Key Tax Incentives for Global Capability Centers (GCCs) in India

 Special Economic Zone (SEZ) Benefits

• 100% tax exemption on export profits for the first 5 years[1][2][5][6].
• 50% exemption for the next 5 years[1][2][5].
• Additional 50% exemption on reinvested export profits for a further 5 years[1][2][5].
• GST exemptions on services exported from SEZs, and duty-free imports of technology and equipment[1][5][6].
• No customs duties on imported capital goods[5][6].

Software Technology Parks (STPs)

• Similar to SEZs, STPs offer a 100% tax holiday on export profits for the first 5 years, followed by 50% for the next 5 years[2][5].
• Exemptions on import duties for IT infrastructure and equipment[2][5].

Corporate Tax

• Lower tax rates for new manufacturing entities (15%) and standard reduced rates (22-25%), making India cost-competitive for GCCs[1][2].
• Additional deductions for R&D expenses under Section 35 of the Income Tax Act[1].
• Export-oriented GCCs can benefit further from reduced tax liabilities[1][2].

Goods and Services Tax (GST)

  Input Tax Credit refunds on input services such as IT and telecom expenses[1].
  Zero-rated GST for exports made by GCCs[1][5].
  Inverted duty refunds are available if input taxes exceed output GST[1].

Tier-2 and Tier-3 Cities
 

• State-level tax exemptions, lower corporate tax rates, infrastructure grants, and subsidies to encourage GCCs to expand beyond major metro areas[1][4][5].

GIFT City (Gujarat IFSC)

•  A special 10-year corporate tax holiday for financial service operations[5].

Transfer Pricing & Double Taxation Avoidance Agreement (DTAA)

• Double Taxation Avoidance Agreements enable GCCs to avoid double taxation on international profits and reduce withholding tax rates on cross-border transactions[1].

Important Compliance Considerations

• GCCs must register with appropriate authorities (SEZ, STPI, etc.) and maintain transparent financial records.
• Incentives vary by business structure and operational focus; expert tax planning is advised[1][5].

These incentives, combined with additional government support for infrastructure and employment, make India an attractive destination for GCCs seeking cost efficiency and global talent[1][5][8].

Sources
[1] GCC Tax Benefits in India: Everything Businesses Need to Know https://supersourcing.com/blog/gcc-tax-benefits-in-india/
[2] What are the tax implications of setting up a GCC in India? - Wisemonk https://www.wisemonk.io/faqs/what-are-the-tax-implications-of-setting-up-a-gcc-in-india
[3] Legal Compliance for GCCs in India: A Taxation Perspective - Trilegal https://trilegal.com/navigating-tax-challenges-gcc-setup/
[4] GCCs in Tier-II Cities Get a Policy Push from the Government - Zinnov https://zinnov.com/centers-of-excellence/the-policy-push-why-government-is-betting-on-tier-2-cities-blog/
[5] Government Support and Incentives for GCCs in India - https://supersourcing.com/blog/government-support-and-incentives-for-gccs-in-india/
[6] Where to Set Up Your GCC in India? Tax Benefits & Cost ... https://knmindia.com/japanese/where-to-set-up-your-gcc-in-india-tax-benefits-and-cost-comparison/
[7] Taxation landscape of Global Capability Centres (GCCs) in India https://tax.cyrilamarchandblogs.com/2024/05/taxation-landscape-of-global-capability-centres-gccs-in-india/
[8] Tax, Talent, and Infrastructure: Comparing GCC Policies in India and ... https://inductusgcc.com/tax-talent-and-infrastructure-comparing-gcc-policies-in-india-and-beyond/
[9] GCCs and the tax landscape In India: The emerging areas https://www.grantthornton.in/insights/blogs/gccs-and-the-tax-landscape-in-india-the-emerging-areas/
[10] Dear Finance Minister, Nirmala Sitharaman ji : GCCs Deserve Tax ... https://www.linkedin.com/posts/sunilpadmanabh_gccs-digitaleconomy-taxpolicy-activity-7358730729020669953-AV2z