Establishing a Global Capability Center (GCC) in India involves navigating a complex legal landscape to ensure compliance with various regulations. Here's a detailed guide on the legal requirements you need to consider:
Company Formation
Setting up a GCC in India requires compliance with the Companies Act, 2013. The process involves several key steps:
- Name Reservation: You must reserve the company name through the RUN (Reserve Unique Name) service.
- Incorporation: File the SPICe+ form, which incorporates the Memorandum of Association (MOA) and Articles of Association (AOA).
- Director Identification: Directors must obtain a Director Identification Number (DIN) and Digital Signature Certificate (DSC).
- Tax Registration: Apply for a Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN).
Taxation
The Indian tax framework is outlined under the Income Tax Act, 1961:
- Corporate Tax: Domestic and foreign companies are subject to different tax rates. A private limited company (PLC) structure has a lower effective tax rate (25.17%) compared to a limited liability partnership (LLP) structure (34.94%).
- Transfer Pricing: Compliance with transfer pricing regulations ensures arm’s length pricing for transactions with associated enterprises.
- Tax Incentives: Businesses can benefit from tax holidays and incentives available in Special Economic Zones (SEZs) and for specific activities.
- Goods and Services Tax (GST): Entities exceeding a turnover threshold must register and regularly file GST returns.
Banking and Financial Services
Compliance with the Banking Regulation Act, 1949, and the Reserve Bank of India Act, 1934, is essential for banking and financial operations:
- Banking Operations: Ensure adherence to banking regulations for stability and integrity.
- Non-Banking Financial Companies (NBFCs): Understand and comply with guidelines for NBFCs.
Export and Import Regulations
Compliance with India’s Foreign Trade Policy is crucial for businesses involved in international trade:
- Import Export Code (IEC): Mandatory for entities engaged in export and import activities.
- Foreign Exchange: Ensure compliance with foreign exchange laws to avoid violations.
E-commerce Regulations
The Consumer Protection (E-commerce) Rules, 2020, and the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, govern e-commerce operations:
- Consumer Rights: Protect consumer rights and ensure fair trade practices.
- Data Privacy: Safeguard user data and privacy.
Investment Vehicles and Funding
For raising funds, compliance with SEBI regulations is necessary:
- Venture Capital and Private Equity: Adhere to guidelines for securing funding.
- Angel Investors: Ensure compliance with angel investor regulations.
Technology Transfer and Licensing
Legal frameworks for technology transfer agreements are essential:
- Indian Contract Act: Governs technology transfer agreements.
- Patents and Trademarks: Compliance with licensing terms and conditions.
- Copyright Act: Regulations for software and other intellectual property.
Data Privacy
Data privacy is governed by several regulations:
- Information Technology Rules: Ensure compliance with data protection practices.
- Data Protection and Digital Privacy (DPDP) Act: Emphasizes data minimization, user consent, and transparency. GCCs must implement stringent security measures, ensure lawful data processing, and provide mechanisms for individuals to exercise their rights over their data.
Employment and Labour Laws
Indian employment and labour laws govern individuals recruited or hired to work with the GCC:
- Compliance: Establish necessary policies and systems to prevent and redress employee-related grievances.
- Employee Onboarding: Prepare for employee onboarding with template employment agreements, statutorily mandated policies, and compliance with local laws.
How Wisemonk Can Help You Establish a GCC in India
As a leading Employer of Record (EOR) service provider in India, Wisemonk offers comprehensive support for establishing and managing your GCC:
- Legal Compliance: Our team ensures thorough compliance with all relevant Indian laws, from company formation to ongoing operations.
- Tax Structuring: We provide strategic tax planning to minimize liabilities and leverage available incentives.
- Banking and Financial Services: We guide you through the regulatory requirements for banking and financial operations.
- Export and Import: Assistance in obtaining IEC and ensuring compliance with foreign exchange laws.
- E-commerce: Support in adhering to consumer protection and data privacy regulations.
- Investment and Funding: Help in navigating SEBI regulations for securing funding.
- Technology Transfer: Legal support for technology transfer agreements and IP licensing.
- Data Privacy: Ensure compliance with data protection laws, including the DPDP Act.
- Employment: Manage all aspects of employee onboarding, compliance with labour laws, and statutory benefits.
By partnering with Wisemonk, you gain access to local expertise, streamlined processes, and a hassle-free experience in setting up and running your GCC in India. Our end-to-end solutions ensure that your GCC operations are efficient, compliant, and aligned with your strategic business objectives.
