Resolving Tax Notices for GCC & Foreign Companies in India
TDS Default Notice - Section 195 on Management Fee to US Parent
Hyderabad GCC received a TDS default demand of ₹42L for management fees paid to the US parent without TDS deduction, citing India-USA DTAA exemption that was not supported by TRC documentation.
Transfer Pricing Adjustment - IT Services GCC, Hyderabad
TPO proposed upward adjustment of ₹1.2 Cr on cost-plus arrangement between Indian GCC and UK parent, alleging the markup was below arm's length. Prepared TP study with TNMM analysis.
Resolving Tax Notices for GCC & Foreign Companies in India
Global Capability Centres and foreign-owned entities face unique Indian tax challenges - from transfer pricing adjustments to PE risk and Section 195 TDS defaults. SMACAS provides specialist representation for GCCs and MNCs operating in Hyderabad, ensuring compliance and protecting against disproportionate tax demands.
Frequently Asked Questions
Can a GCC entity in India receive a TDS default notice?
Yes. GCCs frequently receive TDS default notices for payments made to foreign parent companies - royalties, management fees, technical services - where TDS under Section 195 was not deducted at source or was deducted at a lower DTAA rate without proper documentation. The remedy is filing a revised TDS return with Form 15CA/15CB documentation.
What is a transfer pricing notice and how are GCCs affected?
Transfer pricing notices under Section 92CA are issued when the Tax Department's Transfer Pricing Officer (TPO) believes that transactions between a GCC and its foreign parent are not at arm's length. Common triggers include management fee charges, cost-plus arrangements below benchmarks, and IP licensing fees. GCCs must maintain a Transfer Pricing study (Form 3CEB) annually.
What is Permanent Establishment (PE) risk for foreign companies in India?
If a foreign company sends employees to India regularly for business activities, the Indian arm may constitute a PE, making worldwide attributable income taxable in India. Post-COVID, extended stays of foreign personnel triggered PE assessments. A CA should assess PE risk and file appropriate returns to pre-empt notices.
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