Here are the 10 things global brands should know before entering into India
Options for investment
Foreign investment into India can come in a variety of legal entities. The choice depends on the kind of work you plan to do in the country. For a foreign enterprise to engage in activities not listed within the limits of liaison, branch and project offices, wholly-owned subsidiaries or joint venture companies can be established.
The key positions in Indian company
Incorporating a private limited company requires a minimum of two directors, and between 2 and 50 shareholders, the highest authority of the company. The director or board of directors set the agenda of the company’s operations according to shareholder decisions. As part of annual compliance requirements, companies must appoint an auditor to undertake full audit of company accounts prior to the annual general meeting (AGM).
Intellectual property rights
An important issue is registration of trademark. Registration involves several filling procedures, take about 12 months and can be carried out by local licensed Indian trademark lawyers.
Taxation
The main taxes impacting foreign investors are corporate income tax, which is 30-40%. Whereas for GST, it comprises of 5%, 12%, 18% and 28% depending on the categories of products carried out in businesses.
Accounting
There are more than 30 accounting standards, each governing different aspects of accounting statements. The RBI regulates the country’s foreign exchange markets and prescribes exchange control norms, and the Indian rupee is fully convertible on the current account. However, on the capital account, the Indian rupee is only partially convertible.
Annual compliance requirement
Incorporated companies are required to undertake an annual audit of accounts, which must be sent to shareholders well before the AGM. Company accounts must be submitted to the office of the concerned Registrar of Companies annually, following an AGM which must be held once every calendar year before September 30.
Transfer Pricing
Transfer pricing concerns the prices charged between associated enterprises (those linked through management, control or capital) established in different tax jurisdictions for their intra-company transactions. For tax auditing purposes, international transactions between associated enterprises have to be assessed on the basis of the “arm’s length principle”. This arms’s length nature has to be supported by documentation signed and verified by an accountant.
Visas
For business activities, there are business visas (limited to 6 months) and employment visas. Foreigners intending to stay longer than 180 days are required to register with the local foreigners’ regional registration office within 14 days of arrival.
Labour contracts
Indian labour laws provide a minimum of guarantees and benefits to all employees, and these laws supersede the provisions of labour contracts. There are three types of contracts in India:
Any termination policy should be checked against the current law prior to it is carried out. Besides company rules and regulations, clauses related to the following points can be incorporated into contracts:
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