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Company formation in India

Case study: Company formation in India

The client is a London based company with presence in over 80 countries across six continents. The company helps its clients to successfully deliver projects around the world by sourcing and supplying top professionals in fields such as IT, Telecom, Project Management, Cyber & IT Security, Presales, Sales & After Sales, Compliance and Security. With offices in Europe, Middle East & Africa, Asia and America, the Company is striving to be at the top in delivering the best possible services and support to organizations that need complex services on a global basis. 

Case Overview

The Company is helping many of the worlds’ leading companies to achieve their business goals by providing them a world class outsourcing, staffing and contingent workforce services by aligning their hiring processes to each client’s distinct requirements. Support for achieving that, comes from the staff specializing in the following departments of the business:

  •  Recruitment & Outsourcing
  • Legal
  • Accounting
  • Accommodation
  • Travel
  • Visa & Immigration
  • In-Country support services
  • Health and safety support

 The client wishes to expand its operations and provide its discrete services in India. 


The primary objective of the client was to provide their services in other countries. For this purpose they needed to set up their company at a location where they could set up a robust and reliable distribution network. Apart from this, they had various other requirements with respect to their business and location as well. Some of their requirements were:

  • Setting up of the business in a location in India where companies from the same industry were located;
  • Secure a specific name pattern for the Indian Company similar to its other entities around the world;
  • Appointment of a Director who is ordinarily resident and citizen of India to satisfy the Indian Companies Act requirement; and
  • The Indian Company would provide support in project specific needs of their clients tailored to meet their objectives along with local operational support in the territories where its client does not operate. 

 Business Solution

The client approached us for assistance in incorporation / formation of an Indian Company. After having a detailed discussion with the client and understanding their requirements, our team listed down their preferences keeping in mind their requirement to set up business in India at minimum cost. We assisted the client in identifying the desired location, apply for the name in the desired pattern, appoint a nominee Indian director and complied with other applicable statutory requirements of shareholding, directorship etc. Thus, we successfully incorporated an Indian Company for the client as specified.

Current Status

The Company has expanded its operations to India with an endeavor to expand even more. Their customers are highly satisfied with their delivery times generating a goodwill for them. They were able to increase their business by more than twice as planned. The client recently shared with us their requirements to expand further into many more countries with our assistance. Thus, we extended our services happily to them.

We have served a number of clients for their company incorporations who have benefitted from our professional services. For a more detailed discussion on company incorporations in India, or to obtain further assistance in setting up business in India, company registration in India, company formation in India, post-registration compliances, accounting and bookkeeping, tax compliances, please contact AJSH & Co LLP. If you have any query regarding this Click Here.


Tax highlights from the Union Budget 2018-19

The Union budget was presented to the Parliament on 1 February 2018 by the Finance Minister Arun Jaitley. It was highly anticipated, since it was the first budget after the implementation of Goods and Service Tax (GST) in India. The budget included the annual financial statement and the finance bill of India for the financial year 2018-19.

Taxation Highlights 

  • Direct Tax Collections for FY 2017-18 are at Rs 6.56 lakh, which shows a growth of 18.2% up to December, 2017. As many as 85.51 lakh new taxpayers filed their tax returns in 2016-17, as against 66.26 lakhs in 2015-16. The number has increased from 6.47 crore in FY 2014-15 to 8.27 crore by FY 2016-17.
  • Rebates in presumptive income schemes for small businesses with income below Rs 2 crore and similar schemes for professionals with income below Rs 50 lakh were proposed by the Finance Minister. There was additional income tax collection of Rs 90,000 crore in 2016-17 and 2017-18.
  • In order to boost the MSME sector, the corporate tax for companies with turnover up to Rs 250 crore was reduced to 25 %, decrease of 5%.
  • The emoluments were proposed to be revised for President of India at Rs 5 lakh from Rs 1.50 lakh per month, Rs 4 lakh for vice president from Rs 1.25 lakh per month and Rs 3.5 lakh for governors from Rs 1.10 lakh per month.
  • For salaried taxpayers standard deduction of Rs 40,000 was announced. It has substituted transport allowance of Rs 19,200 and medical allowance of Rs 15000. The income tax slabs remain unchanged.
  • In regards to capital gains tax, long-term capital gains are proposed to be taxed at 10 % on gains arising from the transfer of listed equity shares over Rs 1 lakh, without the allowance for indexation benefit. Short term capital gains tax remains unaltered at 15 %.
  • Exemption in interest income on bank deposits was also raised to Rs 50,000 for Senior citizens, along with income from Bank FDs and post offices which previously had Rs 10,000 exemption. Hence, TDS shall not be required to be deducted under section 194A. This will be applicable on all fixed deposit schemes and recurring deposit schemes.
  • The budget also proposes 10 % dividend distribution tax on income by equity-oriented mutual funds as well as 100 % deductions for cooperative societies that earn income from fishing, cottage industries, sale of agricultural harvest, cottage industries and milk supplied by the members to milk cooperative societies under Section 80P.
  • No adjustment would be required for transactions in immovable property where Circle Rate value does not exceed 5% of the consideration. This would benefit the Real estate sector.
  • PAN number is mandatory for any entity entering into a financial transaction of Rs 2.5 lakh or more. From April 1 onwards PAN will be used as Unique Entity Number for non-individuals.
  • It is also proposed to amend Employees PF Act to reduce contribution of women joining the workforce for the first time to 8% from 12% or 10% (as applicable) for the first three year. There will be no change in employer’s contribution. This will encourage more women to find employment.
  • Government announced 8.33% contribution to EPF for new employees for three years and 12% government contribution to EPF in sectors employing large number of people.
  • The Pradhanmantri Vaya Vandana Yojana (PMVVY) scheme has been extended until March, 2020. The current investment limit of Rs 7.5 lakh per senior citizen is also proposed to be increased to Rs 15 lakh.
  • Under section 80DDB, the deduction limit for medical expenditure for certain critical illness was increased from Rs 60,000 in case of senior citizens and Rs 80,000 in case of very senior citizens, to Rs 1 lakh.
  • Custom duty on mobile phones is proposed to increase from 15 % to 20 %, to 15% on some of their parts and accessories and also on certain parts of televisions.
  • Cess on Income tax has been proposed to be increased by 1% to 4%, increasing the tax payable by all categories of tax payers.

We serve a number of clients who need assistance for various legal, financial and tax matters who have benefitted from our professional services. We also assist in setting up business in India, company registration in India, income tax return filling, bookkeeping and accounting. Find out more on how we can help your business by speaking to one of our advisors at AJSH & Co LLP. If you have any query regarding this Click Here.


Avoid these common mistakes in income tax, keep tax notice at bay

In recent months, the tax department has stepped up efforts to ensure tax compliance. New rules have been introduced to plug tax leaks and officials are cracking down on evasion. Tax records are being put under the scanner and notices are being sent to individuals if the computer-aided selection system notices a discrepancy. Thousands of taxpayers have already received tax notices.

A notice from income tax department is a reason for taxpayer’s worry. There are few common mistakes which invites a call from income tax department. Thus, knowing these mistakes could help you avoid income tax notices.

  1. Not reporting interest incomes

One should report all the interest incomes received or accrued due to him in the previous financial year (for which the return is being filed) while filing his tax returns. Not reporting of interest income from bank and other sources is one of the most prominent reasons resulting in issue of income tax notice. Income tax department gets information of interest, commission & other income of the depositor from multiple sources. Non- reporting results in automatic issue of notices by the income tax system.

Smart tip: Calculate how much interest you will get on your FDs, RDs and other fixed income investments and add that to your income.

  1. Not filing income tax returns

Individual are required to file the income tax return only if income exceeds the basic exemption limit. Lot many taxpayers don’t file the return presuming that return is mandatory only if they have the tax liability. For instance, a person with a salary income of INR 4 Lakh and 80C deduction of INR 1.50 Lakh is required to file the return of income as income is above basic exemption limit even though the tax liability is Nil. Non- filing of return results in notice. It is advisable to file the income tax return even if the income is below basic exemption limit if they have carried out any high value transactions, as it will enable them to avoid income tax notice.

Further, many people don’t file their income tax returns because they have long term capital gains which are tax-exempt and without this their gross total income is below the tax-exempt income level. However, as per recent amendments in section 139 (1) of the Act, if your exempted long term capital gains along with gross total income exceeds the minimum exemption level, you are required to file your income tax return.

Smart tip: Do not miss filing your return even if your tax is zero or all your taxes are paid. File online to avoid mistakes.

  1. Non reporting of tax free incomes

As a taxpayer, you are duty bound to report all your income even if some is tax-free. One of the reasons for income tax notice is that the investment by taxpayer is not in accordance with the income profile of the taxpayer. There are lot many taxpayers who don’t discloses exempt income on the pretext that it don’t have any tax implications. Exempt income includes income such as LIC money back, PPF withdrawals, ELSS withdrawals etc. Often the amount of exempt income is in lump sum and invested back by the taxpayers in other investment avenues. By disclosing exempt income, taxmen are automatically able to link the source of new investment from exempt income. Disclosure of exempt income in ITR forms also could be treated as
self-explanatory for the spending of the taxpayers towards foreign travel, credit card & other spending. Thus, these exempt incomes are to be reported in the ‘Exempt Income’ schedule of the ITR and you can claim exemption on these under various sections of the Income Tax Act.

Smart tip: Mention all tax-free income in your ITR but claim exemption for it under various sections.

  1. Verify 26AS before filing tax return

26AS is a taxpayer’s statement showing the data of the assessee available with the income tax department. Taxpayer should verify that their return incorporates the data available in 26AS. Taxpayer should take efforts to rectify 26AS in case it contains entry not related to him. Taxpayer can avoid notices by verifying 26AS before filing income tax return.

Smart tip: Verify 26AS before filing income tax return.

  1. Non reporting of transaction in Income Tax Return

Non reporting of transactions in income tax return form is one of the most prominent reasons for inviting income tax notices. Even though the transaction has resulted in loss, it is better to disclose the loss figure in income tax return to avoid notices. These types of incidents are often there in shares, mutual funds & property. Be careful, disclose & avoid unwanted notice from income tax department.

Smart tip: Report all transactions including the transactions resulting in losses in income tax return.

  1. Misusing forms 15G / 15H to avoid TDS

Many investors try to avoid TDS by splitting their investments across different banks. Many others submit Form 15G or 15H so that their bank does not deduct TDS. These forms are declarations that the individual’s income for the year is below the taxable limit and therefore no TDS should be deducted from the interest. These are now required to be e-filed by the banks & other recipient. As a result, the income tax systems have handy information of all the taxpayers who have wrongly filed the declaration form. Taxpayers submitting this form in a casual way started receiving notice from the income tax department. Further, misuse of these forms is a serious offence. A false declaration not only attracts penalty but also prosecution.

Smart tip: File Forms 15G only if you fulfil both the conditions i.e. your taxable income for the year does not exceed the basic exemption of INR 2.5 Lakh and the total interest received during the financial year does not exceed the basic exemption slab of INR 2.5 Lakh. TDS is an interim tax and you can claim a refund if you have paid more than due.

  1. Non deduction of TDS

TDS net is widening to include individual taxpayers who are not in any kind of business or profession. Now, purchase of property above INR 50 Lakh attracts TDS. The rule is applicable even if you pay in instalments. In such cases, the TDS needs to be deducted from each payment and the money deposited with the government within seven days. While TDS deduction happens automatically when you buy a new property from a builder, in case of transactions between individuals, it is often ignored.

In addition, payment of rent exceeding INR 50,000 p.a. also attracts TDS. Non-deduction or non-filing of the TDS return after deduction / payment invites notice from the revenue office.

Smart tip: Make it clear to the seller of property / property owner that you will be deducting TDS from the payment. Make sure you have his correct PAN details.

  1. Non reporting of Cash deposit

Change in income tax return forms is an annual feature. This year, income tax return form required taxpayer to disclose the amount of cash deposited in a bank account. Also, if your expenses or cash withdrawals exceed certain limits, your credit card company and your bank are supposed to report that to the tax department. Thus, income tax systems have already received the information from the banks of all the taxpayers regarding their cash deposits. Taxpayers with heavy cash deposits or unmatched data are catching an eye of income tax and the income tax department may send a notice or pick up such cases for scrutiny.

Smart tip: Avoid cash transactions as far as possible. If depositing cash in bank account, keep record of source of cash.

Thus, precisely don’t forget to incorporate all the income details in income tax return. Don’t fail to file the income tax return. Disclose all the transactions, mainly of shares & property. Don’t be casual in submission of Form No. 15G / 15H. Be updated about the changing tax laws, more particularly about the TDS provision on property & rent & deduct proper TDS. Report all income. Disclose all the bank accounts correctly with cash deposits figure. Verify 26AS before filing income tax return & be a happy taxpayer.

For a more detailed discussion on income tax issues, or to obtain further assistance in personal income tax filings, corporate tax filings, tax planning, income tax assessments, response to income tax notices, please contact AJSH & Co LLP. If you have any query regarding this Click Here.

Transfer Pricing

Domestic transfer pricing



Applicability of Transfer Pricing (“TP”) provisions was earlier limited to International Transactions only. With effect from April 1, 2013, the scope of Transfer Pricing provisions extended to “Specified Domestic Transactions (“SDT”).

With the applicability of transfer pricing provisions on Specified Domestic Transactions, it is the obligation on the taxpayer to report / document and substantiates the arm’s length nature of such transaction.

Transfer pricing regulations were extended to include transactions entered into with domestic parties or by an undertaking with other undertakings of the same entity for the purpose of section 40A, Chapter VI-A and section 10AA. All the compliance requirements relating to transfer pricing documentation, including accountant’s report, etc. equally apply to specified domestic transactions as they do for international transactions amongst associated enterprises. However, with a view to reduce the compliance burden, the scope of applicability of domestic transfer pricing has been relaxed by excluding the reporting of expenditure in section 40A under the ambit of SDT provisions.This amendment will take effect from April 1, 2017 and accordingly apply in relation to AY 2017-18 and onwards.

Objective of domestic transfer pricing

Prior to the introduction of domestic transfer pricing, tax officers were empowered to re-compute tax holiday eligible profit if undertaking makes more than ordinary profits as a result of arrangements with closely connected persons or otherwise. In case of inter-unit transfer of goods or services, tax officer/ taxpayer allowed to determine tax holiday profits based on FMV of goods/ services. Thus, no specific methodology was prescribed for disallowance/ tax holiday profit adjustment and it was important to consider making TP provisions applicable to aforesaid transactions.

There are two counts where tax arbitrage happen in India viz. tax holidays and accumulated losses. The objective of introducing the domestic transfer pricing provisions in India is to deal with the tax arbitrage possibilities in India arising out of differential taxes and accumulated losses of loss making concerns.

Statutory rules and regulations

A separate code on transfer pricing under Sections 92 to 92F of the Indian Income TaxAct, 1961 (“the Act”) covers intra-group specified domestic transactions.

The Indian Transfer Pricing Code prescribes that income arising from specified domestic transactions should be computed having regard to the arm’s length price. It has been clarified that any allowance for an expenditure or interest or allocation of any cost or expense arising from a specified domestic transaction also shall be determined having regard to the arm’s-length price. The Act defines the term specified domestic transactions, related parties and arm’s length price.

Type of transactions covered

Finance Act 2012 extended the application of Indian transfer pricing regulations tospecified domestic transactions, being the following transactions with certain related domestic parties, if the aggregate value of such transactions exceeds 20crores:

  • Any transaction referred to in section 80A;
  • Any transaction related to businesses eligible for profit-linked tax incentives, for example, infrastructure facilities (Section 80-IA) and SEZ units (Section 10AA) and
  • Any other transactions as may be specified.

Thus, SDT provisions are applicable only if one of the domestic Indian entities involved in the inter-company transaction is enjoying benefits of any tax holiday / profit linked deduction and the aggregate of such transactions exceed INR 20crores.

Eligible business covered

Section Tax payers covered Deduction
10AA Persons with income from SEZ units 100% for the first 5 years50% for the next 5 years50% of the profits or amount credited to SEZ re-investment reserve, whichever is less for next 5 years
80-IA Infrastructure developers 100% for a period of 10/15 years out of 15/20 years, as the case maybe from the date of commencement of operation
80-IA Telecommunication service providers 100% for a period of 5 years30% for the next 5 yearsout of 15 years from the date of commencement of operations
80-IA Developers of Industrial park 100% for a period of 10 years out of 15 years from the date of commencement of operations
80-IA Producers or distributors of power 100% for a period of 10 years out of 15 years from the date of commencement of operations
80-IAB Developers of SEZ 100% for a period of 10 years out of 15 years from the date of commencement of operations
80-IB Small scale industry engaged in operating cold storage plant 30% of profits for the first 10 years
80-IB Industrial undertaking in Industriallybackward state as mentioned in VIIISchedule
(ex: Jammu and Kashmir)
100% of profits for 5 years and 30% for the next 5 years
80-IB Multiplex theaters and convention centre 50% for the first 5 years
80-IB Company carrying on scientific researchand development 100% of profits for first 10 years
80-IB Eligible housing projects 100% of profits from such business
80-IB Eligible hospitals 100% of profits for first 5 years
80-IC/ 80-IE Persons with units in North-eastern states claiming deduction 100% for a period of first 10 years
80-ID Hotels located in districts having World Heritage site 100% of profits for first 5 years of commencement of business


Documentation requirements

As per section 92D, every person who has entered into SDT shall keep and maintain such information and documents in respect thereof, as prescribed in Rule 10D of the Income Tax Rules. As per Section 92E, the assessee has to take an accountant’s report, in Form 3CEB, duly signed and verified as per the provisions of the Act. The Transfer Pricing Audit Report is required to file electronically on or before the due date of filing of Income Tax Return i.e. on or before November 30 of the respective assessment year.

Penal provisions

If any person fails to keep and maintain any such information and document as required by section 92D, the Assessing Officer or Commissioner (Appeals) may direct that such person shall pay, by way of penalty, a sum equal to 2% of the value of each SDT entered into by such person.

Further, failure to furnish a report from an accountant (Form 3CEB) as required by section 92Eby the due date shall attract a penalty of INR 100,000. However, in case of a transfer pricing adjustment, in absence of good faith and due diligence by the taxpayer in applying the provisions and maintaining adequate documentation, tax authorities in India can levy a penalty of 100% – 300% of tax on the adjusted amount.


For a more detailed discussion of specific transfer pricing rules, or to obtain further assistance in domestic transfer pricing compliance, transfer pricing study, planning activities,addressing and resolving intercompany transfer pricing issues, please contact AJSH & Co LLP. If you have any query regarding this Click Here.

highlights of 25th gst meeting

Highlights of 25th GST council meeting

The 25th GST Council Meeting was held at New Delhi on the 18th of January 2018. In addition to relaxation of GST rules and regulations, GST rates have also be reduced for various goods and services. Here are the outcomes of this meeting:


  • GST council cut rates on 29 products and 53 services. These new rates will be implemented from 25th January 2018.
  • Council members also discuss on E-way Bill. E-way bill system will go through a test from January 25 and will be implemented on a mandatory basis from Feb 1.
  • No discussion on Petroleum & Real-estate
  • GSTR 3B return filing will continue for the time being
  • Total collection under composition scheme is only Rs.307 Crore

Penalty for Late Filing GST Return Reduced to Rs.50 – Rs.20 for NIL Return

The penalty for late filing of GST returns has been further reduced by the 25th GST Council Meeting. Now, any business that failed to file GSTR1 return, GSTR5 return or GSTR5A return will only have to pay a penalty of Rs.50 per day of default. In case of failure to file NIL GST return, the penalty has been reduced to just Rs.20 per day. The reduction in penalty for late filing GST returns will reduce the compliance and penalty burden on many small and medium businesses across the country.

Cancellation of GST Registration

  • Taxable persons who have obtained voluntary registration will now be permitted to apply for cancellation of registration even before the expiry of one year from the effective date of registration.
  • For migrated taxpayers, the last date for filing FORM GST REG-29 for cancellation of registration is being extended by further three months till 31st March, 2018.

E-Way Bills Can Be Out

During the last GST council meeting in December, it was announced to implement e-way bills from February 1. So, this time we can expect the council to discuss the mechanism of the e-way bill to implement it in a better manner from the next month.

If you have any query regarding this Click Here


Power of attorney

What Is Power Of Attorney?

A Power of Attorney is a legal document by which one person gives the right to perform or powers of transacting in matters relating to property, banking, legal and judicial proceedings, tax payments, etc, to another person due to certain reasons like being out of country, or getting old, or not able to look after one’s duties in those matters etc.

Principal/Grantor/Donor- The person who grants the power to the other person to act on his behalf is termed the grantor or principal or donor.

Attorney/Agent/Donee- The person to whom the power is granted is termed the Attorney or agent or donee.

Types Of Power Of Attorney

General Power Of Attorney- A person can give to another person a complete general right or power to act lawfully with respect to his property  or bank accounts or tax payments, or registration work or to sue a third party etc. It is commonly termed as GPA.

Special Power Of Attorney

A Special power of Attorney is to be made by a person when any particular or specific task or act is to be done. Once the particular act is completed the Special power of Attorney comes to an end.This is generally used when you want to rent out your property or appear for the registration of any property or appear in a court on behalf of the Principal or to appear before the Tax authorities etc.

Durable and Non-durable Power of Attorney

IF the Principal wants the Power of Attorney deed to continue even after his death then he has to mention it in the Power of Attorney deed. Such a Power of Attorney is termed as Durable Power of Attorney. If there is no mention that the power shall continue after the death of the Principal then it is a non-durable Power of Attorney deed.

Power Of Attorney By Non-Resident Indians (NRI)

An NRI or non-resident Indian can make a Power of Attorney deed even by staying outside India without having to come to India for that purpose. Most NRIs have properties and banking transactions in India which may require their presence while transactions happen.But it is often not possible to come to India for each such transactions. For this then NRIs can always give the powers to transact to another person who is either a family member or a friend.

Property matters POA need to registered  at sub registrar  office.

We serve a number of clients who need assistance for various legal, financial and tax matters who have benefitted from our professional services. Find out more on how we can help your business by speaking to one of our advisors at AJSH & Co LLP. If you have any query regarding this Click Here.

transfer pricing law in India

Transfer pricing law in India


Transfer Pricing (“TP”) regulations have been at the forefront of corporate headlines over the last few years due to the increasing number of controversies resulting out of tax structuring by multinational companies in India. What makes the topic both contentious and interesting is that regulators view the various techniques applied to inter-corporate transactions as purportedly planned with the intent of achieving benefits of comparable labor cost and tax advantage at the cost of a countries tax revenues.

Hence, there was a need to introduce a uniform and internationally accepted mechanism of determining reasonable, fair and equitable profits and tax in India in the case of such multinational enterprises.

Statutory rules and regulations

A separate code on transfer pricing under Sections 92 to 92F of the Indian Income TaxAct, 1961 (“the Act”) covers intra-group cross-border transactions and specified domestic transactions. Since the introduction of the code, transfer pricing has become the most important international tax issue affecting multinational enterprises operating in India. The regulations are broadly based on the Organisation for Economic Co-operation and Development (“OECD”) Guidelines and describe the various transfer pricing methods, impose extensive annual transfer pricing documentation requirements and containharsh penal provisions for noncompliance.

The Indian Transfer Pricing Code prescribes that income arising from international transactions or specified domestic transactions between associated enterprises should be computed having regard to the arm’s length price. It has been clarified that any allowance for an expenditure or interest or allocation of any cost or expense arising from an international transaction or specified domestic transaction also shall be determined having regard to the arm’s-length price. The Act defines the terms international transactions, specified domestic transactions, associated enterprises and arm’s length price.

Type of transactions covered

The Indian transfer pricing regulations are applicable to an international transaction as well as to specified domestic transactions entered into two (or more) associated enterprises.Section 92B of the Act defines the term “international transaction” to mean a transaction between two (or more) associated enterprises involving the sale, purchase or lease of tangible or intangible property; provision of services; cost-sharing arrangements; lending/borrowing of money; or any other transaction having a bearing on the profits, income, losses or assets of such enterprises.

Further, the Finance Act 2012 extended the application of transfer pricing regulations to “specified domestic transactions”, being the following transactions with certain related domestic parties, if the aggregate value of such transactions exceeds INR 5 crore:

  • Any transaction related to businesses eligible for profit-linked tax incentives, for example, infrastructure facilities (Section 80-IA) and SEZ units (section 10AA); and
  • Any other transactions as may be specified.

Associated enterprises (“AEs”)

The relationship of associated enterprises is defined by Section 92A of the Actto cover direct/ indirect participation in the management, control or capital of an enterprise by another enterprise. It also covers situations in which the same person (directly or indirectly) participates in the management, control or capital of both the enterprises. For the purposes of the above definition, Section 92A of the Act specifies certain parameters have been laid down based on which two enterprises would be deemed as AEs.

Arm’s length principle and pricing methodologies

The term ‘arm’s length price’ is defined by Section 92F of the Act to mean a price that is applied or is proposed to be applied to transactions between persons other than AEs in uncontrolled conditions. The following methods have been prescribed by Section 92C of the Act for the determination of the arm’s-length price:

  • Comparable uncontrolled price (CUP) method
  • Resale price method (RPM)
  • Cost plus method (CPM)
  • Profit split method (PSM)
  • Transactional net margin method (TNMM)
  • Such other methods as may be prescribed

These regulations require a taxpayer to determine an arm’s-length price for international transactions or specified domestic transactions. However, transfer pricing provisions will not apply if the arm’s-length price would result in a downward revision in the income chargeable to tax in India.

Documentation requirements

Taxpayers are required to maintain, on an annual basis, a set of extensive information and documents relating to international transactions undertaken with AEs or specified domestic transactions. Rule 10D of the Income Tax Rules, 1962 prescribes detailed information and documentation that has to be maintained by the taxpayer.

Further, it is mandatory for all taxpayers, without exception, to obtain an independent accountant’s report in respect of all international transactions between associated enterprises or specified domestic transactions. The report has to be furnished by the due date of the tax return filing (i.e. on or before 30 November) to avoid stringent penalties prescribed for noncompliance with the provisions of the transfer pricing code.

 For a more detailed discussion of specific transfer pricing rules, or to obtain further assistance in transfer pricing compliance, transfer pricing study, planning activities,addressing and resolving intercompany transfer pricing issues, please contact AJSH & Co LLP. If you have any query regarding this Click Here.

Company incorporation in India

How a foreign company can incorporate a new company in India?

India is among the fastest growing economies in the world with immense human potential and a large market comprising of over 1.2 billion people. Opportunities in India has attracted a large amount of Foreign Direct Investment into the country and each year the amount of FDI inflow keeps increasing due to more number of foreign businesses starting their operations in India. In this post, the way to setup a business is in India is detailed for foreign companies.

Incorporation of a private limited company is the easiest and the fastest type of India entry strategy for the foreign nationals and for the foreign companies. Foreign direct investment of up to 100% into a private limited company or a limited company is under the automatic route, in which no permission form the Central Government is required. Hence, the incorporation of a private limited company as a wholly owned subsidiary of a foreign company or a joint venture is the cheapest, the easiest and the fastest entry strategy for the foreign companies and the foreign nationals into India.

Cost for Registering a Company in India

The cost for registering a business in India is relatively inexpensive. Registration of a company in India can also be completed within a few weeks, making India an easy place to start a business.

Mandatory documents required for Company Registration in India
In order to register a company in India, the foreign nationals are supposed to submit a copy of their passport along with an address proof (Driver’s License, Bank Statement etc.).

The copy of the original documents should be notarized by a Notary in the home country or by the Indian Embassy in the respective country where the foreign Director belongs to.

In case a corporate entity is aiming to become a shareholder in the Indian Company then the Board Resolution from the foreign company should authorize the investment in the Indian Company.

The Board Resolution that has been decided upon mutually among the Directors should be attached with a notarized copy of the incorporation certificate of the foreign company.

This is to be noted that the presence of any of the foreign Directors is not mandatory required in India at the time of incorporation in India. Thus, the foreign nationals have the flexibility of establishing and operating a business in India without even travelling to India.

If you have any query regarding this Click Here

Telecom Companies Under Debt-Restructuring

IBA requests dot for relief for telecom companies under debt-restructuring

The Indian Banks Association (IBA) has requested the Department of Telecommunications (DoT) to provide relief measures for telecom companies undergoing debt restructuring. This includes refunding payments related to airwaves surrendered by the telecom companies as well as cancellation of future deferred payments for this spectrum.

In the letter submitted to the DoT, IBA said “This money will be used for repaying the banks which in turn prevent loans from turning into NPA (non-performing asset)”. “We understand the government had allowed a similar facility to BSNL and MTNL in the past” it further added.

IBA has also requested speeding up of the process of providing relief along with return of bank guarantees provided by such companies since of theRs. 7.75 lakh crore telecom sector liabilities, Rs. 5.8 lakh crore was primarily towards banks and spectrum obligations. This would benefit the telecom operators by providing them with more working capital, since the troubled carriers, are currently selling assets including spectrum to reduce debt on their balance sheets.

It is becoming difficult for mobile operators to survive and service their debt without immediate support from the government, the IBA added.The revenue and operating profit has been declining in the telecom industry since 2016-17. The adjusted gross revenue of the industry declined to approximately Rs. 39,778 crore in the first quarter from approximately Rs. 53,384 crore in the same quarter of 2016-17. There has been a 25.5% drop in adjusted gross revenue of the industry in the April-June quarter on a y-o-y basis.

According to IBA, most of the operators undergoing restructuring had borrowed from public sector banks. Some of the mobile operators are undergoing financial restructuring under various RBI schemes.As part of debt restructuring, mobile operators have proposed optimising their assets and monetising non-core assets, including their existing portfolio of spectrum.

Banks are under stress as most of them have exposure to debt-ridden companies, like Reliance Communications and Aircel, who have already defaulted on their debt repayment obligations, and have been directed by the RBI to incorporate higher provisions for their exposure towards the sector.

An inter-ministerial group has recommended relief measures to address financial stress in the telecom industry which have been approved by the Telecom Commission, the highest decision-making body of the DoT. The proposals will go to the Cabinet for further approval.

Among the relief measures, the government will also increase the timeframe for deferred spectrum payments to 16 years as well as change the calculation of interest for delayed payments.

We serve a number of clients operating in the telecom industry who have benefitted from our professional services. Find out more on how we can help your business by speaking to one of our advisors at AJSH & Co LLP.

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Where to invest in India

Invest in India

Nearly two decades of economic liberalization, coupled with robust domestic demand, a growing middle class, a young population and a high return on investment, make India a credible investment destination. India jumped 30 places higher in World Bank’s recent ease of doing business report and is aiming to be in the top 50.

Invest India is scheme started by the government’s foreign investment promotion agency, which is planning to actively promote the country as an investment destination and has drawn up a list of 200 companies not present in India that it wants to target.  There are 33 identified investment sectors on the government website, including IT & BPM, Construction, Automobile, Food processing, Healthcare and Telecommunications, which aim to provide the required information for investing in the particular area, highlighting the statistics, the growth driver, the FDI policy, the Sector policy, the investment opportunities, foreign investors, agencies, financial support and achievements.

Some reasons why investment in India is lucrative are as follows:

Fast growing economy

  • India is likely to grow at consistently higher rates (over 7%) and retain its position as one of the fastest growing economies till 2020 (International Monetary Fund).
  • Foreign exchange reserves have been at a comfortable level over recent years. India’s reserves stood at USD 371.279 billion (Reserve Bank of India as on 9th September, 2016).
  • India ranks amongst the top 10 FDI destinations globally – surpassing USD 50 billion in FY 2015-16.
  • India has shown a growth of 46% in FDI equity inflow and 37% in overall FDI inflow since the launch of Make in India initiative (Ministry of Commerce, Government of India).

Demographic Advantage

  • The proportion of working age population in India is likely to reach more than 64% by 2021, with a large number of young persons in the 20-35 age group(Economic Survey 2014).
  • The average age of 125 billion persons will be 29 years by 2020 (Economic Survey, 2014).
  • If India continues its recent growth trend, average household incomes will triple over the next two decades and it will become the world’s fifth largest consumer economy by the year 2025 (McKinsey Report).

Favourable Policies

  • Major FDI policy reforms have been made in a number of sectors, such as defence, construction development, pensions, broadcasting, pharmaceutical and civil aviation.
  • Government of India has permitted foreign investment in almost all sectors with a few exceptions, such as atomic energy & lottery business.
  • 100% FDI is allowed through the automatic route in several sectors, without the need of government approval, namely Automobile, Food Processing, and Construction etc.
  • The Central and State governments have sector specific policies, incentives and subsidies to promote manufacturing.
  • Foreign investors can invest in India either on their own or as a joint venture, as may be required in a few sectors.


If you are new to the entire investment scenario, it is advised to seek professional help. Professionals can advise on the available range of viable investments and will help you chalk out your entire investment plan. AJSH & Co LLP can also assist you with company registration process and tax advisory services.

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