An Introduction to Doing Business in India 2018-19

Published: October 2018

An Introduction to Doing Business in India 2018-19 will provide readers with an overview of the fundamentals of investing and conducting business in India. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, tax, accounting, and audit regime, annual compliance, human resources, payroll, and social insurance obligations in this dynamic market.

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  • No. of Pages: 82 pages

Foreign direct investment (FDI) in India increased to US$61.96 billion in 2017-18 as per the Department of Industrial Promotion & Policy (DIPP), up slightly from US$60 billion in the previous year. As the government pushes toward the ease of doing business and implementing tax and regulatory reforms, India is perfectly positioned to compete with the world’s premier investment locations.

Among emerging markets, India offer investors a unique combination of advantages. Its skilled and low-cost labor force is one of the largest in the world and it has a high level of English fluency relative to other countries in Asia. Economic reforms implemented in the past four years include the roll-out of the goods and services tax (GST), establishing bankruptcy regulations, sector-specific reforms, infrastructural improvements, increasing FDI caps, and the simplification of company registration procedures.

This publication, designed to introduce the fundamentals of investing in India, has been created using the most up-to-date information at the time. It was compiled by Dezan Shira & Associates, a specialist foreign direct investment practice that provides corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia.

Preface 04

Part 1 | Establishing and Running a Business 09

Investment options in India 10

Liaison office 10

Branch office 12

Project office 14

Setting up a wholly foreign-owned business in India 16

Establishing a wholly owned subsidiary 16

Tax liability for companies 17

Navigating FDI caps and restrictions 22

FDI routes and forms 22

Changes to FDI caps and approval routes 23

Investing in Indian companies 26

Part 2 | Tax and Accounting in India 27

Indirect tax in India 28

Goods and services tax (GST) 28

Impact of GST on imports and exports 39

Strategies to reduce tax burden in India 40

India’s Audit Process 42

An overview of India’s audit process 42

Types of audits 44

Audit reporting 47

Convergence with international standards 48

Key considerations to ensure a smooth audit 49

Why audits are important to your business 52

Part 3 | Human Resources and Payroll Considerations 55

Key considerations when hiring staff 56

Visa application 56

Visa registration 58

Hiring staff in India: Common legal issues 60

Payroll and social insurance 63

Withholding tax returns 63

Individual Income Tax 65

Provident Fund scheme 66

Part 4 | Operational Issues 68

Import and export licensing procedures in India 69

Import policy 69

Export policy 72

Types of duties 73

An introduction to sourcing from India 76

India’s sourcing edge 76

Special economic zones 78

Key considerations for sourcing and procurement 81


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