Set Up a Company in India |
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Several international investors are now choosing to set up a company in India to take advantage of the country's sustained economic growth and the introduction of certain financial and tax incentives. A properly-structured Indian private limited company is an ideal medium through which to conduct business in India. The following information will help you determine whether forming a company in India is the optimum solution for your business: |
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Investors who set up a company in India's Special Economic Zones enjoy 100% tax-exemption for the first five years, and a further 50% for the next 5 years. For more information on incentives to incorporate a company in India, kindly visit our India Company Incorporation page. |
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Foreign investors who incorporate a company in India pay a 20% withholding tax if the company is headquartered in a jurisdiction with which India has no double tax treaty. |
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The economic growth in India can be very advantageous for investors planning to set up a company in India. According to a The Times of India, amongst the world's 20 largest economies, India has the fastest growth rate, next to China. |
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A private limited company requires a minimum paid up capital of INR100,000 (US$2,220). In the event that the company uses words such as India or Hindustan in its name then the minimum paid up capital requirement will be INR 500,000 (US$11,100). |
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Companies that have been incorporated in India, under the company formation law, are required to undergo an annual audit. |
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Investors forming a company in Indiaare supported by the country's well established legal infrastructure shared by other commonwealth jurisdictions (eg. Singapore, Hong Kong & Australia) based on the UK legal system. |
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The process to set up a company in India is slowed by the country's bureaucracy and complex regulatory environment, an intermediary jurisdiction such as Singapore allows this process to be more efficient. |
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Other incentives for foreign investors forming a company in Indiainclude capital and interest subsidies and reduced utility rates in certain designated Special Economic Zones. |
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The Indian government is actively promoting economic reform in the country, including streamlining foreign direct investment (FDI) procedures and licensing requirements to set up a company in India. For example, a so-called 'Single Window System' introduced by the Foreign Investment Implementation Authority (FIIA), has helped improve the FDI approval process in India, as well as speed up the process to incorporate a company in India. |
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Despite the above initiatives, forming a company in Indiais slowed by obtaining FDI approval from the Indian authorities. The process to incorporate a company in India is still time consuming and hampered by bureaucracy and paperwork. |
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Foreign investors who set up a company in India are allowed to hold 100% foreign investment, if the company is formed as a subsidiary of a foreign company. |
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Investors who have chosen to incorporate a company in India should note that India is perceived as the 95th least corrupt country in the world, according to the 2011 Corruption Perceptions Index by Transparency International. |
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Investors who have deciding whether to incorporate a company in India should note that according to the Heritage Foundation’s 2010 Index of Economic Freedom, India has the 124th-freest economy in the world. |
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Investors forming a company in India should note that Indian companies are subject to foreign exchange controls. |
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Forming a company in India allows for 100% foreign investment, if the Company is formed as a subsidiary of a foreign company. |
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Forming a company in Indiais an ideal solution for companies planning to outsource English language services due to the wide availability of low cost, English-speaking labour. |
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Under the India company law, companies formed in India require a minimum of two shareholders and directors.. |
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The domestic corporate tax rate for investors who incorporate a company in India is 33% on taxable income above Rs1 million (US$20,500). For more information, visit the India Income Tax Department web site. |
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India's Special Economic Zones (SEZs) are of particular interest to foreign investors forming a company in India. Among the incentives they offer are: |
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| i) | Companies setting up in an SEZ enjoy a 100% tax holiday for five years, and a 50% exemption for a further two years; |
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| ii) | No import licences are required for companies operating in an SEZ; |
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| iii) | No duties are levied on the procurement of capital goods, raw materials, consumables and spares etc, either from overseas or from the domestic market in India; |
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| iv) | Central Sales Tax is reimbursed on domestic purchases; |
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| v) | An SEZ company can carry losses forward; |
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| vi) | SEZ companies may be used for manufacturing, trading or service activity. |
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Investors are permitted to incorporate a company in India in most sectors of the Indian economy, with the exception of the following industries: atomic energy, lottery business or gambling. |
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India has signed double taxation treaties with more than 70 countries, which help support investors who set up a company in India. |
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| Contact Us | |||||||||||||||||
For more information on how to set up a company in India, email email@healyconsultants.com or call us in Singapore at (+65) 6735 0120. |
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Buy Healy Consultants' Asia Business Set Up book, to order call +65 6735 0120 or e-mail email@healyconsultants.com
