the existing publicsector undertakings (PSUs). disinvestment ordilutionof domestic equity in public sector refining isup to 49% withoutany private sector refining projects. The FDIlimit for route ispermitted upto 100% inupstream and encourage investments. FDIundertheautomatic Discovered SmallFieldPolicy andCBMpolicy to Hydrocarbon Exploration andLicensing Policy, The government hasenacted policies suchas of the Ministry of Petroleum andNatural Gas. The industry isundertheadministrative ambit Ports 14 . 6 . The total traffic handledatmajor 6 . The Major Port 15 . The implementation of Port Community System. some of trade-related processes through Shipping, hastaken steps towards digitizing Association, undertheaegisof theMinistry of authorities. Inaddition,theIndianPorts of upontheboards suchports of majorport the administration, control andmanagement planning of inIndiaandto majorports vest to provide for regulation, operation and house of theIndianParliament. The billseeks (excluding atomic energy). to 100%ispermissible inthepower segments continuous surge indemand for power. FDIup commodity. The country isexperiencing continues to bea valuable andessential For adeveloping economy like India,power capacity contribution of around 46.8%of theinstalled Watt370.11 Giga (GW), withprivate sector’s as on31March 2020isestimated ataround India’s installed capacity for power generation agricultural anddomestic waste. conventional sources suchaswind,solar, and oil, hydro andnuclear power to viablenon- sources suchascoal, lignite, natural gas, power generation range from conventional diversified sectors inthe world. Sources of India’s power sector isoneof themost the country 230.60 GW of thetotal installed capacity in installed capacity, accounting for nearly form (i.e., amajor portion 62.8%)of the Power andutilities 16 . Fuel based thermalpower plants 16 . B Doing Business in India 8 The Indianretail trillion by 2030 estate sector isestimated to reach US$1 ambitions. The market size of Indianreal infrastructure for Indiato match its growth to play acritical role inbuilding therequisite retail, hospitality andcommercial continues global destination intheretail space major market intheworld andisfifth-largest population and employs about10%of India’s working be around US$700billionin2019-2020 by 2025 India’s GDPisestimated to beabout13% The contribution of real estate sector to in nuclear families such asurbanization, income growth andrise socio-demographic andeconomic factors growing ataCAGR of 9%-11%,driven by estimated to cross US$1trillionby 2025, Retailers Association of India,themarket is automatic route ispermitted. Asperthe and 100%insinglebrand retail underthe Currently, 51%FDIinmulti-brand retail Government hasbeenrelaxing FDInorms. To provide boost to thesector, theIndian (REITs) Regulations, 2014. registered and regulated undertheSEBI and Real Estate Investment Trusts (REITs) commercial premises, roads orbridges of townships, construction of residential/ However, itdoes not includedevelopment FDI isprohibited inreal estate business. Real estate consumer products Retail industry and 6 . The sector consisting of housing, 18 . Itisoneof thefastest growing 6 17 . sector isestimated to 19 . 6 . base of 1.18billion telecommunications market withasubscriber India iscurrently theworld’s second-largest and highways sector. allowed undertheautomatic route intheroad Highways for FY2020-21.FDIupto 100%is allocated to Ministry of Road Transport and In Budget 2020,US$12.84billionhasbeen of thecountry is88.81% telephone connections. The overall tele-density connections, including1154.39millionwireless The country has1174.66milliontelephone reach 8.2%by 2020 industry’s contribution to GDPisexpected to about6.5%ofsupports India’s GDP. Telecom all telephone subscriptions. The mobileindustry mobile economy now constitutes about 98%of ever highway construction of 3,979kms FY 2019-20,NHAIhasaccomplished highest- route andhigherinvestment limits through telecom sector, 49%isthrough theautomatic The FDIisderegulated andrelaxed to 100%in US$741.51 billionby 2022 65,000 kmsof nationalhighways atthecost of The Government of Indiaaimsto construct has 132,500kms traffic inthe country ishandled by roads. India transported through roads and90%of passenger More than64.5%of allgoodsinthecountry are the world, spanning atotal of 5.89millionkms. India hasoneof thelargest road networks in Telecommunications Roads andhighways 20 22 of nationalhighways. During 23 . The country’s growing . 22 . 6 . 21 . conditions. up to 100%FDI,subjectto certain operating in e-commerce marketplace inIndiaallows Nations the Sustainable Development Goals of United from 134in2017.These goals are alignedto Index of International Telecommunication Union to thetop 50nationsintheICT Development India’s GDP. The other ambitionisto propel India contribution of digital communication to 8%of communications sector andincreasing the creating four millionadditionaljobs inthedigital key objectives are broadband for allby 2022, empowered economy andsociety. The policy’s – 2018(NDCP-2018)envisions adigitally The NationalDigital Communications Policy US $4.29billion. December,2019) FDIequity inflow touched approval route. During2019-20(up to US$200 billionby 2027 e-commerce market isexpected to grow to Brand Equity Foundation (IBEF),theIndian market intheworld by 2034.According to India US to become thesecond largest e-commerce e-commerce sector. Itisexpected to surpass the India hasbeenexperiencing highgrowth inthe userssmartphone anddigital payments options, Owing to thegrowth ininternet penetration, by 2025 to generate atrilliondollaronline economy India underthe Digital ande-commerce 22 6 . The business-to-business model . Digital Indiacampaign isaiming 8 6 . The Government of B Doing Business in India 9 C manufacture theirproducts inIndia. initiative encourages companies to to promote entrepreneurship. The of doingbusiness asakey factor India initiative thatrecognizes ease towards thegovernment’s Make in reflect aprogressive movement destination. These policies also make Indiaaninvestor-friendly adopted by thegovernment to Most of thepolicies have been regulatory framework. discretion to adhere to thegiven to exercise theirjurisprudence and dealer bankers whoare required majority of its powers to authorized Currently, RBIhasdelegated management of foreign exchange. to have acontrolling role inthe implications. The actenvisages RBI which have international financial provisions relating to transactions as itstands today, encompasses Foreign Exchange Management Act, foreign trade climate and Investment categorized asfollows: Foreign investment inIndiacan broadly be 01 03 02 investment inIndia Components of foreign NRIs andPIOs repatriation basis by Investments onanon- Investment Scheme under Portfolio Foreign investment Investment Foreign Direct FDI inIndia by Singapore andJapan) invest 59%of thetotal investments are service sector 19 billion in2012-13to US$44.37billionin2018- sectors hasnearly doubledfrom US$22.42 Total FDIequity inflows inIndiafrom various intellectual property. trade andservices, aswell asininvestment and also enableincreased economic cooperation in to themembercountries, these agreements preferential rates ontrading of goods its key trading partners. from Apart offering bilateral andregional trade agreements with Over theyears, Indiahasentered into several receiving almost 36%of thetotal FDI software and hardware andtelecommunications, 1 . The top three countries (Mauritius, followed Foreign trade 1 . The majorsectors thatattract Japan Singapore Mauritius 2 , computer 1 . 59% period last year ofimports US$140.92billionover thesame lower interms of dollarcompared to theoil valued atUS$129.43billion, whichwas 8.15% March 2019-20 2019-20 India’s overall duringApril-March imports 2019-20 India’s overall exports duringApril-March (-) 6.33%over thesame periodlast year billion, exhibiting anegative growth of (-) 1.36%over thesame periodlast year billion, exhibiting anegative growth of a fall of (-)3.10% billion for thesame periodlast year, exhibiting US$235.73 billionascompared to US$243.27 over thesame periodlast year dollar compared to those of US$373.16billion billion whichwas 9.49%lower interms of imports duringApril-Marchimports 2019-2020 in April-March 2019-20 petroleum andnon-gemsjewelry exports 3 3 are estimated to beUS$598.61 are estimated to beUS$528.45 4 3 . Non-oil imports duringApril- . Non-oilimports were valued atUS$337.76 4 . FDI in India of thetotal 3 were valued at 4 . 1 . 3 4 4 were . Oil . Non- C Doing Business in India 10 D run efficiently. the business can befinanced and and would also helpto ensure that legal/regulatory/tax perspective) efficiency (from anoperational/ is likely to goalongway to ensure entity inIndia.The right selection business objective of its foreign presence, keeping inmindthe appropriate form of business to enter Indiashouldselect an Every foreign investor planning in India options Entry Liability Partnership Company, Limited Private Limited A foreign entity can set uptheirbusiness operations inIndiaeitheras (LLP), etc. Incorporated entities an incorporated orunincorporated entity. Foreign entity Branch Office (BO), Liaison Office (LO), Project Office Unincorporated (PO), etc. entities D Doing Business in India 11 Particulars Permitted activities Ease ofexit accumulated profits Repatriation of commencement Approval for Income taxrate Legal Liaison office (LO) ► ► permitted. No commercial/businessactivitiesare Liaison activities authorities isrequired. Prior approvalofADBankandROC to undertakeanybusinessactivity. Not applicableasLOisnotpermitted any businessactivity. since itisnotpermittedtoundertake An LOisnotsubjecttotaxinIndia, of theforeignparentcompany. acts onlyasacommunicationchannel Represents theparentcompanyand The following table gives a snapshot of some of the commonly preferred business forms in India

scenarios. Required from RBIinexceptional conditions subject to fulfilment of prescribed dealer bank (AD Bank), whichis Required from anauthorized 2 . Project office (PO)/Branch office (BO) ► ► undertaken. Activities listedbyRBIareonlyallowedtobe Restricted scope required. Prior approval of ADBank andROCauthorities is compliances. profits outside Indiauponfulfilling procedural A BO/PO ispermitted to remit post-tax Liable to tax onincome earned inIndia@40% activities inthecourseofbusiness projects, whereasaBOisset-upforcarrying company. APOisgenerallyset-upforspecific Both BOandPOareextendedarmsoftheparent

fulfilment of theprescribed conditions Required from anADBank, whichissubjectto Required from RBIinexceptional scenarios. 1 . 2 . 3 . Private Limited Company ► ► guidelines. A companycanbesetupsubjecttoFDI compliances to beundertaken. No statutory approval required; procedural ► ► guidelines. Association ofthecompany,subjecttoFDI Activities specifiedinMemorandumof Independent status

rates (15%/22%/25%/30%) Liable to tax onglobal income @different Tax (MAT)@15% Company is liableto MinimumAlternate details onapplicable tax rates). conditions (please refer section ‘L’ for annual turnover and fulfilment of certain depending uponthenature of activities, liquidation. Exit can bethrough sale of shares or strategy adopted. It may becomplex dependingonthe 3 on its bookprofit. 3

Partnership (LLP) Limited Liability ► ► to FDIguidelines. An LLPcanbesetupsubject undertaken. compliances to be required; procedural No statutory approval ► ► guidelines. agreement, subjecttoFDI Activities specifiedinLLP Independent status

income @30% Liable to tax onglobal (AMT) @18.5% Alternate MinimumTax An LLPisliableto of interest ordissolution. Exit can bethrough sale strategy adopted. depending onthe It may becomplex book profits. 3 . 3 on its onits D Doing Business in India 12 E Features sector-specific lock-in-conditions. Freely transferable, subjectto capital reduction, etc. Pay-out viadividend,buyback, shareholding. shareholders inproportion to the Voting rights are given to Equity share capital businesses Indian Funding of regulatory conditions: Additional capital can beraised by any of the following modes subjectto existing shareholders in proportion of their issue of share placement of Rights issue: identified group of issue of shares to persons/entities shareholdings shares: Private 1 3 s to an

share warrants: equity shares/ issue andtransfer of be subjectto pricing equity shares may stock options: stock option scheme Partly paid employees undera issue of sha Employee guidelines 4 2 res to respect to dividendandrepayment of capital. preferential right over equity shareholders with Preference shareholders are entitled to equity underthe fully convertible Compulsorily Preference share capital Treated as into equity FDI policy (CCPS) Non convertible equity (NCPS/ convertible in or optionally commercial borrowings Treated as external OCPS) E Doing Business in India 13 ► ► ► ►

parameters prescribed undertheECB automatic route ifthey conform to the route. AllECBs can beraised underthe namely, automatic route andapproval ECBs can beavailed undertwo routes, between 1year to 10years. where average maturity periodcan range by manufacturing companies, etc.), or general corporate purpose, ECB raised ECBs raised for working capital purpose certain specified categories (such as for anECB isthree years except for The minimumaverage maturity period ► ► options: ECB comprises of thefollowing two The framework for raising loans through end-uses, maximumall-in-cost ceiling, etc. maturity, permitted andnon-permitted to theparameters suchasminimum non-resident entities andshouldconform eligible resident entities from recognized ECBs are commercial loans raised by Borrowings (ECBs) External Commercial

Indian Rupee dominated ECBs exchange in any freely convertible foreign Foreign currency dominated ECBs ► ► ►

regulatory conditions. invest inlisted debt securities, subjectto Portfolio Investments (FPIs) are allowed to (FIIs)/Qualified Foreign Investors (QFIs)/Foreign SEBI registered Foreign Institutional Investors the ECB guidelines. are construed asECBs andshouldconform to convertible/optionally convertible debentures treated asequity undertheFDIpolicy. Non- Compulsorily fullyconvertible debentures are registered, andconvertible ornon-convertible. Debentures can beredeemable, bearer or or by accepting deposits from thepublic. debentures, bondsandother debt securities Companies can also raise fundsby issuing examination. their requests to RBIthrough theirADBank for prospective borrowers are required to send framework. Undertheapproval route, the Listed debentures/bonds borrowings Debentures and ► ► ► ►

are noFDI-linked performance conditions. FDI isallowed underautomatic route andthere FDI inLLPs ispermitted insectors where 100% conditions undertheFDIpolicy. contribution of partners andissubjectto Investment inanLLPisthrough capital as specifiedabove. The FCCBs needto conform to ECB guidelines end-use restrictions undertheFDIregulations. bonds) whichare subjectto sectoral caps and FCCBs (rupee denominated equity shares/ capital overseas by issuing ADRs, GDRs or Qualifying Indiancompanies can raise equity Funding of an LLP convertible bonds(FCCBs) and foreign currency Depository Receipts (GDRs) Receipts (ADRs), Global American Depositary E Doing Business in India 14 F ► ► ► applicable underFDI/FEMAregulations. subject to any lock-in conditions thatmay be basis interms of FDI/FEMAregulations, andis the investment was madeonarepatriation due. The repatriation isallowed, provided appreciation, ifany, after payment of allowed to berepatriated alongwithcapital Foreign capital invested inIndiaisgenerally in anIndiancompany Typical modes of repatriation 01

of funds Repatriation week. Repatriation can becompleted withina the handsof shareholders. tax rates provided intheapplicable treaty in surcharge andcess), subject to beneficial istaxableDividend at20%(plusapplicable specified conditions. is also subjectto compliance withother without RBI’s permission. The repatriation to availability of sufficient free reserves can berepatriated asdividend,subject Profits earned by anIndian company Indian company Repatriation from an Dividend ► ► ► ► ► ► ►

03 02 amount received onissue of shares surcharge andcess) onconsideration paid less are liableto pay tax @20%(plusapplicable Companies whoare buyingback shares conditions. subject to satisfaction of theprescribed capital andfree reserves inafinancial year Buy back restricted upto 25%of theshare within sixweeks. Buy back of unlisted shares can becompleted in case of non-resident shareholders. conditions prescribed under the FDI regulations Buy back price willbesubjectto pricing shares. No tax onshareholders incase of buyback of applicable surcharge and cess) inthehandsof profits is taxable atthe rate of 20%(plus Consideration to theextent of accumulated prescribed under FDIregulations. NCLT driven process, subject to conditions Capital reduction Buy back 1 . of royalties andfees for technical services Remittances to foreign entities inthenature such payments. The entities needto substantiate genuineness of ► ► conditions. The payment can befor: agreements, subjectto certain prescribed to foreign entities underforeign collaboration Indian entities are permitted to make payments ► ► ►

Fees for technical services Royalties andtechnical know-how the FEMAguidelines. Capital reduction shouldbeincompliance with protracted litigation). to sixmonths (subject to NCLT’s vacations and Capital reduction can becompleted withinfour shareholders. subject to capital gainstax inthehandsof Consideration inexcess of accumulated profits provided intheapplicable treaty. shareholders subjectto thebeneficial tax rates technical services Royalties andfee for transaction isbetween associated enterprises. be subjectto arm’s lengthtest incase the treaty. Furthermore, thesaid payments will beneficial tax rates provided intheapplicable 115A of theIncome-tax Act, 1961subjectto applicable surcharge andcess) aspersection are subjectto tax withholdingat10%(plus ► ►

from tax inthehandsof thepartners. profit by theLLP to its partners is exempted withdrawal of capital. Repatriation of the way of distribution of profits to partners/ Profit earned by LLPs can be repatriated by company inIndiacan also berepatriated. from thewinding-upof abranch of aforeign payment of theapplicable taxes. Proceeds repatriated to theirhead offices subject to companies (other thanbanks) can be Profits earned by Indianbranches of foreign Other remittances F Doing Business in India 15 G ► ► ► ► ► ► owned andmanaged by individuals. Sole proprietorships are businesses

enterprises business of Forms by anNRIoraPIO remittance oroutof specifiedaccounts held Investments can bemadethrough inward concerns engagedinspecified sectors NRIs/PIOs cannot invest inproprietary business inIndia residing outside India,itiseligibleto carry In case asole proprietor isanNRIoraPIO Unlimited liability of theproprietor No separate legalexistence solely Profits orlosses are borne by the owner Sole proprietorship Features ► ► ► ► ► ► ► them ontheirbehalfiscalled partnership. losses of abusiness conducted by themorany of Persons whohave agreed to share theprofits/

Board (FIPB) of theRBIorForeign Investment Promotion partnership firmafter obtaining anapproval an NRIoraPIO) can make investments ina A person resident outside India(other than firm engagedinspecified sectors NRIs orPIOscannot invest inapartnership available withpriorapproval from theRBI repatriable basis. Repatriation benefits are to invest inanIndianpartnership firmonnon- NRIs/PIOs residing outside India are allowed for existing partners) Partnership interest isnon-transferable (except entity The firmandits partners are legallyasingle Minimum two partners andmaximum50 Partners’ liability isunlimited Partnership firms Features of acompany andapartnership firm. An LLPisahybrid entity withcombined features ► ► ► ► ► ► ►

conditions automatic route subjectto investment FDI into anLLP ispermitted underthe Partners’ liability islimited to theircontribution It has a legal identity separate from its partners It hasaperpetual succession to comply with investment conditions is permitted underautomatic route. Such LLP Conversion of acompany withFDIinto anLLP of India individuals andatleast onebeing aresident Minimum two designated partners whoare investment condition Such downstream company/LLP to satisfy investments into acompany oranLLP. LLPs withFDIeligibleto make downstream Partnership Limited Liability Features 1 1 1 listed companies. on theother hand,ensures compliance by the Securities andExchange Board of India(SEBI), of Companies andtheRegional Directors. Companies Act through the offices of Registrar compliance withtheprovisions of the Affairs hastheresponsibility of ensuring of acompany. The Ministry of Corporate responsibilities of its directors anddissolution company, mannerof conducting its affairs, rules therein, regulate incorporation of a The Companies Act, 2013andsub-ordinate ► ► ►

conditions to applicable Indianexchange control to make outboundinvestments, subject An LLPincorporated inIndiaispermitted an individualto actasadesignated partner a partner, thentheBC willhave to nominate Where theLLPhasabodycorporate (BC) as laws inIndia should comply withtheprovisions of LLP Designated partners responsible for anLLP Companies G Doing Business in India 16 guarantee. registered asa company limited by limited orunlimited. Itcan also be registered with its liability as companies. Acompany can be classified aspublicandprivate Companies inIndiacan bebroadly Types of companies conditions andrules can beissued, subjectto prescribed rights asto dividend,voting orotherwise Equity share capital withdifferential issue two kindsof shares to its members: The Companies Actpermits companies to 01 02 Share capital (preferred stock) Preference shares (common stock) Equity shares One person company ► ►

At least onedirector citizen andresident) (should beanIndian Only onemember ► ► ►

managing director by passing aresolution to thiseffect. The board may also delegate its powers to acommittee of directors or postal ballot. decisions, by way of passing resolutions atgeneral meetings orthrough It seeks theconfirmation andapproval of the company’s members onmajor operations. overall responsibility for conducting its business activities andday-to-day board acts onbehalfof thecompany’s members andisentrusted withthe The management of acompany isentrusted to its board of directors. The Board of directors Small company ► ►

exceed INR20 million Loss account does not to latest Profit and and turnover according more thanINR5million Paid upcapital not Not apubliccompany Private limitedcompany ► ►

transfer of shares Restriction on two directors (2 to 200),minimum Company members Public company ► ►

to thedirectors remuneration paid Limits placed on three directors members, minimum Minimum seven Schedule VIIof theact. 2013 towards theCSR activities specifiedin in accordance withtheCompanies Act, net profits of the company, as calculated spend, inevery FY, atleast 2%of theaverage in Indiaare required to ensure thatthey Eligible Indianandforeign companies working digital signature. Ministry of Corporate Affairs website usinga by submitting thee-Forms available onthe service requests are required to bemadeonline Companies andcentral government andother All statutory filings, intimations to Registrar of CSR E-filing Responsibility (CSR) Corporate Social Section 8Company ► ►

distributed and not to be charitable purpose Profits to beused for for charitable purpose Company established 2% at least G Doing Business in India 17 H ► ► ► ►

The government hasnotified IndAS (IFRS) asissued by the International International FinancialReporting Standards approach instead of fullyadopting India hasadopted theconvergence accordance withtheexisting standards. set of statutory financial statements in will not berequired to prepare another will beirrevocable andsuchcompanies Ind ASare appliedvoluntarily, thisoption according to IndASconsistently. Once need to prepare its financial statements such company opting to applyIndASwill (Accounting Standards) Rules, 2006.Any standards notified underthe Companies their existing standards, i.e., accounting Ind ASvoluntarily orcontinue to apply are not covered above can eitherapply companies covered above. Companies that consolidated financial statements of the Ind ASapplies to both standalone and respective regulators. entities willbenotified separately by the The implementation timelinefor these have deferred implementation of Ind AS. Banking andinsurance regulators inIndia joint venture orassociate companies. INR2.5 billionandtheirholding,subsidiary, non- listed companies having anet worth of now mandatory for alllisted companies and phased manner. Application of IndASis in banking andinsurance, to applyina for Indiancompanies, other thanthose requirements and audit reporting Financial 1

or reappoint theauditor for more thantwo belonging to aprescribed class cannot appoint Furthermore, alllisted companies andthose auditor isappointed for aterm of five years. the ICAI. Under theCompanies Act, 2013,an by anauditor whoisapracticing memberof All companies need to get theiraccounts audited different periodasits financial year. India, may approach central government to allow year for consolidation of its accounts outside India andisrequired to follow different financial company of acompany incorporated outside company whichisaholding/subsidiary/associate financial year ending31March. However, a Companies/LLPs needto uniformly adopt compliant withIASBIFRS. accordance withIndASmay not befully a result, financial statements prepared in Accounting Standards Board (IASB). As Audit Uniform financial year consecutive years, iftheauditor isanindividual. an auditfirmor for more thanone term of five terms of five consecutive years, iftheauditor is statements (subject to afew exceptions). statement inaddition to thestandalone financial required to prepare aconsolidated financial associate orjoint venture companies, itisalso In case acompany hasoneormore subsidiaries, ► ► ► ► ► company includes: company. Financialstatement in relation to a true andfair view of thestate of affairs of the statements for every financial year, whichgives Every company needsto prepare financial

part of,part any document referred to above Any explanatory note annexed to, orforming a A statement of changes inequity, ifapplicable Cash flow statement for the financial year financial year an income andexpenditure account for the company carrying onany activity not for profit, Profit andloss account, orinthe casea of Balance sheet attheendof thefinancial year Financial statement applicable accounting standards. on bookprofit determined onthe basis of the taxpayers, whichcan continue to bebased ICDS does not impact MATfor corporate (TAR) andreturn of income (ROI). to beincludedintheannualTax AuditReport records. Disclosures required underICDS is necessitate maintenance of memorandum for thepurpose of ICDS. However, itmay Separate maintenance of books isnot required been notified by the central government. quantum of income. Presently, 10ICDSs have corporate), irrespective of theturnover or non-resident taxpayers (corporate ornon- ICDS are applicable to alltaxpayers, including chargeable to inIndia. business income orincome from other sources accounting for thepurpose of computation of assessees following themercantile system of Taxation (CBDT) needsto befollowed by all (ICDS) notified by the Central Board Directof Income Computation andDisclosure Standards Tax reporting H Doing Business in India 18 I the following essential elements: enforceable by law, acontract must contain as anagreement enforceable by law. To be breach of acontract. ICA defines a contract It also provides remedies incase there is implementation andconclusion of acontract. The ICA governs theformation, the parties consent of 1872 (ICA) The IndianContract Act, Free regulations laws and Economic the ICA to be be expressly declared by should not A contract consideration void for alawful A contract should be to acontract competent must be with alawful Parties A contract must be object statutes governing thefollowing: the obligationstherein by enactingnecessary (TRIPS)Rights agreement, hascomplied with Trade-Related Aspects of Intellectual Property Agreement onTariffs andTrade (GATT) and India, beingasignatory to theGeneral contract for sale of goods, etc. legislations suchascontract of partnership, cover contracts covered inseparate independent and contract of agency. However, itdoes not guarantee; contract of bailment andpledge; of contracts suchascontract of indemnity and law of contract, ICA also deals withspecialkind Along withdealing inthegeneral principles of property rights Protection of intellectual Industrial designs Patents Geographical indications Trademarks Copyrights andother related rights pre-requisite for its registration. wherein, theprioruse of thetrademark isnot a claiming to bethe proprietor of atrademark of thetrademark issinequanonfor aperson transmission of trademarks. The registration collective marks andfor theassignment and of trademarks for services andgoods, including The TMActandRules provides for protection as well asdestruction of infringing articles. way of injunction,damages andorder for seizure copyright owner isentitled to theremedies by copyright. When aninfringement isproved, the criminal remedies for aninfringement of a The Copyright Act provides for both civiland sine quanon. and therefore, theregistration of copyright isnot inherent right of theauthortowards its creation and sound recording. InIndia,copyright isan musical andartistic work, acinematographic film with theauthorof theoriginalliterary, dramatic, India. Asperthesaid law, copyright subsists Rules, 1958governs copyright protection in The Copyright Act, 1957read withtheCopyright 2017 (TMRules) Act) andThe Trade Marks Rules, The Trade Marks Act, 1999(TM The Copyright Rules, 1958 The Copyright Act, 1957and the Patents Act. infringement of apatent ispunishableunder and infringement of patents inIndia.Any revocation, registration, license, assignment The Patents Act, 1970provides for grant, attributable to its geographical origin. characteristic of suchgoodsisessentially where agiven quality, reputation orother territory of acountry oraregion orlocality, goods thatoriginated ormanufactured inthe goods asagricultural, natural ormanufactured means anindication whichidentifies particular As pertheGIAct, ageographical indication regime inIndia. governs thepresent geographical indications enacted theGIActalongwithRules that for theProtection of Industrial Property, India TRIPS agreement andtheParis Convention In compliance withtheobligationsin The IndianPatents Act, 1970 Rules, 2002(GIRules) (Regulation andProtection) Indication of Goods Act) andThe Geographical Protection) Act, 1999(GI of Goods(Registration and The Geographical Indications I Doing Business in India 19 commercially for aspecificperiod of time. articles, to bemanufactured andmarketed the objective of applyingthemto specific novel designs formulated by anowner with WTO agreements. The Designs Actprotects enacted to fulfillIndia’s obligationsunder The Designs ActandtheDesign Rules were Rules, 2001(Design Rules) (Designs Act) andtheDesign The Designs Act, 2000 applicable are mentioned below: India isamemberof theInternational LabourOrganization (ILO) andcomplies withtheconventions thatithasratified. The key laborlaws thatare Act, 1965 The Payment of Bonus Act, 1951 The Plantation Labour 1926 The Trade UnionsAct, Disputes Act, 1947 The Industrial Legislation Labor laws Details of thelegislation more persons. establishment that hasemployed 20or act isapplicable to every factory and for matters connected therewith. This on production orproductivity, aswell as establishments onthebasis of profits or to persons employed incertain It provides for payment of bonuses Act, 1948apply. to whichtheprovisions of theFactories not includeany factory onthepremises connected with suchplantation, butdoes other premises used for any purpose hospitals, dispensaries, schools andany in part, applies andincludes offices, to whichthisAct, whether whollyor term “plantation” means any plantation in plantations. According to theact, the labor andregulates thecondition of work It provides for thewelfare of plantation interest of its members. unions andpromotes civilandpolitical and corporate status onregistered trade by state governments. Itconfers legal unions of workers andisadministered The actprovides for registration of trade or conditions of labor. employment, theterms of employment, relating to employment ornon- between employers andemployees settlement of industrial disputes, It provides for aninvestigation and 1948 The Factories Act, Wages Act, 1936 The Payment of Act, 1948 The MinimumWages 1946 (Standing Orders) Act, Employment The Industrial 1923 Compensation Act, The Employees Gratuity Act, 1972 The Payment of Legislation Details of thelegislation licensing of factories. to theinspection, registration and factories anddetailed procedures related of aregulation for thefunctioningof of thefactory workers. Italso comprises It governs thehealth, safety andwelfare deductions. limit andwithoutany unauthorized disbursed withintheprescribed time in anindustry suchthatthewages are wages to certain classes of employees It seeks to regulate thepayment of specified inthe schedule to theact. rates of wages incertain employments The actseeks to determine theminimum wages, termination of service, etc. to classification of workmen, payment of implementing service rules withrespect workers by issuing standing orders or the conditions of employment of the It provides for theemployers to define during thecourse of anemployment. accident resulting in disablement or death or theirsurvivors intheevent of an Its objective isto compensate employees factory, shopandother establishment. administrative capacity) engagedina or not employed inamanagerialor of gratuity to allemployees (whether It provides ascheme for thepayment I Doing Business in India 20 Legislation 1954 Establishment Act, The Shops and (CLRA) Abolition) Act, 1970 (Regulation and The Contract Labour Insurance Act, 1948 The Employees’ State Act, 1961 The Maternity Benefit Provisions Act, 1952 and Miscellaneous Provident Fund The Employees’ certain categories of shops andother establishments. conditions andovertime, leave-salary payments to workers in The actregulates working hours, minimumstandards of working the licensing officer. contract labor, except inaccordance with thelicense issued by a license andcannot undertake orexecute any work through appropriate authorities. Every contractor isrequired to obtain are required to beregistered asprincipal employers with contractual labor. The establishments covered under theCLRA The actwas promulgated to regulate theemployment of entitled to asocial security cover underthesaid act. persons. Employees drawing monthly wages upto INR21,000are to factories andother establishments employing 10ormore and for other matters relating thereto. The actisapplicable event of sickness, maternity orinjurysuffered duringemployment It provides for health care andcash benefits to employees inthe entitled to apaid maternity leave of 26weeks. establishments employing 10ormore persons. Women are orsurrogacy. abortion childbirth, The actisapplicable to all establishments for aprescribed periodbefore andafter a The actregulates theemployment of women incertain exemptions given inact. retirement. Applicable to international workers subjectto compulsory savings through acontributory fundpayable at It seeks to ensure financial security of employees by providing Details of thelegislation restrictive underthesaid act. practice thatislikely to beclassified asunfair or deficient services or for undertaking any trade service providers providing defective goodsor consumer interest against themanufacturers or This actwas enacted for the protection of markets inIndia. amalgamations whichhave aneffect onrelevant the qualifying acquisitions or mergers or anti-competitive practice andfor scrutinizing of Indiawas established for adjudication onany effect oncompetition. Competition Commission prevent practices having anappreciable adverse freedom of trade carried onby participants, and protect theinterest of consumers, ensure as promote andsustain competition inmarkets, This hasbeenenacted to achieve objectives such legislations: that principally relates to thefollowing has evolved ananti-trust regulatory framework reducing competition inIndia,thegovernment monopolies from creating trade barriers and In linewiththeglobal normsto prevent Anti-trust regulation 1986 The Consumer Protection Act, The Competition Act, 2002 instrument inIndia. any default inencashment of any negotiable amount of thenegotiable instrument for and/or afinewhichmay extend to twice the which may extend upto aperiodof two years The NIActprovides for criminalprosecution, a drawer, adrawee andaholderinduecourse. cheques. The NIActprescribes theliabilities of promissory notes, billsof exchange and The NIAct, governs thelaw relating to the arbitration clause. act willgovern every agreement containing otherwise agree, theprovisions of thesaid of anarbitral award. Unless theparties an arbitral award aswell asenforcement appointment of arbitrators, objectionsagainst provides, inter alia,for amechanismfor conciliation isembodiedintheactthat In India,thelaw relating to arbitration and apply to every contract of sale of goods. consent, lawful object, consideration, etc., consent, parties competent to contract, free legally enforceable agreements, mutual provisions of ICA, i.e., offer andacceptance, The actiscomplimentary to theICA. The basic Conciliation Act, 1996 The Arbitration and Act, 1881(NIAct) The Negotiable Instruments The Sale of GoodsAct, 1930 I Doing Business in India 21 J acquisitions Mergers and Taxation Ideal for Nature Mode Companies Act, 2013 Relaxations underthe Regulatory considerations Implementation of prescribed conditions. Generally, tax neutral for shareholders andcompanies, subjectto fulfilment regulations to bedeemedto beapproved by theRBI. divestment. Generally, for agroup’s reorganization atthetimeof acquisition and resources. by poolingof allfinancialand other Consolidation of businesses/ entities Cross-border mergers undertaken inaccordance withtheprescribed merger/demerger of alisted company. NCLT may allow anunlisted transferee company to remain unlisted post- companies. Insuchcase, approval from corporate law authorities isrequired. companies andbetween wholly-owned subsidiaries andtheirparent NCLT’s approval isnot mandatory for merger/ demerger between small required. (RBI, SEBI,CCI, stock exchanges, corporate law authorities andITA) is Approvals of shareholders, creditors, NCLT andvarious regulatory bodies Tribunal (NCLT). Vide ascheme to beapproved by jurisdictional NationalCompany Law Merger Demerger of value appreciation. from another withtheobjective Segregation of onebusiness 1

Slump sale capital gainstax Gains ontransfer are subject to Not applicable Third-party acquisition consideration. business undertaking for alumpsum Lock, stock andbarrel transfer of a will apply. sectoral caps underFDIregulations the Income-tax Act, 1961.Also, and competent authorities under Approval required from shareholders jurisdictional NCLT. (BTA)/scheme approved by Vide abusiness transfer agreement 2 . Share acquisition drag alongrights, etc. first refusal, liquidation preference, tag/ among shareholders suchasright of Recognizes enforceable contracts gains tax Gains ontransfer are subjectto capital voting rights. company by acquiring its shares with Gaining direct/indirect control over a regulations. conditions prescribed undertheFDI It issubjectto sectoral caps andpricing Generally, priorapproval isnot required. Vide ashare purchase agreement. conditions are met to capital gainstax inIndia if prescribed Indirect transfer of shares are subject 3 . 4 . J Doing Business in India 22 time limit) (SEBI) Trigger of takeover code Carry forward of losses Mode Time limit of India’s approval Competition Commission 5 6 (approximate Eight to ten months incase of listed companies. Six to seven months incase of unlisted companies. Available, subjectto fulfilment of prescribed conditions. Merger Approval isrequired ifprescribed thresholds are breached. conditions. Exemption available to merger/demerger, subjectto fulfilment of prescribed Demerger Slump sale approved by jurisdictional NCLT. if undertaken through scheme Same timelineasmerger/demerger One to two months through BTA. Not available company are issued in consideration. Possible onlyifshares of alisted Share acquisition One to two months Available incertain scenarios. through transfer/issue. indirect) of shares of listed company breached incase of acquisition (direct/ Possible ifprescribed limits are J Doing Business in India 23 K facility isavailable for nationalsof Japan, South Korea andtheUAE for specifiedpurposes. conference, journalist, research, missionary, sports, mountaineering, filmvisa, etc. Visa onarrival Others: Othertypes of visas issued for visits to Indiaincludetransit, medical, entry (X), student, types of Indianvisas issued to foreigners. purpose of thevisitto India.Below are afew Type of visa to beobtained dependsuponthe obtain anappropriate visa to enter India. A foreign nationalvisitingIndianeedsto a contract basis in highly-skilled services. which royalty ispaid andconsulting on or services, transfer of know-how for or contracts, providing technical support Employment inIndia,executing projects technical guidance onongoingprojects. trade of goodsandproviding high-level director, negotiating supplies, conducting partners orfunctioningasapartner/ meetings, liaisingwithpotential business of setting-up of businesses, attending Establishing orexploring thepossibility requirements Visa andregistration immigration andtax Personal Employment visa Business visa for specifieddurations. Available for nationals of specified countries e-Medical Visa and e-Medical Attendant Visa. Visa, e-Business Visa, e-Conference Visa, Sub-divided into five categories: e-Tourist friends andrelatives, etc. Recreation, sightseeing, casual visitto meet to certain checks and conditions specified. governmental organizations (NGOs), subject educational institutions andnon- Pursuing internship inIndiancompanies, sectors. Execution of projects inthepower andsteel e-Visa Tourist visa Intern visa Project visa need to beemployed inIndia. must obtain aseparate employment visa ifthey Spouses ordependents of working expatriates visa-dependents or employment visa–dependent. required to applythevisas suchas the purpose of business oremployment, are children of theindividuals visitingIndiafor Accompanying legalspouses anddependent police authorities. visitors are also required to register withthe requires thisregistration. Certain categories of than 180days orifthevisa stamp specifically arrival inIndiaiftheirvisa isvalid for longer FRRO/FRO within14days from theirdate of Foreign nationalsmust register withthelocal considerations Family andpersonal Residential permit business workers. employees whoare eligibleasinternational scheme for theiremployees, including towards theprovident fundandpension The covered employers must contribute ► ► applies to thefollowing establishments: Provisions Act, 1952(EPFAct). The EPFAct Employees’ Provident Funds andMiscellaneous Social security inIndiaisgoverned by The

by theEPFAct. persons thatvoluntarily opts to becovered An establishment employing less than20 government. establishments asnotified by the central 20 ormore persons orclass of such or any other establishment employing persons engagedinaspecificindustry An establishment employing 20ormore Social security K Doing Business in India 24 below: Residential status of anindividualisdetermined based ontheconditions prescribed in thetable Liability for income tax isgoverned by theresidential status of individualsduringthetax year. Liability for income tax Additional conditions criteria of similarnature reason of hisdomicileorresidence orany other liable to tax inany other country orterritory by INR15 lakhduringthetax year, whoisnot than income from foreign sources, exceeding A citizen of India,having total income, other four years immediately preceding thetax year ≥ 60*days inthetax year and≥365days in 10 immediately preceding tax years NR asperbasic conditions inatleast 9outof ≥ 182days inthetax year (1Aprilto 31March) criteria of similarnature reason of its domicileorresidence orany other liable to tax inany other country orterritory by INR15 lakhduringthetax year, whoisnot than income from foreign sources, exceeding A citizen of India,having total income, other but less than182days or periodsamounting inallto 120days ormore the tax year, whohasbeeninIndiafor aperiod foreign sources, exceeding INR15lakhduring having total income, other thanincome from A citizen of Indiaoraperson of Indianorigin, preceding tax years ≤729 days inIndiaseven years immediately Basic conditions Period of stay inIndia Taxation None Satisfies (NR) Non-resident Residential status (NOR) resident ordinarily Not Deemed Resident Satisfies any one both one or Satisfies Resident NOR NOR (ROR) resident ordinarily and Resident both satisfy Does not *60 days issubstituted by The oldslabrates alongwithits comparison withthenew slabrates are asbelow: subsequent years until itceases to have business orprofessional income. option iswithdrawn by thetaxpayer, itshallnot beeligibleto avail theconcessional slabrates in irrevocable basis. Such option willapplyto allthesubsequent tax years andincase where such an Taxpayers earning business orprofessional income, can opt into theregime onlyonce on every year by furnishingthereturn of income. which are applicable withoutcertain exemptions anddeductions. This option can beexercised scheme, ataxpayer willhave anoption to pay taxes atthereduced slabrates (mentioned below) A new andsimplified personal income tax regime hasbeenintroduced whichisoptional. Underthis Rates of income tax for tax year 2020-21 less than80years, andINR500,000inthecase of resident individuals of 80years of ageormore. *INR250,000 is substituted by INR300,000for resident individualswhoare 60years old ormore but Income levels (INR) (c) 182days for acitizen of IndiawhobeinginIndia,leaves Indiainany tax year for the (b) 182days for acitizen of Indiaoraperson of Indianorigin,other thantheonereferred in (a) 120days for acitizen of Indiaoraperson of Indianorigin, whobeingoutside India,comes 1,500,001-above 1,250,001-1,500,000 1,000,001-1,250,000 750,001-1,000,000 500,001-750,000 250,001-500,000 0- 250,000* (a) above, whobeingoutside India,comes onavisitto Indiainany tax year. sources exceeding INR15lakh. on avisitto Indiainany tax year, having total income other thantheincome from foreign purpose of employment outside India. Old rate Old rate (%) 30% 30% 30% 20% 20% 5% Nil New rate New rate (%) 30% 25% 20% 15% 10% 5% Nil K Doing Business in India 25 with total income upto INR500,000. A rebate of INR12,500oractual tax payable, whichever isless, isavailable for resident individuals special rates of 10%: specified assets, onwhichsecurities transaction tax (STT) ispaid, are chargeable to tax at Long-term capital gainsexceeding INR100,000arisingfrom thesale of thefollowing a base rate of 20%plusapplicable surcharge andcess. Long-term capital gainsare not taxed according to theabove slabrates butare generally taxed at Certain specified incomes are taxable atspecified rates. amount by whichtheincome exceeds suchlimits. limits of INR5,000,000,INR10,000,000,INR20,000,000andINR50,000,000islimited to the amount of income tax payable, includingsurcharge, onthe excess of income over therespective In cases where surcharge isapplicable, marginal relief isallowed to ensure thattheadditional Surcharge isapplicable asinthetable below: Income levels (INR) 50,000,001–above 20,000,001–50,000,000 10,000,001–20,000,000 5,000,001–10,000,000 0–5,000,000 a company Equity shares in oriented mutual fund Units of equity Surcharge 37% of total income tax liability 25% of total income tax liability 15% of total income tax liability 10% of total income tax liability Nil business trust Units of by health and education cess of 4%. on therates specified above, increased isfurther The income tax andsurcharge calculated, based person. body of juridical individualsandanartificial family (HUF)andanassociation of persons, a taxpayer beinganindividual,aHinduundivided provided above andonthedividend income for a at specialrates inrelation to specified assets as are not applicable onthecapital gainstaxable The increased rates of surcharge of 25%and37% of 15%. within oneyear) are chargeable ataspecialrate assets onwhichSTT ispaid (ifassets are sold Short-term capital gainsonaforesaid specified November 2020 of RoI for FY2019-20 hasbeenextended till30 of COVID-19 pandemic, theduedate for filing succeeding thetax year. However, inthewake subject to atax audit, by 31October of theyear year succeeding thetax year or, ifaccounts are income must also befiled by 31Julyof the tax year. RoI for self-employment orbusiness be filed by 31Julyof theyear succeeding the Generally RoI for salaried individualsneedsto amount thatisliableto tax. if theincome does not exceed themaximum outside Indiaare required to furnishRoI even hold foreign assets orincome from any source Residents (excluding not ordinary residents), who maximum amount thatisnot liableto tax. must file aRoI iftheirincome exceeds the All taxpayers, includingnon-residents (NRs), the tax authorities onayear-on-year basis. Income tax filing 1 . Return forms are notified by K Doing Business in India 26 L Categories income (RoI) isasfollows: year. The duedate for filing return of year andendsat31March of thesubsequent The Indiantax year starts from 1Aprilof a LLPs Other companies/ transactions international with respect to in Form 3CEB pricing certificate submit atransfer that isrequired to A company/an LLP of Direct Taxes (CBDT). control liewiththeCentral Board Its administration, supervisionand direct taxes by way of income tax. The central government levies Administration taxes Direct Date of filing of RoI COVID-19 pandemic) 20 inthewake of for tax year 2019- November 2020 (extended to 30 31 October 30 November 1 worldwide income arisingfrom allsources. Corporations residents inIndiaare taxed ontheir ► ► ► ► income: income comprises of thefollowing heads of For Indianincome tax purposes, acorporation’s shortfall intaxes attract penalty/interest. Late filing of an RoI anddelay in payment or basis. discharged by way of advance tax onaquarterly Corporate tax liability needsto beestimated and certain conditions. fee for technical services subjectto fulfillment of consists of onlyinterest ordividendroyalty or in Indiacase theincome earned from India India. However, RoI isnot required to befiled have aphysical presence oreconomic nexus with file a RoI inIndiaifthey earn income inIndiaor Non-resident corporations are also required to

activities (i.e. income from other sources) Residual income arisingfrom non-business Capital gainsondisposition of capital assets Income from business Income from house property Corporate income tax the tax payable. health andeducation cess attherate of 4%of with asurcharge. There isanadditional levy of upon thetotal income, thebasic rate isincreased a tax ataspecified basic anddepending Domestic andforeign corporations are subjectto likely to berestricted ormodified. resident taxpayer. Accordingly, thetaxability is is more beneficial are applicable to anon- Provisions of theITActorDTAA, whichever Agreement (DTAA) Avoidance PE. connection isconsidered widerinits scope than tax profits from business. The term business IT Actinstead of aPE,asintax treaties, to The term business connection isused inIndian capital asset situated inIndia. in Indiaorany source inIndiaortransfer of a income earned through abusiness connection Non-resident corporations are taxed onthe Rate of corporate tax 2021 Base tax rates for tax year 2020- Particulars Domestic company LLP Foreign company deductions orincentives they donot avail specified concessional tax rate provided Domestic companies may opt for incentives (optional regime) availing specified deductionsor up to 31March 2023without commencing manufacturing or after 1October 2019and established andregistered on New manufacturing companies > INR4billioninFY2018-19 Companies having turnover ≤ INR4billioninFY2018-19 Companies having turnover Base tax rate 30% 40% 22% 15% 30% 25% 2 L Doing Business in India 27 2020-2021 Surcharge rates for tax year exempt. such profits inthehands of the partner(s) is are distributed by anLLP, astheshare of There isnorepatriation tax cost whenprofits LLP company Foreign above) (other than company Domestic 15% or22% tax rate of concessional opting for company Domestic Status 12% 2% 7% 10% million INR100 million to INR10 from Income 12% 5% 12% 10% million INR100 Above Withholding tax rates Notes (a) rates Withholding tax services (FTS) Fee for technical etc. patents, know-how, Royalty from Interest Dividends health andeducation cess of 4%. indicated inthesurcharge table above and with reference to theincome slabs as must beincreased by applicable surcharge The rates listed above for withholdingtax (f)(g) 10/2 (d) (e)(g) 10/2 (d) 10 (d)(g) 10 (d)(g) company domestic Paid to a note) (corresponding Tax rates in % 10 (a)(c)(d) 10 (a)(c)(d) (b)(d) 20/5 (a) 20 (a) company foreign Paid to a less than5%invalue) duringtheyear. (INR50 millionprovided cash transactions are turnover orgross receipts exceed INR10million audited by anaccountant ifits total sales, to maintain books of accounts andget them Every company engagedinabusiness isrequired (g) (f) (e) (d) (c) (b) tax audit Books of accounts and 2020 inthewake of COVID-19 pandemic. has beenreduced by 25%w.e.f. 14May 2020-21 for payment to domestic company Withholding tax rates applicable for tax year cases. a professional service) and 10%inother of fees for technical services (not being Withholding tax rate of 2%willapplyincase cinematographic films. for sale, distribution orexhibition of on royalty paid to residents inconsideration Reduced withholdingtax rate of 2%to apply 20%, whichever ishigher. at anapplicable rate oratapenalrate of payee) isnot available, tax willbewithheld details/documents incase of anon-resident If PAN of thepayee (PAN orother specified rate of 10%onagross basis. taxed withrespect to royalties orFTS atthe Royalty orFTS: foreign corporations are of 20%to foreign corporations. is subjectto tax atanormalapplicable rate foreign currency loans. Any other interest This rate of 5%onlyapplies to interest on given above) w.e.f. 1 April2020. the applicable rates (refer withholdingtax rate companies are required to withholdtaxes at or paid by distributing them.Dividend the 4%cess) ondividendsdeclared, distributed dividend payable plusthe12%surcharge and (basic rate of 15%onthegross amount of dividend distribution tax attherate of 20.56% Earlier domestic companies were liable to pay dividend income are deductibleexpenses. shareholders. Interest expenses upto 20%of domestic companies istaxable inthehandsof From 1April2020,dividendreceived from rates, dependingonthenature of assets. basis of reducing balance method usingvarying Depreciation oncapital assets isallowed onthe for anunlimited period. depreciation ispermitted to becarried forward in theeight subsequent years. Unabsorbed for setting off against business profits arising so set off, are permitted to becarried forward same year. Business losses, whichcannot be from employment, i.e., salary income) inthe income from any other source (except income businesses, are permitted to beset off against Business losses, other thanfrom speculation Tax ondividend income Depreciation Relief for losses L Doing Business in India 28 normal provisions and tax according to MAT. of thedifference between tax according to normal provisions of theITActto theextent against theincome tax payable underthe carried forward for 15years andset off The credit for MATpaid isallowed to be tax rate of 15%or22%. domestic companies opting for concessional of theirbookprofits. MATisnot applicable on less than15%(excluding surcharge andcess) payable according to regular tax provisions is in theirfinancial statements where the tax corporations onthebasis of profits disclosed Indian requires MATto bepaid by is not taxable. subject to satisfaction of specified conditions merger/demerger of foreign corporations, shares of anIndiancorporation pursuant to transfer tax. Moreover, indirect transfer of the Indianassets are exempted from indirect foreign corporation orentity directly holding the total voting power/share capital, inthe Small shareholders holding5%orless of by aforeign corporation. at least 50%of thevalue of all assets owned date exceeds INR100millionandrepresents value (FMV)of anIndianasset onaspecified assets located inIndia,where thefair market India, derivingits value substantially from or entity registered orincorporated outside arising onany share orinterest inacompany Non-residents are also taxed oncapital gains Tax (AMT) MAT/Alternate Minimum of domestic corporations Indirect transfer of shares transactions: an equalization levy onthefollowing 1 (digital economy), Indiahasintroduced In linewithOECD’s BEPS project ActionPlan provisions andtax according to AMT. difference between tax according to normal provisions of theITActto theextent of the against income tax payable underthenormal can becarried forward for 15years andset off linked tax incentives. Unadjusted AMTcredit companies) whoare availing specifiedprofit- LLPs andcertain other taxpayers (other than (excluding surcharge andcess) isapplicable to A modified version of MAT, AMTat18.5% government. other service notified by the central advertisement, andalso includes any or service for thepurpose of online advertising space orany other facility advertisement, orprovision for digital service hasbeendefined asan online providing specified services. Specified PE of anon-resident to anon-resident on abusiness orprofession ortheIndian the payment madeby aresident carrying Equalization levy of 6%ischargeable on Equalization levy 6% the doublytaxed income. rate of tax or thetax rate of thesaid country on The credit amount isthelower of Indianeffective subject to fulfillment of certain requirements. credit for thetax paid by theminother countries resident corporations can claimaforeign tax double taxation. Ifthere isnosuchagreement, countries govern foreign tax relief to avoid DTAAs entered into by Indiawithseveral other Foreign tax relief ► ► ► ► tax year to: beyond threshold of INR20millionduring a provided orfacilitated by suchanNR from e-commerce supplyorservices made, non-resident (NR) e-commerce operator consideration received/receivable by a of 2%ischargeable ontheamount of From 1April2020,equalization levy

using anIndianIPaddress A person whobuys goods or services person whouses IndianIPaddress or from aperson resident inIndiaorfrom a An NRwhichentails sale of data collected Indian IPaddress or accessing suchadvertisement through an targeted atacustomer resident inIndia or An NRwhichentails sale of advertisement A person resident inIndiaor 2% exceed INR30million. arrangement inarelevant tax year does not the tax benefit (for all parties) from an The provisions of GAAR willnot applywhere benefit. the arrangement orthestep isto obtain atax provisions onlyapplyifthemainpurpose of step may bedeclared anIAA.However, these arrangement entered, andthearrangement or can beinvoked for any step of inorpart an Act ortheapplicable . The provisions benefit eitherundertheprovisions of theIT (IAA). The consequences includedenialof tax an Impermissible Avoidance Arrangement arrangement entered by ataxpayer to be powers to thetax authority to declare an in theform of GAAR, whichprovides extensive The ITActcontains anti-avoidance provisions more inaggregate. a non-resident valuing INR1000millionor undertaken orproposed to beundertaken with its tax liability arising outof atransaction can also approach theAARfor determining undertaken. Additionally, aresident applicant a transaction undertaken orproposed to be tax liability of thenon-resident arisingoutof any question of law orfact inrelation to the (resident ornon-resident) withrespect to A rulingcan beobtained by anapplicant avoid lengthy andexpensive litigation. plan theirincome tax well inadvance andto eligible taxpayers (includingnon-residents), to achieve certainty ontheincome tax liability of An advance rulingscheme isavailable to Rule (GAAR) General Anti-Avoidance Ruling (AAR) Authority for Advance L Doing Business in India 29 M length price (ALP). must beconducted atarm’s enterprises (AEs) (includingPEs) between two ormore associated specified domestic transaction international transaction and regulations (TPRs), any Under noteworthy differences. the OECD, except withcertain tax administrators issued by multinational companies and with theTPguidelines for provisions inIndiaare inline Transfer pricing(TP) Pricing Transfer tax rate. manufacturing companies chargeable to alower or units eligible for , ornew domestic all transactions withrelated domestic companies The transactions covered underTPR(s) include same shallbecomputed having regard to ALP. INR200 million,withintheambitof TPRs, the In case theaggregate value of SDT exceeds taxpayer’s AE. transaction exists between thenon-AE andthe agreement orarrangement pertaining to such as aninternational transaction ifaprior transaction withanon-AE may also bedeemed or assets of suchenterprises. Furthermore, a have abearing ontheprofits, income, losses either orboth of whomare non-residents and the onethattakes between two or more AEs, TPRs define aninternational transaction as Relevant provisionsregarding TPR: International transactions transactions (SDT) Specified domestic unilateral/bilateral/multilateral APAs. between AEs. Application can befiled for dispute arisingfrom controlled transactions India) andthe taxpayers, so asto prevent any in advance by thetax authorities (i.e., CBDT in transacted between group entities isdetermined wherein thetransfer price of goodsandservices There isanAPA program available inIndia, 2019-20. 2018-19) hasbeenmadeapplicable for FY (applicable for theperiodFY2016-17to FY by ataxpayer to beatarm’s length.The SHR authorities accept atransfer price declared SHR indicates circumstances underwhichtax Agreement (APA) Advance Pricing Safe HarborRule (SHR) successive years. be allowed to be carried forward upto eight 30% of EBITDA. Excess interest, ifany, shall third-party debt guaranteed by anAE)to of amount lent by anon-resident AEora deductible interest expenditure (in respect These provisions limittheamount of be computed intheprescribed manner. certain conditions). The interest thereon shall taxpayer to suchAE(subject to fulfilment of shall bedeemedto beanadvance made by the repatriated to Indiawithintheprescribed time, money whichisavailable withits AE,ifnot adjustment to thetransfer price, theexcess or reduction intheloss dueto theprimary In case, there isanincrease inthetotal income BEPS report onAction13. recommendations contained intheOECD’s by-country (CbC) reporting to implement the TP documentation, master fileand country- tiered documentation structure, comprising of The IndianGovernment hasadopted athree- Interest limitation rules Secondary adjustment documentation Three-tiered M Doing Business in India 30 N legislation GST rated. while exports would continue to bezero- Further, would imports besubject to IGST, the destination state. is transferred by thecentral government to Goods andService Tax (IGST), whereof apart center hastheauthority to levy Integrated services). Incase of inter-state transitions, the same taxable base (supply of goodsand State GoodsandServices Tax (SGST)) on Central Goods and Services Tax (CGST) and levy equalamounts of tax (intheform of the center andthestate are empowered to The GST isbased onadual levy model.Both attractive in distribution. tax system, neutral inits application and It hasbeenenvisaged asamore efficient goods, entry tax, purchase tax, octroi, etc. of state levies like VAT/CST onmajority of duties suchascentral andamultitude that replaces theearlier central taxes and tax framework. Itisadestination-based tax and hasbeenamajortransition intheIndian as thebiggest indirect of India in Indiafrom 1July2017.Itisconsidered Goods andServices Tax (GST) was introduced taxes Indirect ► ► ► ► 28% +cess 28% 18% 12% 5% Exempt

INR1,000 Hotel/Lodges withtariff below Residential accommodation Healthcare Education Rate classification for services Rate classification for goods Exempt Cars, pan masala, cigars Air-conditioners, dishwashing machines, digital cameras, monitors andprojectors, motor car granite, transmission apparatus for radio broadcasting Forklift, liftingandhandlingequipment, electrical apparatus for radio andtelevision broadcasting, chocolates, slabs of marbles and bamboo orcane ofArticles apparels exceeding INR1,000,biodiesel, printing ink,specified parts of sewing machine, furniture whollymade of Apparels valued less thanINR1,000,flyash,fishing net andfishinghooks, aircraft engines, biogas Electrical energy, newspapers, milk,credit scrips, food grains ► ► ►

Economy class airtickets Rail tickets (other thansleeper class) Goods transport 5% ► ► ► ► ►

Hotel/lodges Financial services Telecom services Business Class airtravel Works contract 12%-18% ► ►

Gambling Betting 28% N Doing Business in India 31 curbs issuance of fake invoices. the different government platforms. Italso GST ecosystem anddata consistency across interoperability of invoices across theentire Electronic invoicing aimsto bring certain registered persons. invoices mandatory w.e.f. 1October 2020for Government of Indiahasmadeelectronic an invoice inthecountry. Accordingly, the At present, there isnostandard format for and inward providing invoice level details. GST ANX-1 andForm GST ANX-2) for outward RET-01) andtwo separate annexures (Form components – onemainreturn (Form GST return filing. This system hasthree main whereas other taxpayers can opt for quarterly INR50 millioninthepreceding financial year, whose aggregate turnover exceeds more required to befiledmonthly by the taxpayers implemented from October 2020shallbe The new system whichisproposed to be the tax ispaid by thesupplier. allowing recipient to get thecredit assoon as initial intent of curbing revenue leakage by aimed towards fulfillingthegovernment’s administration process. The new system is system inorder to ease thecompliance and A new GST return system replaces theearlier invoicing Electronic filing system New return electronic invoicing New returns and suppliers: has beenpassed onto thefollowing category of Relaxation from IRNandQRcode generation number (IRN)isgenerated for each invoice. invoice, to ensure thatuniqueinvoice reference for thepurpose of de-duplication checkof the system (called Invoice Registration Portal), which shallin-turn bereported to thecentral generation of aninvoice inastandard format, Electronic invoicing shallprimarilyinvolve ► ► ► ►

cinematographic filminmultiplex screens Suppliers engagedinexhibition of transportation services Suppliers engagedinpassenger Goods transport agencies companies (NBFCs) institution/non-banking financial insurers/banking institution/financial Supplier of taxable services being subsumed withGST. etc. Various other taxes thatwere hitherto levied by thestates like entry tax, octroi, etc. have been profession tax andstate Value AddedTax onlyonselected items like petroleum products alcohol, , profession tax andproperty tax. Post theimplementation of GST, the states continue to levy Other thanGST, thecentral government levies indirect taxes comprising of customs duty, stamp tax Entertainment Profession tax Customs duty Tax Other indirect taxes Varies across states authority Varies witheach municipal Varies across the states Varies across the states System of Nomenclature) International Harmonized which isalignedwiththe under thecustoms tariff, depending onclassification 30.98% (actual rate varies Rate of customs duty - Standard rate amusement parks and events. cable orDTH subscriptions, videogames, and amusement activities suchasexhibitions, ment tax onvarious entertainment respective state government can levy entertain- Local governments, withtheauthority of the authority. valorem basis) asprescribed by each municipal of theproperty thatissought to betaxed (ad The amount of tax iscalculated onthevalue maintenance of basic civicservices inacity. of theproperty (usually real estate) for the It isamunicipal tax imposed ontheowner profession, trade, oremployment inastate. It isastate levy onpersons engagedinany on instruments affecting suchtransactions. It isatax ontransactions intheform of stamps ► ► ► Components of customs duty: India andistypically payable by theimporter. Customs duty islevied of onimport goodsinto Applicability

Social welfare surcharge 1975 IGST leviable undertheCustoms Tariff Act, Basic customs duty N Doing Business in India 32 O into three categories: companies inIndia. These are broadly divided are available for existing andnewly setup in Indiaprogram, various tax incentives In order to resonate well withtheMake manufacturers. been well-received by industry partners and innovation. These announcements have research anddevelopment (R&D) and on start-ups, promoting skilldevelopment, increasing ease of doingbusiness withafocus components, corporate tax exemptions, extending differential duty structure to structure for awiderange of products, policy initiatives suchasrationalizing duty The government hascome outwithseveral class manufacturing infrastructure. protect intellectual property andbuildbest-in- foster innovation, enhance skilldevelopment, program designed to facilitate investment, hub. The campaign isamajornational aim to turn Indiainto aglobal manufacturing ambitious Make inIndiacampaign withan Minister, Narendra Modiunveiled the On 25September 2014,theIndianPrime Make inIndiascheme in India incentives Tax ► ► ► ► ► ► ► ► ► ► ► ► ► ►

based Location specific Industry linked Hospitality andtourism, etc. Affordable housingproject schemes Fertilizer production Hospitals Cold chainandwarehousing Oil andgas Infrastructure andpower facilities projects or substantial expansion of specified Project Scheme for Import initial set-up bio- degradable waste Business of collecting andprocessing Employment of new workmen Benefit for R&D expenditure exemption, electricity duty exemptions, etc. State-level incentives like stamp duty northeastern regions of India Tax holiday inspecifiedlocations, viz.,the Special Economic Zone incentives Some of therecent tax deductionsandtax incentives have beenhighlighted below: Financial Service Centers (IFSCs) Companies located inInternational processes orservices intellectual property- driven products, commercialization of new technology- or innovation, development, deployment or Start-up businesses engagedin Expenditure onskilldevelopment projects infrastructure facilities, etc country distribution of natural gasoil, storage of agricultural produce, cross- facilities, warehousing facilities for business categories suchascold chain Deduction inrespect of specified Scientific research anddevelopment or gross receipts exceed INR10million All taxpayers, whose total sales, turnover Activity 1 . million 1 April2021withaturnover of less thanINR1000 10 years, deductionto eligiblestart-ups set-up by 100% tax holiday for three consecutive years outof company incurred onanotified skilldevelopment project by a (thereafter, 100%deduction) onexpenditure Weighted deductionof 150%till31March 2020 100% deductiononcapital expenditure ► ► ► ► 31 March 2020(thereafter, 100%deduction) Weighted deductionof 150%of theexpenditure till a new employee Additional deductionof 30%of thecost incurred on conditions) Benefits (subject to specified

Tax Tax, Long-term Capital GainsTax and Commodities Specified relaxation from Securities Transaction Reduced MinimumAlternate Tax rate of 9% Exemption from paying Distribution Tax Dividend 15 years 100% tax holiday for 10consecutive years outof O Doing Business in India 33 2020) which commence operation by 30September SEZ units approved by 31March 2020and (The aforesaid tax holiday isonlyavailable for ► ► ► in aphased mannerasunder: Deduction isavailable to units’ setup inaSEZ Quantum of deduction provision of services. engaged inthemanufacture orproduction/ Undertakings/units located inSEZs and Nature of business incentives for SEZ domestic investment. package of incentives to attract foreign and integrated simplifiedinfrastructure anda environment for exports, supported by an government aimsto create hassle-free duties/tariffs. With theSEZscheme, the for thelimited purpose of trade operations, enclaves deemedto beaforeign territory SEZs are specifically delineated duty-free

or machinerywithinthree years Account for thepurpose of acquiring plant Economic Zone Reinvestment Reserve the profits are transferred to aSpecial 50% of export profits, provided that for thenext five years 50% deductioninrespect of export profits for first five years 100% deductioninrespect of export profits (SEZs) inIndia Special Economic Zones ► ► tax liability infuture. carried forward for 15years andset-off against the SEZunit. However, MAT/AMT credit can be applicable onbookprofits/ of MAT/AMT of 15%(plussurcharge andcess) is developers/units benefits available to SEZ duty exemption of onimport goods. undertaking for claiminganupfront custom be required to execute abond-cum-legal IGST. However, theSEZdeveloper/unit shall has beenspecifically exempted from levy of Exemption: of Import goodsandservices ofImport goodsandservices transactions inanSEZ(subject to state laws). of stamp duty exemption onlandrelated States offer additionalincentives intheform options: from aregistered dealer underthefollowing avail tax benefit ondomestic procurements An SEZdeveloper/SEZ unitshallbeeligibleto Domestic procurement of goodsandservices Stamp duty exemption/reimbursement

provider subsequently by theregistered dealer/service provider andrefund shallbeclaimed GST paid by aregistered dealer/service bond oralegalundertaking Upfront exemption by way of execution of a to 31March 2021,unless otherwise specified. current FTP(2015-20)shallremain inforce up fromExport India Scheme) provided underthe Accordingly, various benefits (except Service extended by one year, i.e. upto 31March 2021. COVID-19 pandemic, FTP(2015-20)hasbeen In thewake of current situation arisingoutof the initiatives of thegovernment. the Make inIndia,Digital IndiaandSkill value additioninthecountry thereby integrating well asgeneration of employment andincreasing for increasing exports of goodsandservices as trade videFTP. The FTPprovides aframework benefit of stakeholders and of import export India hasprovided various incentives for the achieve the said objective, theGovernment of rendering Indianexports more competitive. To to cut down thetransaction cost, thereby Trade facilitation isapriority of thegovernment Trade Policy 2015-20(FTP) Incentives underForeign Products (RoDTEP) Remission of Duties andTaxes on Exported has given its approval for theScheme for The Cabinet Committee onEconomic Affairs ► ► ► domestic taxes/duties are not exported. producers intheInternational market so that providing alevel playing field for Indian the domestic industry andIndianexports, This scheme isgoingto give aboost to distribution of exported products. incurred intheprocess of manufacture and under any other mechanism,but whichare level, whichare currently not being refunded duties/levies, atthe central, state andlocal would becreated for reimbursement of taxes/

(DoC). notified by theDepartment of Commerce set by thecommittee willbedecidedand given onvarious items withintherates to becovered anddegree of benefit to be across sectors, prioritization of thesectors The sequence of introduction of thescheme oriented manufacturing industries. better employment opportunities inexport- international markets andwould provide competitiveness of exported products in IGST refund. This would lead to cost exports intheform of drawback and would beastep towards zero-rating of The refunds undertheRoDTEP scheme electronic ledger. exporters, whichwillbemaintained inan credit/electronic scrip willbeissued to the scheme, intheform of transferable duty line withDigital India,refund underthe taxes andduties would beprovided. In items for whichthereimbursement of committee willdetermine therates and Under theScheme aninter-ministerial central taxes andlevies Rebate of state and 2 underwhichamechanism O Doing Business in India 34 exchange) by theIEC holder, relating to service rendered inthefinancial year. (Gross earnings of foreign exchange) minus(total expenses/payment/remittances of foreign This can becalculated by: ► ► ► ► Incentive available to exporter (includingSEZunits) for notified services scrip Validity period of the Eligibility Preferential features Value of incentive Benefit of duty scrip conditions Features/

India Scheme for FY2020-21isyet to betaken andnotified. Considering thecurrent coronavirus outbreak, thedecisiononcontinuation of Service from Export foreign exchange (NFE)earned intheform of duty credit scrip (scrip). Under SEIS, rewards for notified services shall be available aspernotified percentage of net The objective of theSEISisto encourage export of notified services from India. replaces theerstwhile Served From IndiaScheme (SFIS). In theFTP2015-2020announced on1April2015,Service from Exports IndiaScheme (SEIS) Service from Exports IndiaScheme 24 months from thedate of issue ► ► ► ► services 5% or7%of NFEavailable asduty scrip for notified ► ► Standard rate

Exporters withminimumof US$15,000NFEintheprevious year Available to exporters of notified services only Scrip isfreely transferable, can besold inopenmarket No actual user condition ongoodsprocured through thescrip It can beused for payment of customs duty onprocurements Scrip isfreely transferrable O Doing Business in India 35

Key tax compliance calendar 1 April 2020 to 31 March 2021 24 22 20 11 7 May 2020 30 30 24 22 20 11 April 2020 those mentioned above in thepreceding financial year for the States/UTs other than for April2020by taxpayers having turnover upto INR50million Electronically filing Form GSTR-3B to discharge GST tax liability in thepreceding financial year for thespecified states for April2020by taxpayers having turnover upto INR50million Electronically filing Form GSTR-3B to discharge GST tax liability in thepreceding financial year for April 2020 by taxpayers having turnover above INR50million Electronically filing Form GSTR-3B to discharge GST tax liability and/or services inForm GSTR-1 for April2020 Electronically filingdetails of outward supplies of taxable goods Payment of taxes withheldinApril2020 million inpreceding financial year to March 2020by taxpayers having turnover less thanINR15 and/or services inForm GSTR-1 for thequarter January2020 Electronically filingdetails of outward supplies of taxable goods Payment of taxes withheldinMarch 2020 those mentioned above in thepreceding financial year for the States/UTs other than for March 2020by taxpayers having turnover upto INR50million Electronically filing Form GSTR-3B to discharge GST tax liability in thepreceding financial year for thespecified states for March 2020by taxpayers having turnover upto INR50million Electronically filing Form GSTR-3B to discharge GST tax liability million inthepreceding financial year for March 2020by taxpayers having turnover above INR50 Electronically filing Form GSTR-3B to discharge GST tax liability and/or services inForm GSTR-1 for March 2020 Electronically filingdetails of outward supplies of taxable goods 2(a) 2(a) 2(b) 3 2(b) 3 3 1,2(a) 1,2(a) 24 22 20 14 12 11 7 July 2020 27 15 11 7 June 2020 mentioned above in thepreceding financial year for the states/UTs other thanthose for June2020by taxpayers having turnover up to INR50million Electronically filing Form GSTR-3B to discharge GST tax liability in thepreceding financial year for thespecified states for June 2020 by taxpayers having turnover upto INR50million Electronically filing Form GSTR-3B to discharge GST tax liability in thepreceding financial year for June 2020 by taxpayers having turnover above INR50 million Electronically filing Form GSTR-3B to discharge GST tax liability mentioned above the preceding financial year for the States/UTs other thanthose for May 2020by taxpayers having turnover upto INR50millionin Electronically filing Form GSTR-3B to discharge GST tax liability the preceding financial year for thespecified states for May 2020by taxpayers having turnover upto INR50millionin Electronically filing Form GSTR-3B to discharge GST tax liability and/or services inForm GSTR-1 for June2020 Electronically filingdetails of outward supplies of taxable goods Payment of taxes withheldinJune2020 than INR50million for May 2020by taxpayers having aggregate turnover of more Electronically filing Form GSTR-3B to discharge GST tax liability for thetax year 2020-21) Payment of advance tax (not less than15%of theestimated tax and/or services inForm GSTR-1 for May 2020 Electronically filingdetails of outward supplies of taxable goods Payment of taxes withheldinMay 2020 4 4 . 3 1,4 1 cc Doing Business in India 36

Key tax compliance calendar 1 April 2020 to 31 March 2021 15 11 7 24 22 20 11 7 31 31 31 31 31 September 2020 August 2020 Filing of belated income tax return for thetax year 2018-19 Filing of revised income tax return for thetax year 2018-19 returns inForm 24Q/26Q/27Q Electronically filequarterly (April to June2020)withholding tax withholding tax returns inForm 24Q/26Q/27Q Electronically filingthequarterly (January 2020 to March 2020) in preceding financial year June 2020by taxpayers having turnover less thanINR15million and/or services inForm GSTR-1 for thequarter April2020to Electronically filingdetails of outward supplies of taxable goods for thetax year 2020-21) Payment of advance tax (not less than45%of theestimated tax and/or services inForm GSTR-1 for themonth of August 2020 Electronically filingdetails of outward supplies of taxable goods Payment of taxes withheldinAugust 2020 those mentioned above in thepreceding financial year for the states/UTs other than for July2020 by taxpayers having turnover upto INR50million Electronically filing Form GSTR-3B to discharge GST tax liability in thepreceding financial year for thespecified states for July2020 by taxpayers having turnover upto INR50million Electronically filing Form GSTR-3B to discharge GST tax liability in thepreceding financial year for July2020by taxpayers having turnover above INR50million Electronically filing Form GSTR-3B to discharge GST tax liability and/or services inForm GSTR-1 for themonth of July2020 Electronically filingdetails of outward supplies of taxable goods Payment of taxes withheldinJuly2020 4 1 4 4 31 31 31 24 22 20 11 7 3 1 30 20 October 2020 ing tax returns inForm 24Q/26Q/27Q Electronically filequarterly (July to September 2020)withhold- maintenance of TPdocumentation, for thetax year 2019-20 (in Form 3CEB) for taxpayers subjectto TPcompliance and Filing of tax auditreport (inForm 3CD) million inpreceding financial year September 2020by taxpayers having turnover less thanINR15 and/or services inForm GSTR-1 for thequarter July2020to Electronically filingdetails of outward supplies of taxable goods than those mentioned above million inthepreceding financial year for the states/UTs other for September 2020by taxpayers having turnover upto INR50 Electronically filing Form GSTR-3B to discharge GST tax liability million inthepreceding financial year for thespecified states for September 2020by taxpayers having turnover upto INR50 Electronically filing Form GSTR-3B to discharge GST tax liability million inthepreceding financial year for September 2020by taxpayers having turnover above INR50 Electronically filing Form GSTR-3B to discharge GST tax liability and/or services inForm GSTR-1 for September 2020 Electronically filingdetails of outward supplies of taxable goods Payment of taxes withheldinSeptember 2020 than those mentioned above million inthepreceding financial year for the states/UTs other for August 2020by taxpayers having turnover upto INR50 Electronically filing Form GSTR-3B to discharge GST tax liability states to INR50millioninthepreceding financial year for thespecified for themonth of August 2020by taxpayers having turnover up Electronically filing Form GSTR-3B to discharge GST tax liability respectively cable) for theperiod2018-19in form GSTR-9 andGSTR-9C, Electronically file GST Annual return andaudit (ifappli- report million inthepreceding financial year for August 2020by taxpayers having turnover above INR50 Electronically filing Form GSTR-3B to discharge GST tax liability 1,4 4 4 and/or TPcertification 1 cc Doing Business in India 37

Key tax compliance calendar 1 April 2020 to 31 March 2021 30 30 20 17 15 7 20 17 7 20 December 2020 November 2020 20 Filing of income tax return by taxpayers for thetax year 2019- international group for thetax year 2019-2020 Report inForm No. 3CEAAby aconstituent entity of an turnover upto INR50millioninthepreceding financial year turnover more thanINR50million inthepreceding financial year tax liability for November 2020by taxpayers having aggregate Electronically filing Return Form GST RET-1 to discharge GST 10th of thefollowing month) can beavailed by therecipient basis thedetails uploaded until million inthepreceding financial year (though input by taxpayers having aggregate turnover of more thanINR50 goods and/or services in Electronically saving thedetails of outward supplies of taxable for tax year 2020-21) Payment of advance tax (not less than75%of theestimated tax Payment of taxes withheld inNovember 2020 liability for October 2020 Electronically filing Form GST PMT-08 to discharge GST tax year turnover of more thanINR50millioninthepreceding financial goods and/or services inForm GST ANX-1 for October 2020 Electronically saving details of outward supplies of taxable Payment of taxes withheldinOctober 2020 tax liability for October 2020 Electronically filing return Form GST RET-1 to discharge GST the following month) availed by therecipient basis thedetails uploaded until 10thof in thepreceding financial year (though input tax credit can be taxpayers having aggregate turnover of more thanINR50million 4 Form GST ANX-1 for November 2020 5 by taxpayers having aggregate 5 by taxpayers having aggregate 5 by 5

31 20 20 20 20 17 7 17 7 20 February 2021 January 2021 respectively applicable) for theperiod2019-20inform GSTR-9 andGSTR-9C, Electronically file GST annual return andaudit (if report turnover upto INR50millioninthepreceding financial year liability for December 2020 Electronically filing Form GST PMT-08 to discharge GST tax year turnover of more thanINR50millioninthepreceding financial tax liability for December 2020by taxpayers having aggregate Electronically filing Return Form GST RET-1 to discharge GST 10th of thefollowing month) can beavailed by therecipient, basis thedetails uploaded until million inthepreceding financial year (though input tax credit by taxpayers having aggregate turnover of more thanINR50 liability for January2021 Electronically filing Form GST PMT-08 to discharge GST tax year turnover of more thanINR50millioninthepreceding financial tax liability for January2021by taxpayers having aggregate Electronically filing Return Form GST RET-1 to discharge GST the following month) availed by therecipient, basis thedetails uploaded until 10th of in thepreceding financial year (though input tax credit can be taxpayers having aggregate turnover of more thanINR50million turnover upto INR50millioninthepreceding financial year turnover upto INR50millioninthe preceding financial year goods and/or services in Form GST ANX-1 for January2021 Electronically saving thedetails of outward supplies of taxable Payment of taxes withheldinJanuary2021 goods and/or services inForm GST ANX-1 for December 2020 Electronically saving thedetails of outward supplies of taxable Payment of taxes withheldinDecember 2020 liability for November 2020 Electronically filing Form GST PMT-08 to discharge GST tax 5 by taxpayers having aggregate 5 5 by taxpayers having aggregate by taxpayers having anaggregate 5 by 5

cc Doing Business in India 38

Key tax compliance calendar 1 April 2020 to 31 March 2021 31 20 20 31 17 15 7 March 2021 statements endingon31December) [Form 3CEAC] for thetax year 2019-20(Assuming consolidated financial international group whose parent isanon-resident (CbC Report) Intimation to befiled by a resident constituent entity of an March) (Assuming consolidated financial statements endingon31 liability for February 2021 Electronically filing Form GST PMT-08 to discharge GST tax year turnover of more thanINR50millioninthepreceding financial tax liability for February 2021by taxpayers having aggregate Electronically filing Return Form GST RET-1 to discharge GST the following month) availed by therecipient, basis thedetails uploaded until 10thof in thepreceding financial year (though input tax credit can be taxpayers having aggregate turnover of more thanINR50million in respect of tax years 2018-19 where exchange of information agreement hasnot beensigned, entity orIndianconstituent entities of aninternational group Filing of aCountry-by-Country (CbC) Report by anIndianparent turnover upto INR50millioninthepreceding financial year goods and/or services inForm GST ANX-1 for February 2021 Electronically saving thedetails of outward supplies of taxable year 2020-2021 Payment of advance taxes upto estimated tax liability for thetax Payment of taxes withheldinFebruary 2021 5 by taxpayers having aggregate 4 and2019-20(inForm 3CEAD) 5 by (a) Nilinterest orinterest atthereduced rate of 9%,iftaxpayers filetheir 2. 1. laws. The calendar pertains to compliances to beundertaken underthecentral Note states specified other than located in (Taxpayers million INR50 Less than states specified located in (Taxpayers million INR50 Less than turnover Aggregate notified for statutory compliance underGST law: In view of COVID-19 outbreak, thefollowing relief measures have been Nicobar Islands, Telangana andAndhra Pradesh. Lakshadweep, Kerala, Tamil Nadu,Puducherry, theAndamanand Dadraand Diu, andNagarHaveli, Maharashtra, Karnataka, Goa, Specified states are Chhattisgarh, Madhya Pradesh, Gujarat, Daman returns withinthetimeperiodastabulated below: 1 1 ) ) July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 Tax Period 29 September 2020 25 September 2020 15 September 2020 9 July2020 5 July2020 30 June2020 27 September 2020 23 September 2020 12 September 2020 6 July2020 3 July2020 30 June2020 and late fee) (without any interest be filedonorbefore Form GSTR-3B can 2020 30 September 2020 30 September 9%) reduced rate of interest atthe payment of or before (upon can befiledon Form GSTR-3B cc Doing Business in India 39

Key tax compliance calendar 1 April 2020 to 31 March 2021 7 6 5. 4. 3. (b) Taxpayers, other thanabove, can also filethe said returns in Form ed date. late fee andpenalty shallbelevied ifreturns are filedbefore the extend- are filedpost 24June2020,normal rate of interest shallbelevied. No reduced rate of 9%ontax paid after 15days from theduedate. Ifreturns GSTR-3B by 24June2020.Insuchcases, interest would bepayable at June 2020. to berevisited inview of any press release/notification issued after 24 The duedates may get extended onaccount of thepandemic andneeds government. union territories of JammuandKashmir andLadakh) provided by the (e.g., extension for GST compliances for the persons registered inthe The above calendar does not comprise of any state specific extensions determine theinputcredit available for each month. uploaded by thesupplier inGST ANX-1 withinthestipulated duedate to (accept/reject/pending) inGST ANX-2 inrespect of thedetails of invoices until September 2020.Also, therecipient isrequired to take action Presently, theduedates underGST legislationare notified for theperiod This istheextended duedate inview of thepandemic. GSTR-1 isfiled withinthe timeperiodastabulated below: Form GSTR-1 hasbeenwaived subjectto thecondition thattheFORM In view of COVID-19 outbreak, late fee andpenalty for delay infiling April 2020to June2020 January 2020to March 2020 June, 2020 May, 2020 April, 2020 March, 2020 Month/ Quarter 03 August 2020 17 July2020 05 August 2020 28 July2020 24 July2020 10 July2020 Form GSTR-01 can befiledupto cc Doing Business in India 40 CGST CCPS CCI CBM CBDT CbC CAGR BTA BSE BPO BPM BO BEPS BCG BC API APA AMT ALP AI AE ADR AD Bank AAR A&C Act Abbreviation Central GoodsandService Tax ence shares compulsorily fully convertible prefer Competition Commission of India coal bedmethane Central Board of Direct Taxation country-by-country Compound AnnualGrowth Rate Business Transfer Agreement Bombay Stock Exchange Business Process Outsourcing Business Process Management branch office Base Erosion andProfit Shifting Bacillus Calmette–Guérin body corporate active pharmaceutical ingredients Advance PricingAgreement Alternate Minimum Tax arm’s lengthprice IntelligenceArtificial associated enterprises American Depositary Receipt authorized dealer bank Authority for Advance Ruling Arbitration andConciliation Act, 1996 Description Glossary - FIPB FII/FPI FEMA FDI FCCB F Co ESOP ESI Act EPF Act ECB EBITDA DTH DTAA DPT DPP DoC D&D CST CSR Cr CP Act COVID-19 CLRA Abbreviation Foreign Investment Promotion Board portfolio investor foreign institutional investor/foreign Foreign Exchange Management Act Foreign Direct Investment Foreign Currency Convertible Bond foreign company employees stock ownership plan Employees’ State Insurance Act, 1948 neous Provisions Act, 1952 Employee Provident Fund andMiscella- External Commercial Borrowings tion andamortization Earnings before interest, tax, deprecia - Direct-to-Home Television Double Taxation Avoidance Agreement PertussisDiphtheria, andTetanus Defence Procurement Procedure Department of Commerce design anddevelopment Central Corporate Social Responsibility crore Consumer Protection Act, 1986 Coronavirus Disease 2019 tion) Act, 1970 Contract Labour(Regulation andAboli Description - ICDS ICAI ICA IBEF IASB IAA GW GST GoI/ government GI Rules GI Act GDR GDP GATT GAAR FY FTS FTP FRRO FRO FMV Abbreviation Standards Income Computation andDisclosure India Institute of Chartered Accountants of Indian Contract Act, 1872 India Brand Equity Foundation Board International Accounting Standards Impermissible Avoidance Arrangement gigawatt Goods andService Tax ulation andProtection) Rules, 2002 Geographical Indication of Goods(Reg- 1999 (Registration andProtection) Act, Geographical Indications of Goods Global Depository Receipt Gross Domestic Product Trade General Agreement onTariffs and General Anti-Avoidance Rule financial year fee for technical services Foreign Trade Policy Foreigner Regional Registration Offices foreigner's registration office fair market value Description Doing Business in India 41 NCLT MWA MSME MoSPI MNC MCA MAT M&E LO LLP km ITU IT Act IT andITeS IRN IRDA IPO INR Ind AS ILO IGST IFSC IFRS IEC ICT Abbreviation National Company Law Tribunal Minimum Wages Act, 1948 Micro, SmallandMediumEnterprises Implementation Ministry of Statistics andProgramme multi-national companies Ministry of Corporate Affairs Minimum Alternate Tax industry the Indianmediaandentertainment liaison office Limited Liability Partnership kilometers International Telecommunication Union Income Tax Act, 1961 tion technology enabledservices information technology andInforma- Invoice Reference Number Authority of India Insurance Regulatory andDevelopment Initial PublicOffering Indian Accounting Standard International LaborOrganization Integrated GoodsandServices Tax International FinancialService Centre Standards International FinancialReporting Import-Export Code Technology Information andCommunications Description ROI RoDTEP ROC REIT RBI R&D QFI PSU PO PIO PE PAN OPC OFB OECD OCPS NSE NRI NR NOR NI Act NHAI NGO NFE NDCP NCPS Abbreviation Return of Income Exported Products Remission of Duties andTaxes on Registrar of Companies Real Estate Investment Trusts Reserve Bank of India research anddevelopment Qualified Foreign Investors Public Sector Undertaking project office Person of IndianOrigin one person company Ordnance Factories Board tion andDevelopment Organisation for Economic Co-opera- shares optionally convertible preference National Stock Exchange Non-resident Individual non-resident Not Ordinarily Resident Negotiable Instruments Act, 1881 National Highways Authority of India Non-Governmental Organizations Net Foreign Exchange – 2018 National Digital Communications Policy non-convertible preference shares Description WTO VAT UT USP US$ US TRIPS TPR TP TM Rules TM Act TDS TAR STT sq SME SHR SGST SG Act SFIS SEZ SEIS SEBI SDT ROR Abbreviation World Trade Organization Value AddedTax union territory Unique Selling Proposition US Dollar The United States of America Property Rights Trade-Related Aspects of Intellectual Transfer PricingRegulations Transfer Pricing Trade Marks Rules, 2017 Trade MarkAct, 1999 Tax Deducted atSource Tax AuditReport Securities Transaction Tax square small andmediumenterprises Safe HarborRule State GoodsandService Tax Sale of GoodsAct, 1930 Served from IndiaScheme Special Economic Zone Service from Exports IndiaScheme Securities andExchange Board of India Specified Domestic Transaction resident and ordinarily resident Description 1. BOs are permitted to represent the parent company and undertake activities, such as export/import of goods, rendering professional services, carrying out research work, etc. in India. 2. For setting up a BO/LO, a foreign entity should further have a financially sound track record and should satisfy profitability Sources and net worth conditions and other conditions prescribed under the Master Directions issued by the RBI for establishment of a BO/LO/PO or any other place of business in India by foreign entities dated 01 January 2016 (updated on 29 March Click on the button and return to the article 2019). 3. Rates mentioned above needs to be increased by applicable surcharge rate as well as by health and education cess of4%. (Please refer section ‘L’ for more details).

1. knowindia.gov.in 1. Rule 40BB of the Income-tax Rules, 1962 states the provisions for calculation of ‘amount received on issue of shares’ in 2. www.knowindia.net scenarios such as mergers, asset acquisition, ESOPs, etc. 3. As per data released by India Brand Equity Foundation 4. www.iwai.nic.in 5. www.investindia.gov.in 6. World Population Prospects 2019, United Nations 7. www.worldometers.info 1. An LLP to be engaged in sectors where 100% FDI is allowed under automatic route and FDI-linked performance conditions 8. www.worldpopulationreview.com do not exist. 9. As per the World Bank Group estimates 10. Estimated using figures in INR from Ministry of Statistics and Programme Implementation (MoSPI), Government of India (GoI) and an average exchange rate of 70.9 INR/US$ for FY19 11. MoSPI, GoI 12. Ministry of Commerce and Industry, GoI 1. Companies (Indian Accounting Standards) Rules, 2015 and as amended from time to time.

1. www.globalfirepower.com 2. www.idsa.in 3. www.pib.gov.in 4. www.ddpmod.gov.in 1. As per Foreign Exchange Management (Cross Border Merger) Regulations, 2018 dated March 20, 2018 5. Ministry of Defence’s press release dated 11 March 2020 6. As per data released by India Brand Equity Foundation 2. rate may vary between 20%-40%, depending upon the period of holding and the residency status. The rates exclude a maximum surcharge of 5% in case of foreign entities, and 12% in case of domestic companies, and cess of 4%. 7. https://www.investindia.gov.in 8. FDI statistics published by the Department for Promotion of Industry and Internal Trade for the period starting from 3. Capital gains tax rate may vary between 5%- 40%, depending upon the period of holding and the residency status. The rates April 2000 till December 2019 exclude a maximum surcharge of 5% in case of foreign entities, and 12% in case of domestic companies, and cess of 4% 9. www.dhi.nic.in 4. Indirect transfer tax implications are required to be evaluated basis separate mechanism and computation 10. Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 5. Applicable to listed companies only 11. EY India IPO Trends Report Q1 2020 6. Subject to any NCLT vacations and protracted litigations 12. The Government of India’s press release dated 21 March 2020 on promotion of the domestic manufacturing of medical devices in country 13 The era of consumer A.R.T. - India’s Media & Entertainment sector – by EY and FICCI (March 2020). Average exchange rate of 70.42 INR/US$ for 2019 has been used for converting INR figures into US$. 1. CBDT Notification No. 35/2020 dated 24 June 2020 14 Press release by Ministry of Shipping dated 7 April 2020) 15 www.indiabudget.gov.in (Average exchange rate of 71.5 INR/US$ has been used for converting INR figures into US$) 16 Monthly Review of Power Sector Reports (Executive Summary), March 2020 17 It includes subsectors - alcoholic drinks, beauty and personal care, consumer health, home care, hot drinks, foods, soft drinks, tissue and hygiene, tobacco products, apparel, footwear, furniture and furnishings, appliances, books, stationary and others. 1. The due dates may get extended on account of COVID-19 pandemic 18 Oxford Economics 2. The rates listed above must be increased by applicable surcharge rate (refer table for surcharge rates) and health and 19 www.outlookindia.com education cess of 4%. 20 As on April 2019 21 Ministry of Road Transport & Highways press release dated 6 April 2020 22 www.trai.gov.in 23 Department of Telecommunications, Annual report 2019-20 1. Certain advanced technology areas such as semi-conductor fabrication, solar photo voltaic cells, lithium storage 1. FDI statistics published by the Department for Promotion of Industry and Internal Trade for the period starting from April, batteries, solar electric charging infrastructure, computer servers, laptops, etc. are yet to be notified. 2000 till December 2019 2. www.pib.gov.in 2. Services sector includes financial, banking, insurance, non-financial / business, outsourcing, research & development, courier, technology testing and analysis 3. The data for March 2020 is an estimation, which will be revised based on RBI’s subsequent release. 4. Press Information Bureau - India’s Foreign Trade: March 2020 Ernst & Young LLP Our offices EY | Assurance | Tax | Transactions | Advisory About EY EY is a global leader in assurance, tax, transaction Ahmedabad Delhi NCR Kolkata and advisory services. 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