Destination India - IE Seminar - April 2016/media/IE Singapore/Files/Events...Destination India...

DestinationIndia

April 2016

www.pwc.com

PwC

Agenda

Destination IndiaSlide 2

April 2016

1

Is DestinationINDIA

2

Entry Strategy

3

IndianRegulatory

Environment

4

Tax Structures

5

Destination ISINDIA

Appendix: Self read – relevant web links

PwCDestination India

3April 2016

Is Destination INDIA

Section 1

PwC

Incredible India…..


April 2016

PwC

Things you may know about India

April 2016

Largestdemocracy

2015 – 16Growth @7.6%

[email protected]%

Emergingmiddle class

InformationTechnology

prowess

SingleMajority Partyafter 30 years

Infrastructuredeveloping

Ease of doingBusiness @130

Concerns overretrospective

legislation


PwC

Over 400 million internet usersand close to 1 bn telecomsubscribers

11th most favoreddestination for MNCheadquarters

Active member ofG20, SAARC

Unity in Diversity

7 Indian companies in Fortune500

Key market for leadingMNCs

IndependentJudiciary

Use of English asBusiness

Language

Hyperactive Media

Very young population

Things you may not know about India

April 2016Destination IndiaSlide 6


7April 2016

Entry Strategy

Section 2

PwC

Modes of establishing operations in India

As Indian Entity

Whollyowned

subsidiary

Joint

Venture

As Foreign Entity

Branch officeLiaisonoffice

Project officeLLP’s

Foreign Investment


PwC

Communication Channel

Represent the Parent/ Group

Entry Strategy via Liaison Office

Liaison Office(‘LO’)

SingaporeCorporation

(‘HQ’)

• Establishing – Approval of Authorised DealersCategory-I Banks and registration with Registrarof Companies (RoC)

• Taxation – No taxable income. Prescribedprocedural annual compliance

• LO’s under the lens by the Revenue Authorities –Functionality Test – to evaluate the actualactivities performed on the ground

Pros/ Cons

• No commercial activity allowed

• Thin line of difference between creating a taxablePE because of nature of work involved

• Primarily used as a model to test the Indianwaters


PwC

Entry Strategy via Branch Office

Branch Office(‘BO’)


(‘HQ’)

• Establishing – approval of Authorised DealersCategory-I Banks and registration with RoC

• Regulatory – only specified commercialactivities; manufacturing not allowed (unlessSEZ);

• Taxation – taxable as foreign entity for theprofits earned by the Branch

• Need to undertake tax compliances like taxaudits if applicable, file returns, undergoassessments, etc.

Pros/ Cons

• Preferred model for the provision of services– IT, SWD, etc.

• Subject to higher rate of taxes, however entireprofits can be repatriated – DividendDistribution Tax (DDT) not applicable

Research work in area of its HQ

Professional, Consultancy,Technical Support and IT Services


PwC

Entry Strategy via Subsidiary

Subsidiary(‘Subsi’)


(‘HQ’)

• Establishing – incorporated as a Private or aPublic company in terms of the IndianCompanies Act

• Regulatory – subject to FDI guidelines, eitherunder automatic route or approval route.Governing Authority RoC

• Taxation –as a normal Indian company with alower rate of tax. Also, any distribution ofprofits liable for DDT

Incorporation procedure

• Obtaining DIN (Director IdentificationNumber), Digital Certificate and apply forname availability

• Drafting Memorandum of Association (MOA)and Articles of Association (AOA)

• Court stamping and signing of MOA and AOAby first subscribers

• Filing with ROC, vetting of MOA and AOA byROC

• Obtaining certificate of incorporation

Maximum flexibility toconduct business

Moving towards 1-day companyincorporation


PwC

Comparative Analysis

ParticularsLiaisonOffice

Project Office Branch OfficeWholly OwnedSubsidiary / JointVenture Company

LLPs

Activities

Nonincomeearningactivities

Execution ofspecificproject-awarded byIndia Company

Only specifiedactivities

(Manufacturing isnot possible – unlessSEZ)

Any activitiesAnyactivitieswhere 100%FDI isallowed

RestrictionsNumber ofrestrictions

Relaxation incase of projectfor whichapproval hasbeen sought

Number ofrestrictions

Only those imposedby the (“FIPB”), ifany

FIPBapproval –restrictedsector

ApprovalTiming

6-8 weeks 6-8 weeks 6-8 weeks

4-8 weeks,subsequent to FIPBapproval, ifrequired

Around 4-6weeks

RegulatoryAuthority

AD/ RBI AD/ RBI AD/ RBI RoC / FIPB RoC



13April 2016

Indian Regulatory Environment

Section 3

PwC

Governing Authorities

April 2016

1 Regulatory

• Departmentof IndustrialPolicy andPromotion(DIPP)

• FEMA andFDI policy

2 MCA

• CompanyIncorporationand governance

• Registrar ofCompanies

3 ReserveBank ofIndia

• Central BankingInstitution,controls themonetary policy

• AuthorisedDealers

• Ministry ofFinance

• Central Board ofDirect Taxes(CBDT)

• Central Board ofExcise andCustoms (CBEC)

• State Taxes

4 Taxation

5 Listing

• SecuritiesExchange Boardof India


PwC

Sector FDI Cap

Private Banking 74%

Telecom 100%

Civil Aviation 100%

Insurance 49%

Retail Trading 51% - 100%

Print Media 26-100%

FM Radio 49%

Defence 49%

Railway infra 100%

Foreign Direct Investment (FDI) policy – SectoralSnapshot

Prohibited Sectors

Conditionalities in certain Sectors• Telecom, News Media, FM Radio, TV Channels, Insurance,

Civil Aviation, Trading

• Agriculture (some exceptions)• Gambling & Lottery, Nidhi company• Real Estate (except certain construction development

projects)• Manufacture of cigarettes, Trading in TDRs

Government Sector only• Atomic Energy, Railways (operations)

Approval WindowsFIPB/DIPPApproval

AutomaticRoute

100% FDI permitted without approvals (except, a small -ve list)100% FDI permitted without approvals (except, a small -ve list)


PwC

Partial Capital A/c Convertibility

Negative list principle

• Prohibited list

• Requiring Approval

Current Account

• Investments

• Loans

• Immovable Property

Capital Account


PwC

Regulatory – RBI – Exchange Control – ADs

Description Form

30 days - receipt of share application money ARF

30 days - issue of shares + Certificate fromChartered Secretary

FC-GPR

60 days from receipt - transfer of shares residentand non-resident

FC-TRS

Inward remittances FIRC

Reporting – ECB Transactions ECB - 2

Reporting – ECB loan agreement Form -83

Software Export Declaration SOFTEX

Reserve Bank of India (RBI)1

Authorised Dealers (ADs)- Banks

2

Moving towards e-filing3

FrameworkFramework



18April 2016

Tax Structures

Section 4

PwC

FundamentalsFundamentals

Tax Structures – Overview – Direct taxes

* Including surcharge and cesses

Description Rate *(%)

A - Domestic company

Income less than INR 10 mill 30.9

Income more than INR 10 mill but lessINR 100 mill

33.063

Income more than INR 100 mill 34.608

Minimum Alternate Tax (MAT) - baserate - 18.5% (profits levels above)

19.055/ 20.38/21.34

Dividend Distribution tax (DDT) 20.358

Buy Back tax (BBT) 23.072

B - Foreign company

Branch, project/other PE – base rate -40% (income level as above)

41.2/ 42.024/43.26

Central subject

Uniform tax year(April to March)

No Group taxationsystem

DividendDistribution Tax

Capital Gains Tax


PwC

Tax Structure – Overview – Indirect taxes

Central Levies State Levies

Customs Duty:-Basic customs duties onimport of goods (‘BCD’)Additional duties ofcustoms – in lieu of Excise(‘ACD’) and in lieu of VAT(‘SAD’)

Excise duty – onmanufacture of goods

Service tax – on provisionof services

Central sales tax – oninter-state sales

Other cesses andsurcharges

VAT/ purchase tax – onintra-state transactions

Entry tax on entry ofgoods into the state

Electricity duty

Octroi – on entry intomunicipal areas

Stamp duty

Entertainment tax/Luxury tax

Other cesses andsurcharges levied

Indirecttaxes

in India


PwC

SEZ Units – 100% tax holiday for 5 years and 50% for next10 years

Infrastructure Development (Power, Ports, Airports,Highway, Water Projects) – Profit based tax incentive

Food Processing Units – 100% tax holiday - first 5 years and adeduction of 30%/ 25% of profits for subsequent 5 years

Start-up India - 3-years tax holiday for eligible start-ups(3 out of 5) – set up April 2016 to March 2019

Tax Incentives & Deductions

Slide 21

Expenditure in Scientific Research – Weighted deduction –100% to 200%

Proposal to insert sunset-clause in incentives/ deductions– In line with announcement to reduce corporate tax rate

April 2016Destination India

PwC

Compliance Calendar – Tax

Slide 22

Monthly Date

E-payment of excise or service tax liability 06th - subsequent month

Payment of taxes withheld 07th / 30 April for month of March

Filing of monthly Excise return 10th – subsequent month

Quarterly

Advance Tax

15% - 15 June45% - 15 September75% - 15 December100% - 15 March

Withholding tax returns15th July/ 15th Oct/ 15th Jan/15th

May

Yearly

Income Tax Return for Individuals and Corporates (No TaxAudit & Non- TP)

July 31

Income Tax Return for Corporates and Non-Corporates(Subject to Tax Audit & Non- TP)

September 30

File income tax return and other certificates – Subject to TP November 30

April 2016Destination India


23April 2016

Destination IS INDIA

Section 5

PwC

Destination IS INDIA…..

Human Capital –Resource Pool andConsuming Class

GlobalHeadwinds vsIndia’sGrowth Story& Robustmacroeconomicindicators

BusinessFriendlyGovernment

You have arrived….


Thank You

About PwCAt PwC, our purpose is to build trust in society and solve important problems. We’re a networkof firms in 157 countries with more than 208,000 people who are committed to deliveringquality in assurance, advisory and tax services. Find out more and tell us what matters to youby visiting us at www.pwc.com.In India, PwC has offices in these cities: Ahmedabad, Bangalore, Chennai, Delhi NCR,Hyderabad, Kolkata, Mumbai and Pune. For more information about PwC India's serviceofferings, visit www.pwc.com/inPwC refers to the PwC International network and/or one or more of its member firms, each ofwhich is a separate, independent and distinct legal entity in separate lines of service. Pleasesee www.pwc.com/structure for further details.

©2016 PwC. All rights reserved

Look forward to support youin your India growth story !!

Abhishek ShuklaDeputy Head – India DeskPricewaterhouseCoopers Singapore Pte. Ltd.email: [email protected]

PwC

Appendix: Self read – relevant web links

Description Web link

PwC India http://www.pwc.in/

Department of Industrial Policy andPromotion

http://dipp.nic.in/English/default.aspx

Reserve Bank of India https://www.rbi.org.in/home.aspx

MEA – Investment and TechnologyPromotion Division

http://indiainbusiness.nic.in/newdesign/index.php

MCA – Incorporation of Company andGovernance

http://www.mca.gov.in/

CBDT – Income Tax http://www.incometaxindia.gov.in/Pages/default.aspx

Overseas Indian Facilitation Centrehttp://www.oifc.in/business-connect/doing-business-india

Listing – Securities and Exchange Boardof India

http://www.sebi.gov.in/index.html

Make in India – Manufacturing http://www.makeinindia.com/home

Start-up India http://www.startup-india.org/


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