9870310368 9810688945

Inbound Investment Structuring

  • Choice of Entity
  • Use of Holding Companies
  • Cash Extraction
  • Foreign Tax Credit Availability
  • Exit Strategy
Request a call back

What is Inbound Investment Structuring?

Choice of Entity


Private Company


Income Tax
  1. Corporate Tax Rate: 32.45%/33.99%
  2. MAT, DDT, and BBT are applicable
  1. Corporate Tax Rate: 33.99%
  2. Tax efficient as no MAT, DDT and BBT are applicable
Foreign Direct Investment/Foreign Exchange Management Regulation
  1. No FIPB approvals required for FDI at the time of entry or exit
  2. FDI can be made in the form of cash consideration, swap, conversion of receivables etc
  1. Prior approval from FIPB authorities required even if the activities are covered under automatic route
  2. FDI can be made only by way of cash contribution
Governance Framework
  1. Higher Statutory Requirements
  2. Adhere to CSR policy
  1. Limited Reporting Requirements
  2. Not required to comply with CSR Policy

Use of Holding Companies

Direct Investments in India

Foreign Investor > Indian Company Key Issues

  • Capital gains on sale of shares are taxable in India
  • Treaty Benefit in respect of capital gains is available only in selected countries
  • Risk of double taxation due to conflicting source rules

For foreign companies investing in India, Mauritius has become like a Hub. Especially for portfolio investors who earn from portfolio investments in India in the form of capital gains, it is unavoidable to set up a holding company in Mauritius. Most of the countries do not levy a capital gain tax on non-residents investing in shares in their countries. However, if a foreign company holds shares in Indian Company it will end up paying 21% tax on long-term capital gain and 42% tax on the short-term capital gain. In most of the countries, the supreme rate is below 35%. Therefore, in case of short-term gains, the foreign company will not get the full credit for the taxes paid in India. Further, in case of FIIs and venture capital funds, most of the investors are pension plans, which are otherwise tax-exempt entities in their home countries. Therefore, they do not have taxable income to offset the tax paid in India. This is the reason many inbound investments have flown into India via Mauritius. A substantial amount of foreign direct investment has gone into IT and ITES industries.

Most of the companies set up for IT services and BPOs enjoy a tax holiday under section 10A/10B. It is very common for the founders to start the business with minimum paid-up capital, to take the companies to a reasonable maturity stage and invite private equity investors to invest in these companies. By virtue of provisions like S. 10A(9), often these companies lose the tax holiday at the time new investors join in. This is derogatory to the main objective of providing the tax incentive to these units set up in STPs for development of software industry and encouraging their expansions. Often, provisions like this compel foreign investors to induct holding companies so that they are neutral to changes in foreign law or internal restructuring.

The Regulatory environment in the relation to foreign investment has been steadily eased to make it investor friendly. The liberalization programs set up by the government aims at rapid and substantial growth of country’s economy and harmonious integration with the global economy

Key Services provided by us for Inbound Investment Structuring?

  • Advise on Indian entrance approach and suggestions for gaining finest ownership/jurisdiction for investing in India
  • Advising on entity restructuring by selecting the finest entry vehicle such as setting up a branch, subsidiary, LLP or a Joint Venture
  • Provide the services of capital restructuring in terms of foreign exchange policies keeping repatriation in loop
  • Assisting in the filing, obtaining necessary approvals including regulatory compliances from Reserve Bank of India, Foreign Investment Promotion Board, Government of India or any other regulatory authority.
  • Assisting and finalizing from the perspective of the shareholder, joint venture agreements, any other business arrangements or agreements from the tax perspective
  • Target Due Diligence

Share With
Why Enterslice?
Asia Winner
Top 100 Most Innovative Companies in Asia - Red Herring
Top 25 Consultants
Forbes 30 Under 30 in American business and industry figures Lists.
Success Rate. Your Order Comes with Money Back Guarantee
Services delivered by 300+ Qualified CA and CS
Latest Post
Inbound and Outbound Investments: A Detailed Guide
The Government has become liberal in the past few years regarding inbound and outbound investment regimes. The Industrial Policy Resolution of 1956 and Ind...
Read more
As seen in

" Enterslice use technology better than others. That saves time and money; Team enterslice is more efficient than traditional competitors, and that helps to pass on the cost advantage to its clients. The company is building a high-level transparency in legal services by optimum use of technology and process automation in consulting. I highly recommend this company. "

Nilanjan Bandyopadhyay
Nilanjan Bandyopadhyay

" Excellent advisory role by Enterslice Team. They are a trusted partners to us. Narendra and his team helped us with our pre NBFC applications and Post NBFC advisory services. "

Amit Goel
Amit Goel

" Amazing services provided by your organization. They have completed our NBFC registration order within stipulated time period of 90 days. They provide constant guidance and support in the process. Their support in building fintech software is amazing. "

Manisha Mantri
Manisha Mantri
Trusted by
Finstar Financial
Herbal Life Nutrition
First Cry
Acme Solar
Opera Software
Taj Hotels
wechat Abhi821982
Go to Top Hey I'm Suman. Let's Talk!