Accounting & Tax
for India GCCs

Transfer pricing provisions under Chapter X of the Income Tax Act apply when the aggregate of all inter-company international transactions exceeds INR 1 crore in a financial year. This includes the service fee paid by the Indian GCC to the foreign parent (the cost-plus billing), any cost recharges, royalties, shared service allocations, and inter-company loans. Form 3CEB (the TP accountant's report) must be certified by a Chartered Accountant and filed by 31 October. A TP study document (Master File and Local File) is separately required when transactions exceed INR 50 crore.

The Transactional Net Margin Method (TNMM) compares the net operating margin of the Indian GCC as a percentage of its costs with the margins of comparable independent companies. For a captive GCC that provides services exclusively to its parent, TNMM is preferred because it is less sensitive to product-level differences and relies on publicly available financial data of comparable IT services companies. The Profit Level Indicator (PLI) used is typically Operating Margin on Total Cost (OM/TC). The Indian GCC's PLI must fall within the arm's length range derived from comparables - usually 5-15% operating margin for pure-play GCCs.

Companies with international related-party transactions must file Form ITR-6 by 31 October (extended from 31 July because they require both statutory audit and TP accountant's report). Form 3CEB must also be filed by 31 October. Advance tax is due in four installments during the year. Late filing of ITR attracts a penalty of INR 10,000 under Section 271F (reduced to INR 1,000 if total income is below INR 5 lakh, which is rare for GCCs). Filing after 31 December forfeits the ability to carry forward most losses.

The standard model is Cost Plus Markup: the Indian GCC aggregates all its costs (salaries, rent, depreciation, overheads, amortisation) and adds a markup determined by the TP study (typically 8-15% for pure-play captive GCCs). It raises a monthly or quarterly invoice to the foreign parent in USD, GBP, or EUR. The GCC recognises this as export of services (zero-rated GST with LUT). The accounting entry: Dr. Debtors (Foreign Parent) / Cr. Revenue (Export of Services). The parent remits via SWIFT; the bank issues an e-FIRC confirming receipt of foreign currency.

Ind AS (Indian Accounting Standards, aligned to IFRS) is mandatory for companies with net worth above INR 250 crore or whose holding company is Ind AS compliant. Most early-stage GCCs (net worth below INR 250 crore) follow Indian GAAP under the Companies (Accounting Standards) Rules 2006. The key differences for GCCs: Ind AS 115 (revenue recognition) requires percentage-of-completion for long-term contracts; Ind AS 116 (leases) brings operating leases onto the balance sheet (significant for office space); and Ind AS 21 requires foreign currency monetary items to be retranslated at closing rates. We prepare accounts under whichever standard applies and provide IFRS reconciliation for group reporting.

When an Indian GCC remits management fees, royalties, or technical service fees to its foreign parent, it must: (1) obtain Form 15CB from a Chartered Accountant confirming the nature of payment, applicable DTAA provisions, and that TDS has been correctly deducted or is not required; (2) file Form 15CA on the Income Tax portal (Part C for taxable remittances above INR 5 lakh); and (3) submit both forms to the authorised dealer bank before processing the SWIFT payment. The bank will not process the remittance without these. The process typically takes 2-3 working days.