How can foreign companies expand into India without setting up a subsidiary?

Foreign companies can expand into India using an Employer of Record (EOR) model which handles payroll, compliance, and regulatory requirements.

What is the most efficient way to enter the Indian market?

Companies can enter India through a subsidiary, EOR model, or GCC setup depending on speed, cost, and long-term strategy.

What are key compliance requirements for foreign companies in India?

Key requirements include GST registration, corporate tax compliance, transfer pricing documentation, and adherence to FEMA and RBI regulations.

What is a Global Capability Center (GCC) in India?

A GCC is a captive offshore unit that supports global operations such as finance, IT, and analytics with cost efficiency and scalability.

How can profits be repatriated from India?

Profits can be repatriated via dividends, royalties, or intercompany transactions subject to tax and FEMA regulations.

Slump Sale in India: Taxation, Valuation & Practical Guide

International Tax and Transfer Pricing — Overview

International Tax and Transfer Pricing
Mar 04, 2026

Slump Sale in India: Taxation, Valuation & Practical Guide

Slump sale, the transfer of a business undertaking for a lump sum without individual asset valuation, is taxed under Section 50B of the Income Tax Act, 1961. Gains are always taxed as Capital Gains, never as business income.

Key Qualifications for a Slump Sale:

Transfer of an Undertaking: The transaction must involve the transfer of an entire business unit or, at minimum, a functional part of the business that can operate independently.

Lump Sum Consideration: The payment is made for the entire business in one amount, rather than for each asset individually.

No Individual Asset Valuation: Values are not assigned to individual assets or liabilities during the transfer.

Going Concern: The business is typically transferred as a "going concern," meaning it is operational and capable of continued operation by the buyer.

Asset and Liability Transfer: Both assets and liabilities of the undertaking must be transferred.

Non-cash consideration (shares, bonds, debentures) is generally not permitted for a transaction to qualify as a "slump sale" under Section 50B of the Income-tax Act, 1961

Direct Tax (INCOME TAX)

Gains are calculated as the difference between sale consideration (or fair value in case sale consideration is lower) and the undertaking's net worth. Net worth equals the book value of assets minus liabilities. Written Down Value (WDV) is the net worth of depreciable assets whereas book value is used for other assets

Tax Rates:

Long-Term Capital Gains (LTCG):

Applied if the undertaking was held for more than 36 months.

The rate is 12.5% (for transfers made after 23 July 2024).

No indexation benefit is allowed, even for LTCG.

Short-Term Capital Gains (STCG):

Applied if the undertaking was held for 36 months or less.

Taxed at your normal slab rates (for individuals) or corporate tax rates.

Form 3CEA, certified by a Chartered Accountant, shall be filed at least one month before the ITR filing deadline.

Indirect Tax (GST)

Under GST law, the transfer of a business as a "going concern" is classified as a service and is specifically exempted from tax. The business must be transferred such that the buyer can continue operating it as an independent entity.

Since the sale is exempt, the seller cannot charge GST, and the buyer cannot claim any ITC on the purchase. However, the seller shall transfer unutilized ITC balance to the buyer via Form GST ITC-02.

Stamp Duty

Stamp duty is payable as it is treated as a "conveyance" or transfer of property.

The rates vary by state and are often calculated on the higher of the lump sum consideration or the circle rate of any immovable property included in the sale

For detailed insights and practical guidance, visit our Knowledge Center and access our curated guides on India market entry: https://www.a2consultants.in/guides/india-market-entry-strategies-for-foreign-investors

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