GCC setup in India

GCC Setup in India
Global Capability Centre Advisory for Multinationals

India is the World’s GCC Capital — Now Set Yours Up the Right Way

From Entity Structuring to Cost-Plus Operations and State Incentives

India hosts more than 1,700 Global Capability Centres employing over 1.9 million professionals, with new GCCs opening at the pace of roughly one a week. For a multinational, the appeal is straightforward — deep technical talent, mature delivery ecosystem, English-language working environment and a 60–70% landed-cost advantage on engineering, R&D, analytics, finance and shared-services work. The hard part is not the decision to come to India; it is structuring the GCC so that the cost-plus transfer pricing, intercompany service agreement, SEZ / STP-I choice, state-incentive timing and ongoing compliance all line up from day one.

Jain Anurag & Associates is a Mumbai-based chartered accountancy firm advising foreign-parent multinationals on captive-centre setups across India. A GCC is legally almost always a Wholly Owned Subsidiary, so the incorporation steps are familiar — what makes a GCC engagement different is everything that wraps around the incorporation: the operating model, the inter-company economics, and the location / incentive strategy. This page covers all of that. For an overview of how a GCC fits alongside other India entry options, see our pillar guide on Foreign Company Registration in India.

What Makes a GCC Different from a Regular WOS
Captive, not Customer-Facing

A GCC delivers services back to its foreign parent and group entities only — not to third-party Indian customers. There is no Indian revenue from external clients, no GST output liability on local sales, and no commercial-contracting risk in India. That single fact reshapes the tax model, the GST footprint, and the transfer pricing approach.

Cost-Plus Economics

The GCC recovers all operating costs from the parent plus an arm’s-length markup — typically 10–18% depending on function (lower for back-office, higher for engineering/R&D). The markup is benchmarked, defended via a Transfer Pricing study and Form 3CEB, and is the single biggest determinant of Indian corporate tax outflow.

Intercompany Service Agreement (ISA)

The ISA between the parent and the GCC is the foundational document. It defines scope of services, cost base, markup, billing cycle, IP ownership, data flow, exit and termination. We draft and review ISAs that hold up under both Indian transfer-pricing scrutiny and the parent’s home-country audit.

Export of Services — Zero-Rated GST

Services delivered to the foreign parent qualify as “export of services” under IGST law — zero-rated, with the GCC entitled to claim a refund of input GST or operate under a Letter of Undertaking (LUT) without paying output tax. Setting up the LUT and the refund workflow early is critical to working-capital efficiency.

Choosing the Legal Vehicle for Your GCC

Almost every GCC is set up as a Private Limited Company that is a Wholly Owned Subsidiary of the foreign parent. A few situations call for alternatives:

  • WOS (default) — separate Indian legal entity, full operational flexibility, taxed at 22% concessional corporate rate (or 25%/30% depending on regime chosen), eligible for state incentives. Best fit for any GCC headcount of 30+ or any operation with multi-year commitment.
  • LLP (Limited Liability Partnership) — lower ROC compliance, no dividend distribution tax, but FDI under Automatic Route only for sectors where 100% FDI is allowed and only after the LLP rules introduced in 2015. Used occasionally for service-only GCCs but loses out on share-based ESOPs and corporate-investor expectations.
  • Branch Office — rare for GCCs because the BO is taxed at the higher 40% foreign-company rate, has restricted permitted activities, and cannot do all the things a GCC typically needs (e.g. cross-functional R&D, internal IP development for the group).

The decision is rarely a close call — for almost all GCCs the right answer is WOS. The structuring conversation moves quickly to which WOS configuration: equity-funded or equity+ECB-funded, SEZ unit or STP-I unit or commercial space, single location or hub-and-spoke across two cities.

Location & State-Incentive Strategy

Indian states actively compete for GCC investment. The big six destinations — Karnataka, Telangana, Tamil Nadu, Maharashtra, Haryana (Gurugram) and Uttar Pradesh (Noida) — each have notified or de-facto packages. Examples we see most often:

  • Karnataka GCC Policy — capital subsidy, stamp-duty reimbursement, payroll incentive per eligible job, with enhanced benefits for Tier-2/3 city locations (Mysuru, Mangaluru, Hubballi).
  • Telangana TS-GCC scheme — lease rental support, recruitment incentive, fast-track approvals through TS-iPASS.
  • Tamil Nadu Industrial Policy 2021 — structured incentives for GCCs in Coimbatore, Madurai, Tiruchirappalli; payroll subsidy for women employees.
  • Maharashtra IT/ITeS Policy — electricity duty exemption, stamp-duty rebate, FSI incentives for IT parks in Pune, Navi Mumbai, Nagpur.
  • Andhra Pradesh & Uttar Pradesh — capex grants for global captives, especially attractive for engineering R&D and electronics design GCCs.
  • Common across states — PF reimbursement for new jobs, stamp duty on lease, single-window clearance, brand-incentive marketing support.

Most state incentives have employment thresholds and look-back periods. Filing the incentive application alongside (not after) incorporation is critical — some schemes require the GCC to be registered with the state IT department before the lease deed is signed. We sequence the timeline accordingly.

SEZ vs STP-I vs Non-SEZ Premises
  • SEZ unit — zero-rated GST on exports, customs/IGST exemption on capital imports, simplified compliance. The Section 10AA income-tax holiday is closed for new units commencing operations after 1 April 2020, so the SEZ choice today is driven by indirect-tax efficiency and the regulatory wrapper, not income tax.
  • STP-I (Software Technology Park) registration — customs duty exemption on imports of hardware and software, single-window approvals through STPI authority, simpler export-services regime. Suitable for IT, software development and engineering R&D GCCs in commercial buildings outside SEZs. The most common choice for new tech GCCs today.
  • Non-SEZ commercial space — maximum operating flexibility, faster real-estate decisions, no SEZ wind-up risk. Best for finance, shared-services and back-office GCCs where customs/import benefits are minor.
The Setup Roadmap — Four Phases
  1. Phase 1 — Structuring (Weeks 1–4): entity choice, location shortlisting, state-incentive modelling, cost-plus markup benchmarking, draft ISA, capital structure (equity vs equity+ECB), FDI sector check.
  2. Phase 2 — Incorporation (Weeks 4–10): name reservation, SPICe+ filing, PAN/TAN, GST registration, professional tax, Importer-Exporter Code (IEC) if needed, STPI or SEZ application, parent-side FEMA documentation.
  3. Phase 3 — Operational Setup (Weeks 8–16, in parallel): AD bank account opening, FC-GPR filing for share allotment, payroll setup, EPFO/ESIC registration, LUT for export-of-services, ISA signing, intercompany invoice template, transfer pricing study kickoff, state-incentive application filing.
  4. Phase 4 — Ongoing (Year 1 onward): monthly payroll & GST returns, quarterly TDS / advance tax, statutory audit, transfer pricing report & Form 3CEB, FLA return, GST refund claims, state-incentive periodic claim filings, board governance support.
Tax & Regulatory Checklist for a GCC
  • Transfer Pricing study & Form 3CEB each year (markup defence).
  • Advance Pricing Agreement (APA) with CBDT — for GCCs of 200+ headcount, an APA locks the markup for 5+5 years and eliminates audit risk.
  • GST LUT renewed annually + monthly refund claim workflow.
  • FC-GPR within 30 days of every share allotment to the foreign parent.
  • FLA Annual Return to RBI by 15 July each year.
  • Form 15CA/15CB for any outward remittance to parent or vendors.
  • Tax audit (Form 3CD) by 30 September.
  • ROC filings — AOC-4, MGT-7, DIR-3 KYC annually; charge filings on any ECB.

See our dedicated pages on Transfer Pricing, FC-GPR filing, FLA Annual Return and Form 15CA/15CB for the mechanics of each.

Why Foreign Parents Choose Jain Anurag & Associates for GCC Setup
  • Single point of accountability — entity, tax, transfer pricing, FEMA and state-incentive workstreams under one engagement partner. No coordination tax across multiple firms.
  • Structuring-first approach — we run the 5-year landed cost model before you sign anything, so the location, incentive and SEZ/STP-I decisions are based on numbers, not vendor pitches.
  • Parent-side coordination — we work directly with the parent’s tax, legal and treasury teams in their time zone, with the ISA, transfer pricing report and audit working papers in formats their auditors accept.
  • Sector experience — technology, engineering R&D, SaaS, fintech, pharma and shared-services GCCs across Bengaluru, Pune, Mumbai, Hyderabad and Chennai.
  • Ongoing managed service — once the GCC is live, monthly closing, payroll, GST, TDS, transfer pricing, state-incentive claims and statutory audit run as a single subscription.

Planning a GCC in India? Talk to us early — the structuring decisions made in the first four weeks shape the tax, compliance and incentive economics for the next ten years.

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