FEMA & RBI Compliance
for India GCCs

FC-GPR filed after 30 days of share allotment is a FEMA contravention. The company must file a compounding application with RBI's Foreign Exchange Department (FEDD). Compounding fees under the Compounding of Contravention Rules 2000 are calculated based on the FDI amount and delay period: for delays up to 1 year, typical fees range from INR 5,000 to INR 5 lakh for small amounts. For large amounts or persistent non-filing, penalties can reach 3 times the FDI amount under Section 13 of FEMA 1999. Filing FC-GPR proactively within 30 days of every allotment eliminates this exposure entirely.

SOFTEX (Software Exports) is a declaration required under FEMA for Indian companies exporting software or IT-enabled services where the invoice value exceeds USD 25,000 (or INR 15 lakh equivalent per invoice). It is filed on the EDPMS (Export Data Processing and Monitoring System) portal through the AD bank or STPI. For IT/ITES GCCs that bill the foreign parent monthly in USD, every invoice above the threshold requires a SOFTEX declaration within 30 days. This is one of the most frequently overlooked FEMA obligations - non-filing requires compounding with RBI.

Yes, through External Commercial Borrowing (ECB) governed by RBI's ECB Framework (Master Direction 2019). Track I ECBs (minimum 3-year maturity) allow borrowing up to USD 750 million per year under the automatic route for eligible borrowers including Indian companies in the manufacturing and infrastructure sectors. IT/ITES GCCs can borrow under Track II (5-year minimum maturity). Form ECB must be filed within 7 working days of the loan agreement; Form ECB-2 monthly return is due by the 7th of each month. Interest rates must comply with the all-in-cost ceiling prescribed by RBI.

Dividends paid by an Indian subsidiary to its foreign parent are freely repatriable under current account transactions - no RBI approval is required. Since the abolition of Dividend Distribution Tax (DDT) in 2020, dividends are taxed in the hands of the recipient. The Indian company deducts TDS at the applicable DTAA rate (e.g., 15% for US entities under the India-US Tax Treaty, compared to the domestic rate of 20%) before remittance. Form 15CB (CA certificate) and Form 15CA (portal declaration) must be filed before the AD bank processes the SWIFT payment. We handle TDS computation, 15CA/15CB preparation, and bank coordination for every dividend cycle.

The Foreign Liabilities and Assets (FLA) return must be filed by all Indian entities with outstanding FDI or ODI as of 31 March - regardless of whether any new capital was received during the year. It captures the stock position (not just flows) of foreign equity, other capital, and overseas investment. It is filed on the FLAIR portal (flair.rbi.org.in) by 15 July every year. Even a GCC incorporated 5 years ago with no new capital raises must file FLA annually as long as the foreign parent holds shares. Missing the 15 July deadline requires compounding with RBI.

A voluntary compounding application is strongly recommended before RBI identifies the violation through audit or inspection. The compounding process: file a formal application with RBI FEDD in Mumbai, submit supporting documents (allotment letter, FIRC, Board Resolution, CA certificate), pay the compounding fee assessed by RBI, and receive a compounding order that regularises the past violation. We prepare the compounding application, calculate the expected fee, and represent the GCC in the RBI process. Acting voluntarily significantly reduces the fee compared to RBI-initiated enforcement.