India Business Guide—Startup to Set-up

Chapter 1 Introduction .................................................................................................1
¶1-010 Start-ups Revolution in India ........................................................................ 3
Chapter 2 Advantage India .........................................................................................7
¶2-010 Market Place............................................................................................................7
¶2-020 Manufacturing and Service Sectors....................................................................8
¶2-030 Communication and Information Technology................................................9
¶2-040 Low Cost and Skilled Manpower.....................................................................10
¶2-050 Strong Banking and Financial Sector ...............................................................12
¶2-060 Reforms in Infrastructure ...................................................................................13
¶2-070 Liberalisation of Foreign Investment and Foreign Trade Regulations .....16
¶2-080 International and Regional Trade Agreements .............................................17
Chapter 3 Constitutional Framework .....................................................................19
¶3-010 Governance Framework .....................................................................................19
¶3-020 Hierarchy of Courts for Civil Matters..............................................................22
¶3-030 Alternate Dispute Resolution (ADR) ...............................................................25
Chapter 4 Establishing Presence in India .............................................................. 27
¶4-010 Entry Option for Foreign Investors ............................................................ 27
¶4-020 Incorporation of Company .......................................................................... 34
¶4-030 Limited Liability Partnerships in India ..................................................... 39
¶4-040 Foreign Exchange Guidelines on Investment........................................... 41
¶4-050 Setting up a Legal Structure for a Non-profit Entity in India................ 41
Chapter 5 Foreign Investment in India ..................................................................49
¶5-010 Policy on Foreign Direct Investment ......................................................... 49
¶5-020 Eligibility for Investment in India — Who can Invest? .......................... 51
¶5-030 Entry Routes ................................................................................................... 67
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¶5-040 Prohibition on Investment in India ............................................................ 71
¶5-050 Types of Instruments Eligible for Foreign Investment ........................... 72
¶5-060 Entities into which Foreign Investment can be made ............................. 74
¶5-070 Issue of Instruments ...................................................................................... 78
¶5-080 Transfer of Instruments ................................................................................ 84
¶5-090 Pricing Guidelines ......................................................................................... 92
¶5-100 Reporting Obligations .................................................................................. 94
¶5-110 Downstream Investment .............................................................................. 98
¶5-120 Calculation of Total Foreign Investment ................................................. 103
¶5-130 Taxes, Remittance and Repatriation ........................................................ 107
¶5-140 Violations and Consequences ................................................................... 108
¶5-150 Sector-Specific Policy .................................................................................. 110
Chapter 6 Tax Laws .................................................................................................. 149
¶6-010 Chargeability of Income Tax ..................................................................... 152
¶6-020 Residential Status ........................................................................................ 152
¶6-030 Scope of Income ........................................................................................... 153
¶6-040 Tax Year......................................................................................................... 154
¶6-050 Rates of Income Tax .................................................................................... 154
¶6-060 Aligning Scope of “Business Connection” under the Indian
Domestic Tax Laws with Modified PE Rule as per Multilateral
Instrument (MLI) ......................................................................................... 155
¶6-070 “Business Connection” to Include “Significant Economic presence” 156
¶6-080 Place of Effective Management ................................................................. 157
¶6-090 Heads of Income .......................................................................................... 163
¶6-100 Computation of Profits and Gains from Business or Profession ........ 163
¶6-110 Exemption on gift restricted to Individuals/HUF ................................ 168
¶6-120 Cost of Acquisition under “Offer-For-Sale” in IPO............................... 169
¶6-130 Abolition of Angel Tax ............................................................................... 170
¶6-140 Equalization levy ......................................................................................... 171
¶6-150 Tax incentives to IFSC ................................................................................ 171
¶6-160 Computation of profits of Life Insurance business ............................... 172
¶6-170 Income from letting out residential house property ............................. 173
¶6-180 Transfer Pricing ........................................................................................... 174
¶6-190 Anti-Avoidance Rules ................................................................................ 175
¶6-200 Master File and Country-by-Country (CbC) Reporting –
BEPS Action Plan ......................................................................................... 180
¶6-210 Withholding Tax .......................................................................................... 182
¶6-220 Minimum Alternative Tax (MAT) ............................................................ 183
¶6-230 Alternate Minimum Tax............................................................................. 184
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¶6-240 Securities Transaction Tax ......................................................................... 184
¶6-250 Taxation of Dividend Income.................................................................... 184
¶6-260 Taxation of Dividends Received from Foreign Subsidiaries ............... 185
¶6-270 Buyback of shares by the Indian company ............................................. 186
¶6-280 Return of Income ......................................................................................... 188
¶6-290 Books/Records to be Maintained and Audited ..................................... 188
¶6-300 Assessment and Dispute Resolution........................................................ 188
¶6-310 Appeals: Administrative, Quasi-Judicial and Judicial Hierarchy ...... 191
¶6-320 Board for Advance Rulings ....................................................................... 191
¶6-330 Advance Pricing Arrangement ................................................................. 192
¶6-340 Mutual Agreement Procedure .................................................................. 194
¶6-350 Bilateral Investment Promotion and Protection Agreement ............... 197
¶6-360 Closure of Business ..................................................................................... 198
¶6-370 Corporate Restructuring: Tax Implications ............................................ 199
¶6-380 Effect of the order of the Tribunal or Court in respect of
business reorganization – Section 170A of the ITA ............................... 200
¶6-390 Administration ............................................................................................. 201
¶6-400 GST Overview .............................................................................................. 201
¶6-410 GST - Structure ............................................................................................. 201
¶6-420 Taxes Subsumed under GST ..................................................................... 202
¶6-430 Taxes outside GST ....................................................................................... 202
¶6-440 Types of Taxes under GST ......................................................................... 203
¶6-450 Levy of GST .................................................................................................. 203
¶6-460 Place of Supply............................................................................................. 204
¶6-470 Valuation under GST .................................................................................. 205
¶6-480 Exceptions to Transaction Value .............................................................. 205
¶6-490 Rate of GST ................................................................................................... 206
¶6-500 Time of Supply ............................................................................................. 206
¶6-510 Input Tax Credit .......................................................................................... 207
¶6-520 Reverse Charge Mechanism ...................................................................... 208
¶6-530 Import of Services and Goods ................................................................... 209
¶6-540 Export of Goods and Services ................................................................... 209
¶6-550 Cross-border Services between Related Parties ..................................... 211
¶6-560 Registration................................................................................................... 212
¶6-570 Returns and Payment under GST............................................................. 213
¶6-580 Documentation under GST ........................................................................ 214
¶6-590 Input Service Distributor............................................................................ 214
¶6-600 Special Economic Zones ............................................................................. 215
¶6-610 Job Work Transactions ............................................................................... 215
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¶6-620 Composite Supply and Mixed Supply .................................................... 215
¶6-630 Composition Scheme .................................................................................. 216
¶6-640 Anti-Profiteering.......................................................................................... 216
¶6-650 Tax Deduction at Source (TDS) ................................................................. 216
¶6-660 Compliance Rating ...................................................................................... 217
¶6-670 Administrative Control over Assessee .................................................... 217
¶6-680 Chargeability of Customs Duty ................................................................ 217
¶6-690 The Levy of Customs .................................................................................. 218
¶6-700 Export Duties ............................................................................................... 218
¶6-710 Import Duties ............................................................................................... 218
¶6-720 Rate of Duty.................................................................................................. 220
¶6-730 Input Tax Credit .......................................................................................... 221
¶6-740 Classification of Goods ............................................................................... 221
¶6-750 Advance Ruling ........................................................................................... 221
¶6-760 Administration of Rules of Origin under Trade Agreement ............... 223
¶6-770 Administration ............................................................................................. 223
¶6-780 Special Economic Zone ............................................................................... 223
¶6-790 Foreign Trade Policy under Foreign Trade (Development and
Regulation) Act, 1992 .................................................................................. 223
Chapter 7 Labour and Industrial Laws ................................................................. 228
¶7-010 Background .................................................................................................. 228
¶7-020 Laws Relating to Industrial Relations ...................................................... 231
¶7-030 Laws Relating to Wages ............................................................................. 233
¶7-040 Laws Relating to Social Security ............................................................... 235
¶7-050 Laws Relating to Working Hours, Conditions of Service and
Employment ................................................................................................. 238
¶7-060 Laws Relating to Equality and Empowerment of Women .................. 241
¶7-070 Prohibitive Labour Laws............................................................................ 243
¶7-080 Laws Relating to Employment and Training ......................................... 246
¶7-090 e-Kranti: e-Governance Initiative of the Ministry .................................. 247
¶7-100 Start-up India Action Plan: An Initiative of the Government of
India Providing Several Relaxations to Start-ups .................................. 248
¶7-110 Labour Law Reforms .................................................................................. 249
Chapter 8 Important Considerations for Expatriates Working in India ....... 259
¶8-010 Engagement of Foreign Personnel ........................................................... 259
¶8-020 Taxability under the Double Taxation Avoidance Agreements ......... 265
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Chapter 9 Competition Policy and Law ................................................................ 281
¶9-010 Competition Laws in India — An Overview ......................................... 281
¶9-020 Growth of Legislations Governing Competition in India .................... 282
¶9-030 Recent Developments in Competition Law in India ............................. 293
Chapter 10 Intellectual Property Laws .................................................................... 302
¶10-010 Introduction .................................................................................................. 303
¶10-020 Introduction .................................................................................................. 304
¶10-030 Procedure of Registration of Trademark in India ................................. 307
¶10-040 Renewal of Registration ............................................................................. 309
¶10-050 Rectification of Trademark ........................................................................ 309
¶10-060 Assignment, Transmission and Licensing of Trademarks in India .... 309
¶10-070 Background .................................................................................................. 310
¶10-080 Procedure for Grant of a Patent in India ................................................. 311
¶10-090 Filing of Application for Grant of Patent in India by Foreigners ........ 312
¶10-100 Pre-grant Opposition .................................................................................. 312
¶10-110 Post-grant Opposition ................................................................................ 312
¶10-120 Grounds for Opposition ............................................................................. 312
¶10-130 Term of Patent .............................................................................................. 313
¶10-140 Payment of Renewal Fee ............................................................................ 313
¶10-150 Restoration of Patent ................................................................................... 313
¶10-160 Patent of Biological Material ..................................................................... 313
¶10-170 Rights Granted by a Patent ........................................................................ 314
¶10-180 Maintainability of Secrecy by the Indian Patent Office (IPO) ............. 314
¶10-190 Compulsory Licensing ............................................................................... 314
¶10-200 Infringement of Patent ................................................................................ 316
¶10-210 Licensing and Assignment of Patent ....................................................... 316
¶10-220 “Work” Protected in India ......................................................................... 317
¶10-230 Registration of Copyright .......................................................................... 317
¶10-240 Need for Registration of Copyright ......................................................... 317
¶10-250 Enforcement of Copyright in India .......................................................... 317
¶10-260 Protection to Foreign Works in India....................................................... 318
¶10-270 Licensing and Assignment of Copyright ................................................ 318
¶10-280 Duration/Term of Copyright .................................................................... 318
¶10-290 Registrability of Designs ............................................................................ 318
¶10-300 Term of Design............................................................................................. 319
¶10-310 Process of Registration of Design ............................................................. 319
¶10-320 Cancellation, Protection and Enforcement of Designs ......................... 319
¶10-330 Registration of Geographical Indications ................................................ 321
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¶10-340 Duration of Protection ................................................................................ 321
¶10-350 Infringement of Geographical Indications .............................................. 321
¶10-360 Procedure for Registration ......................................................................... 322
¶10-370 Duration of Protection ................................................................................ 322
¶10-380 Rights under the Plant Act......................................................................... 322
¶10-390 Infringement of Plant Varieties and Farmers’ Rights ........................... 322
¶10-400 Registrability of Layout-Design ................................................................ 323
¶10-410 Duration of Protection ................................................................................ 323
¶10-420 Infringement of Layout-Design ................................................................ 323
¶10-430 Trade Secrets ................................................................................................ 323
¶10-440 Authorities Involved in the Execution of Orders of Courts................. 324
¶10-450 Competent Court ......................................................................................... 325
¶10-460 Border Control Measures for Enforcement of IPR ................................ 325
¶10-470 Information Technology Act, 2000 .......................................................... 329
Chapter 11 Insolvency and Bankruptcy Code ....................................................... 334
11-010 Background of Insolvency Laws in India................................................ 334
11-020 Institutional Framework in the Code....................................................... 335
11-030 Adjudicating Authority under the Code ................................................. 337
11-040 Corporate Insolvency Resolution Process............................................... 339
11-050 Insolvency Resolution and Bankruptcy of Individuals and
Partnership Firms ........................................................................................ 360
11-060 Applicability of the Limitation Act, 1963 ................................................ 364
Chapter 12 Regulation of Real Estate in India....................................................... 365
¶12-010 Introduction .................................................................................................. 365
¶12-020 Registration of Real Estate Projects .......................................................... 366
¶12-030 Functions, Duties and Obligations of Promoter .................................... 371
¶12-040 Registration and Functions of Real Estate Agents ................................. 376
¶12-050 Rights and Duties of Allottees................................................................... 377
¶12-060 Transfer of Real Estate Projects ................................................................. 378
¶12-070 Return of Amount and Compensation .................................................... 379
¶12-080 Investigation and Adjudication ................................................................ 381
¶12-090 Violations and Consequences ................................................................... 383
Chapter 13 Consumer Protection Law..................................................................... 387
¶13-010 Introduction .................................................................................................. 387
¶13-020 Background .................................................................................................. 387
¶13-030 Scope .............................................................................................................. 388
¶13-040 Consumer Protection Council ................................................................... 389
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¶13-050 Redressal Machinery under the Act ......................................................... 389
¶13-060 Applicability of the Law of Limitation .................................................... 390
¶13-070 Remedies under the Act ............................................................................. 390
¶ 13-080 Special Features of the Act ......................................................................... 390
¶13-090 Interplay with Real Estate and Arbitration ............................................. 391
¶13-100 Legal Metrology Act, 2009 ......................................................................... 392
Chapter 14 Environment Laws ................................................................................. 393
¶14-010 Background .................................................................................................. 393
¶14-020 The National Green Tribunal Act, 2010 ................................................... 394
¶14-030 The Air (Prevention and Control of Pollution) Act, 1981 ..................... 395
¶14-040 The Water (Prevention and Control of Pollution) Act, 1974 ................ 395
¶14-050 The Environment Protection Act, 1986 .................................................... 396
¶14-060 Hazardous Wastes Management Regulations ....................................... 396
¶14-070 The Wildlife Protection Act, 1972 ............................................................. 399
¶14-080 The Forest Conservation Act, 1980 ........................................................... 399
¶14-090 The Indian Forest Act, 1927 ....................................................................... 400
¶14-100 The Public Liability Insurance Act, 1991 ................................................. 400
¶14-110 The Biological Diversity Act, 2002 ............................................................ 400
¶14-120 The Compensatory Afforestation Fund Act, 2016 ................................. 401
Chapter 15 Special Schemes for Export Promotion
(SEZs/ EOUs/STPs/ EHTPs/ BTPs/IFSC) ...................................... 402
¶15-010 Special Economic Zones ............................................................................. 402
¶15-020 Export Oriented Units (EOUs) .................................................................. 412
¶15-030 Software Technology Parks (STPs)........................................................... 414
¶15-040 Electronics Hardware Technology Parks (EHTPs)................................ 415
¶15-050 Bio-technology Parks (BTPs) ..................................................................... 415
¶15-060 International Financial Services Centre (IFSC)....................................... 416
Chapter 16 Anti Money-Laundering Laws ............................................................. 418
¶16-010 Introduction .................................................................................................. 418
¶16-020 Offence of Money-Laundering.................................................................. 418
¶16-030 Attachment of Property under PMLA ..................................................... 420
¶16-040 Arrest under PMLA .................................................................................... 421
¶16-050 Bail under PMLA ......................................................................................... 421
¶16-060 Summon, Survey & Search ........................................................................ 422
¶16-070 Retention of Records under PMLA .......................................................... 423
¶16-080 Interconnected Transactions...................................................................... 423
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¶16-090 Presumptions & Onus of Proof ................................................................. 423
¶16-100 Offences of Cross-Border Implications .................................................... 425
Chapter 17 Black Money Act, 2015 .......................................................................... 426
¶17-010 Introduction .................................................................................................. 427
¶17-020 Background .................................................................................................. 427
¶17-030 Applicability and the Scope of the BMA ................................................. 428
¶17-040 Chargeability under the BMA ................................................................... 429
¶17-050 Valuation Methodology ............................................................................. 430
¶17-060 Penal consequences ..................................................................................... 433
¶17-070 Assessment Procedure................................................................................ 434
¶17-080 Appellate Procedure ................................................................................... 435
¶17-090 Miscellaneous ............................................................................................... 436
¶17-100 Impact of BMA on Assessees .................................................................... 438