Are there any government incentives or tax benefits available for GCCs in India?

Setting up a Global Capability Center (GCC) in India offers numerous advantages, including significant government incentives and tax benefits designed to attract foreign investment and promote economic growth. Here's a detailed overview of these incentives:

Government Incentives

‍1. Special Economic Zones (SEZs): The Indian government has established SEZs to encourage foreign investment and provide a conducive environment for businesses. GCCs operating within SEZs can benefit from:

• Tax Holidays: A 100% tax exemption on export profits for the first five years, followed by 50% for the next five years, and 50% of the plowed-back export profits for the next five years.
• Custom Duty Exemptions: SEZ units enjoy exemptions on import duties for equipment and raw materials, reducing setup costs.
• Service Tax Exemptions: Services provided to SEZ units are exempt from service tax, further lowering operational costs.

2. Software Technology Parks (STPs): GCCs can also register as STP units, which provide:

• Indirect Tax Benefits: STP units can claim indirect tax benefits at the time of imports, particularly beneficial for GCCs requiring hi-tech equipment.
• Duty-Free Imports: STP units can import goods duty-free, enabling cost savings on procurement.

3. Foreign Direct Investment (FDI): India allows 100% FDI in many sectors, simplifying the entry process for foreign MNCs and enabling smoother operations once GCCs are established.

‍4. Digital India and Make in India Initiatives: These government-backed programs enhance India's technological capabilities and ensure connectivity, providing an advantage for high-tech GCC operations.

‍5. Tax Incentives: The government offers various tax incentives to attract foreign investment:

• Reduced Corporate Tax Rates: New manufacturing companies and GCCs can avail of reduced corporate tax rates of 15%, compared to standard rates.
• Tax Exemptions: GCCs can benefit from exemptions on certain taxes and levies, especially when operating within SEZs.

6. Incentives for Tier-2 and Tier-3 Cities: The Indian government is planning a new policy to boost GCCs in smaller towns, offering:

• Tax Breaks: Incentives like tax breaks to encourage GCCs to set up units in these regions, promoting balanced regional development.

How Wisemonk Can Help You Leverage Government Incentives and Tax Benefits for Your GCC in India

Wisemonk, as an Indian payroll and employer of record (EOR) expert, can assist you in maximizing these government incentives and tax benefits:

‍Strategic Planning: We provide strategic guidance to help you understand and optimize your tax position, ensuring you leverage available tax incentives and exemptions. Our experts help you navigate the complex landscape of state and central regulations.

‍SEZ and STP Setup: Wisemonk guides you through the process of setting up in an SEZ or registering as an STP unit, ensuring you avail of the maximum tax benefits available. We assist in obtaining necessary approvals and managing compliance.

‍FDI Compliance: Our team ensures compliance with FDI regulations, simplifying the entry process for your GCC and enabling smoother operations.

‍Tax Compliance: We handle GST registration, filing, and ITC claims, ensuring you comply with the latest GST laws and regulations. Our experts also assist in reassessing withholding tax rates on foreign payments, managing tax return filing requirements for overseas recipients.

‍Local Expertise: With our local knowledge and partnerships with legal advisors, we ensure thorough compliance and smooth operations, reducing the risk of non-compliance and maximizing your GCC's cost savings.

By partnering with Wisemonk, you can focus on leveraging India's talent pool and business-friendly environment while ensuring your GCC operates within the legal framework, reducing the risk of non-compliance and fostering a positive work environment.