India Market Entry for Australian Companies
Setup, treaty and repatriation points for Australian parents, from a first team to a full subsidiary or Global Capability Centre.
Australian companies look at India for technology services, education, resources, agribusiness and financial services. The India-Australia Economic Cooperation and Trade Agreement has been in force since December 2022, and both countries continue to negotiate a wider agreement. An Australian parent's practical questions are about the treaty, how Australian tax rules treat an Indian subsidiary's income, and whether to start with a team or an entity.
Treaty and withholding
The India-Australia treaty reduces India's withholding tax on dividends, interest and royalties paid to an Australian resident. Dividends and interest are generally taxed at 15 per cent, while royalties and fees depend on how each contract is classified, so each contract should be reviewed before a rate is applied.
The India-Australia double taxation treaty reduces India's withholding tax on dividends, interest and royalties paid to an Australian resident. Dividends and interest are generally taxed at 15 per cent under the treaty, while royalties and fees for included services are taxed at a rate that depends on the type of payment, so check how each of your contracts is classified. India's default rate for dividends, royalties and technical fees to non-residents is 20 per cent before surcharge and cess. Treaty relief needs an Australian Tax Residency Certificate, Form 10F, beneficial ownership and clearance of India's anti-avoidance rules. Confirm current rates in the treaty text before applying one.
Structure
An Australian company with a continuing business typically forms a wholly owned Indian private limited company, reporting the equity inflow within 30 days of allotment. Technology firms often start with a small team and later move to a global capability centre, and an Employer of Record avoids incorporating for short projects.
An Australian company with a continuing business typically forms a wholly-owned Indian Private Limited company. The equity inflow is reported on Form FC-GPR within 30 days of allotment. Australian technology and services firms often start with a development or support team and later move to a Global Capability Centre. Our GCC setup service and the FAQ on whether a GCC needs its own legal entity show the options. If you only need a few people for a year, an Employer of Record avoids incorporating at all.
Cross-border payments and Australian tax rules
Payments from the Indian entity to the Australian parent for services, royalties or interest are tested for arm's-length pricing in India, and Australia applies its own transfer pricing rules to the group. Agree the pricing basis, document it in both countries, and plan how profits will return as dividends.
Payments from the Indian entity to the Australian parent for services, royalties or interest are tested for arm's-length pricing in India, and Australia applies its own transfer pricing and foreign income rules to the group. Agree the pricing basis and document it in both countries. Profits come back as dividends after Indian tax, within FEMA's rules, and surplus cash can be returned in other forms with care. See how to repatriate profits from India through dividends, royalties, fees and buybacks.
Frequently asked questions
Do we need an Indian entity to sell services to Indian customers? Not always. It depends on whether you have a fixed place of business, dependent agents or local staff in India. GST also applies to many cross-border services.
Is the India-Australia trade agreement a tax treaty? No. It covers trade and market access. Taxes on cross-border payments follow the double taxation treaty.
How long does it take to set up? Use our cost and timeline calculator for an indicative range based on your structure and sector.
Can Australian staff work in India? They need the right visa and registration. Our work visa service covers employment visas and registration.