Over the last decade, we have seen that India has transformed a lot from being just a place for companies for their back-office to now becoming the centre of global capability (GCCs) – for some of the top companies around the world. Today in India, there are more than 1700+ GCCs that operate across various top cities in the country.
And this huge transformation did not happen just like that.
Behind this large-scale shift lies something equally thoughtful.
A tax and policy system that was designed strategically to attract these global companies.
Starting from the Special Economic Zones (SEZ) that promise structured fiscal relief to the Software Technology Parks of India (STPI) that once fueled the IT revolution, where India’s tax incentives have played a decisive role in shaping the GCC story.
For global companies, these are not just some random numbers on the balance sheet. Instead, they are the key factors that influence where a centre is established, how operations are structured and what long-term advantages can be sustained.
So, in this article, let us look at various tax incentives for GCCs and how they can help you when you set up a GCC in India as a global company.
Tax-Incentives Regimes for GCCs
In this section, let us take a look at the two main regimes that shaped GCC investments.
1. Special Economic Zones (SEZs)
SEZ formed under the SEZ Act, 2005 – was made to make India globally competitive, offering near-total fiscal relief for export-focused units. And this later became one of the hot spots for IT/ITES GCCs in cities like Bangalore, Hyderabad, Pune and Chennai.
Here are some core benefits you can avail:
Direct Tax Benefits (Section 10AA of the Income Tax Act):
- 100% tax exemption on export profits for the first 5 years
- 50% exemption for the next 5 years
- Further 50% exemption on reinvested export profits for the subsequent 5 years (subject to reserve creation)
Related Service: Direct Tax Advisory & Consulting Service
Indirect Tax Benefits:
- You can enjoy zero customs duty on your imports
- GST zero-rated supplies for goods/services provided to or from SEZ units
- You get exemption from the central excise and certain local taxes
Related Service: Indirect Tax Advisory & Consulting Service | GST Consulting Services in Bangalore
Operational Benefits:
- You will get a single window clearance for setting up your units
- Gets the benefit of duty-free procurement from the Domestic Tariff Area (DTA)
- Have a simplified deference through the SEZ online systems
Initially SEZ benefit will only apply to your net foreign exchange-earning units. And your units must be physically present inside a notified SEZ zone. In case of tax holidays, it only applies if the unit was approved before the sunset date (31 March 2020 for most cases).
2. Software Technology Parks of India (STPI): The Flexible Model
The STPI scheme was one of the main reasons for the IT boom in India. It was launched to simplify the export of software and IT-enabled services.
Here are a few highlights:
- Under STPI units can operate from anywhere in India, even within the city limits.
- Could enjoy duty-free import of capital goods for export operations.
- Registration under STPI brings simplified customs handling, data-communication approvals, and single-window clearances.
This is ideal for GCCs that are looking towards flexibility over geography or hybrid export-domestic operations.
STPI centres enjoy smoother day-to-day operations but fewer direct fiscal advantages. Still, for companies avoiding SEZ compliance rigidity, this model remains a balanced choice.
Beyond SEZ and STPI
As now the GCC ecosystem is changing rapidly, GCCs are diversifying beyond just IT/ITeS into fintech, analytics and R&D. And now new regimes have emerged that complement SEZ/STPI. Let us have a look at a few of them.
(a) GIFT City / IFSC (International Financial Services Centre)
This is a hub for financial and fintech GCCs coming to India. And you could also get a 10-year tax holiday under Section 80LA for specified income. You could avail MAT/AMT at concessional rates, and no GST on services rendered to offshore clients.
This is ideal for financial institutions, treasury centres, and fintech captives who are looking forward to setting up their GCCs in India.
(b) State-Specific GCC Policies
Now, coming to State-Specific GCC Policies, each state government brings in various policies to attract GCCs to their land. For example, Karnataka’s GCC Policy 2023, Telangana and Tamil Nadu payroll-linked incentives. Maharashtra & Gujarat have stamp-duty rebates and local tax waivers for large IT/ITES parks.
(c) Domestic Tax Regimes
As per Section 115BAA, new companies can opt for a 22% corporate tax rate without looking for other incentives. And this domestic tax regime supports non-export or mixed-revenue GCCs.
Tax & Compliance Considerations for GCCs
Setting up your company under a tax regime is not just the thing; staying compliant only makes you eligible for long-term existence in the country. So, before finalising an incentive route, let us have a look at some key checkpoints every GCC should keep in mind:
1. Eligibility and Alignment with Regulations
Each tax regime has its own requirements. Let us have a look at them in detail:
- SEZ Units: Your business must be export-oriented and should be locates within the SEZ area.
- STPI Units: You must be registered with STPI and declare software exports for SOFTEX certification.
- IFSC Units: For this you need approval from the International Financial Services Centres Authority (IFSCA).
- 115BAA Route: For domestic entities, cannot combine with other deductions or holidays under 10AA or 80LA.
2. Transfer Pricing and Related-Party Rules
As the majority of the GCCs are wholly owned subsidiaries, naturally they fall under India’s Transfer Pricing (TP) framework (Sections 92–92F of the Income Tax Act). Let us have a look at the key compliance areas that are included:
- You must keep an arm’s length pricing for all intercompany transactions.
- You have to file Form 3CEB annually with a certified accountant’s report.
- Keeping the Master File & CbCR documentation ready if the group crosses global thresholds.
- Even when you have the benefits of tax holidays, neglecting TP can trigger disputes or adjustments.
3. MAT, AMT and GAAR Implications
While some tax regimes promise “tax holidays”, the following often still apply:
- Minimum Alternate Tax (MAT) under Section 115JB for SEZ/STPI units.
- Alternate Minimum Tax (AMT) for units claiming profit-linked deductions.
- General Anti-Avoidance Rules (GAAR)
4. Compliance and Reporting
Each model comes with its own version of compliance:
| Regime | Key Compliance Requirements |
|---|---|
| SEZ | Quarterly progress reports, Annual Performance Reports (APR), customs transaction logs, and online filings via SEZ portal. |
| STPI | SOFTEX filings for software exports, periodic approvals for capital goods imports, and annual performance statements. |
| IFSC (GIFT) | Periodic filings with IFSCA and adherence to RBI/FEMA norms for foreign transactions. |
| State GCC Policies | Proof of employment generation, investment thresholds, and incentive utilisation reports. |
Related Service: GCC Advisory & Consulting Services
Final Thoughts:
Today in India, GCC is not about cost or talent. It is about how global companies prefer to align with the right policy and the tax ecosystem, so as to gain long-term value.
Whether we want to speak about the structured benefits of SEZs, the flexibility of STPI, or the emerging features of GIFT City – each model holds its own space.
The point lies in choosing the one that fits your global business structure.
As policies are changing from DESH framework to ESG-linked incentives, we can see the system shifting from “tax reliefs” to “growth seekers”. GCC that stays compliant and forward-looking will enjoy these benefits and also help shape the next phase of India’s global capability story.
In the end, incentives may open the door, but only the right strategy and structure will decide how far your GCC will truly go.
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