India

General Information Banking
Business Etiquette Tips Embassy Locations and Registration
Employment-Legal Requirements Entry and Exit Requirements
Intellectual Property Legal and Registration of a Business Entity
Safety and Crime Taxes

 General Information

IndiaIndia is the largest democracy in the world, with an approximate population of 1.2 billion people.  It is also one of the most densely populated countries, with 15 percent of the world's population inhabiting only 2.4 percent of the world's land mass. In addition, India's median population is around 25 years old, making it one of the youngest large economies. India's long and rich history ensures that its modern day society contains vibrant influences from Western to Arab cultures. The geography is extremely diverse as well, with the epic Himalayas in the north and tropical wet conditions in the southwest.

India is slowly undergoing a modest social transformation from the traditional rigid caste system toward a slightly more flexible system with increased upward mobility. The caste system is largely occupational, and marriages and other associations are strongly encouraged to involve individuals solely of the same caste. Employee discrimination based on caste is officially illegal, but despite affirmative action initiatives from the government, caste discrimination is still prevalent, especially in rural areas.

There may be political unrest and/or targeted crime against visitors to the country.  Travelers should check with the U.S. State Department Web site for current travel safety information.

Major Cities Capital: New Delhi
Other major cities: Mumbai, Kolkata (formerly Calcutta), Chennai, and Bangalore
Official Currency Indian rupee
Time Zone IST (UTC+5:30) (10.5 hours ahead of Washington, D.C. during Standard Time).
Language Official languages: Hindi, English, and 16 other recognized local languages

 

Legal System and Government

Type of Legal System

India has a three-tier judiciary system, with the Supreme Court having original and appellate jurisdiction as with the American system. The Supreme Court's primary function is interpretation of the Constitution.

Form of Government

Federal republic. There are executive, legislative, and judicial branches of government, and suffrage is universal over age 18.

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Banking

Available Banking Services

ATMs
Online banking
Banking in English
Overdraft protection

Bank Holidays

Republic Day
Maha Shivrati
Holi
Mahavir Jayanthi
Good Friday
May Day
Buddha Purnima
Krishna Janmastami
Independence Day
Ganesh Chaturthi
Mahatma Gandi Jayanti
Vijaya Dashami
Diwali
Guru Nanak Jayanthi
Christmas


U.S. and Other Major Banks in Country

(Note:  Addresses and contact information subject to change.)

American Express
Cyber City, Tower-C, DLF Bldg. No.8,
Sector-25, DLF City Ph-II,
Gurgaon-122002
Haryana, India
Phone: +91-124-280 1222
Web:  https://www.americanexpress.com/india/homepage.shtml?location=globalsplash

Citibank
P.O. Box # 4830,
Anna Salai Post Office,
Chennai, India - 600 002
Phone: 1-800-419-6747
Web:  http://www.online.citibank.co.in/

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Business Etiquette Tips

Business Attire

Appropriate business dress for men tends to be formal for initial meetings and should consist of a suit. For women, though saris are considered formal attire, it is best to rely on conservative business suits as well. Observe your counterparts' attire, as it is possible that less formal meetings may be arranged where business casual dress is appropriate.

Business Negotiations

Developing a relationship with your counterpart will go far in making business negotiations more comfortable and expedient.  Keep in mind that decisions in India are not made solely based on statistics and figures, but on intuitions, feelings, and faith as well.  India is a largely hierarchical society, and seniority is greatly respected.  As such, it is common for final decisions to be deferred to the more senior members present.

Proper Greetings

Business meeting etiquette requires a handshake, though Indians in both formal and nonformal situations tend to namaste in greeting. The namaste involves bringing the palms and fingertips together at chest height, slightly bowing the head, and saying "namaste."  One should always return this greeting if offered by another party, and greeting another in this way shows sensitivity to and knowledge of Indian culture.

Public and Social Behavior

Promptness is expected, but arriving 10 minutes late for a legitimate reason will not have catastrophic consequences. In India, family always takes precedence over business.

Scheduling Meetings

Ensure that meetings are scheduled well in advance, and take care to avoid national holidays. It may be wise to schedule meetings for the nonsummer months so that the climate will be more comfortable. 

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Embassy Locations and Registration 

(Note:  Addresses and contact information subject to change.)

Embassy of India
2107 Massachusetts Avenue, NW
Washington, D.C. 20008
Phone: (202) 939-7000
Fax: (202) 265-4351
Web:  http://www.indianembassy.org/

U.S. Embassy in India
Shantipath, Chanakyapuri
New Delhi - 110021
Phone: 011-2419-8000
Fax: +91-11-2419-0017
Web: http://newdelhi.usembassy.gov/index.html

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Employment-Legal Requirements

When hiring in India it is mandatory to conform to various central and state regulations that ensure employees are well protected and have access to various benefits such as retirement funds, medical insurance, bonuses, and gratuity. Additionally, the government expects you to collect taxes from employees and remit the Tax Deducted at Source on fixed dates. If your hiring needs change per your business cycles you may choose to  hire a labor/manpower contractor for your human resources needs. There are regulations that you need to conform to when you hire such contracted labor.

Broadly, whenever you hire employees,  statutory compliances (governed by various central and state acts) can be categorized into the following groups: (key acts are listed within each category)

  1. Wage laws
    1. The Payment of Wages Act, 1936; The Payment of Wages Rules, 1937; The Payment of Wages (Amendment) Act, 2005
    2. The Minimum Wages Act, 1948; The Minimum Wages (Central) Rules, 1950
    3. The Payment of Bonus Act, 1965; The Payment of Bonus Rules, 1970
  2. Working hours, conditions of services, and employment laws
    1.  The Factories Act, 1948
    2. The Contract Labour (Regulations and Abolition) Act, 1970
    3. Shops and Establishment Act
  3.  Equality and empowerment of women laws
    1. The Maternity Benefits Act, 1961
    2. The Equal Remuneration Act, 1976
  4. Social Security laws
    1. The Workmen's Compensation Act, 1923; The Workmen's Compensation (Amendments) Act, 2000
    2. The Employees' State Insurance Act, 1948
    3. The Employees' Provident Fund & Miscellaneous Provisions Act, 1952; The Employees' Provident Fund & Miscellaneous Provisions (Amendment) Act, 1996
    4. The Payment of Gratuity Act, 1972

It is critical that you consult with a competent legal counsel or chartered accountant to accurately interpret the various laws applicable to your organization before hiring employees.

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Intellectual Property

Five central ministries administer intellectual property in India under the terms of the Allocation of Business Rules of the Government.

The Department of Industrial Policy and Promotion of the Ministry of Commerce & Industry regulates industrial property, which includes patents, trademarks, industrial designs, and geographical indications.

The Ministry of Human Resource Development looks after copyrights.

The Ministry of Agriculture handles legislation on plant varieties and farmers' rights protection.

The Ministry of Information Technology is responsible for implementation of the Information Technology Act and the Semiconductor IC Layout Designs Act.

The Ministry of Environment and Forests is responsible for implementation of the Biological Diversity Act.

Besides these administrative ministries a number of other ministries and departments, such as Information & Broadcasting, Tribal Affairs, Culture, Ministry of Micro, and Small & Medium Industries, are also involved with either enforcement or commercialization of IP.

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Legal and Registration of a Business Entity

In India a variety of options exist for setting up businesses in various forms. They each come with their respective advantages and disadvantages. The three main types likely to be useful to a university are a liaison office, branch office, and wholly owned subsidiary. These are outlined below.

Liaison Office (LO)

The most significant limitation of liaison offices is their inability to earn revenue.  But this means that these offices are not required to file income taxes in India. The approved activities of LOs are somewhat limited, and it may be best to utilize these types of offices to provide information from the university to its Indian constituents and vice versa. The activities are also subject to regular audit by the Reserve Bank of India (RBI).  A proposal to set up an LO must be approved by the RBI, and the process can be completed in six to eight weeks. This process may take longer depending on whether the RBI submits the proposal for the review of the Indian Government.

Branch Office (BO)

In contrast with LOs, BOs are allowed to earn income. But they are then subject to the relevant Indian income tax rate.  These offices are thus better suited to commercial activities than LOs.  In addition, these offices may own immovable property, can hire Indian employees, and can obtain employment visas to hire foreign employees.  Like LOs, BOs are subject to regular audits by the RBI. The obvious disadvantage to this type of office is the fact that it is not possible to register as a not-for-profit entity, and the net income tax rate is very high for foreign businesses.


Wholly Owned Subsidiaries (WOS)

WOSs are very different than LOs or BOs because they are considered Indian companies by the RBI for taxation purposes. This means that approval for setting one up no longer needs to be referred to the Indian Government, thus expediting the process. WOSs are considered taxable entities, but tax exemption status may be obtained (though the process is long and cumbersome, at times taking six months or more).  These offices may receive foreign funding, but the office's actions can then no longer be controlled by a foreign company, making them inappropriate for certain university applications.

Registration Formalities (Including Timing)

The World Bank estimates that it will take about a month for an entrepreneur or university to establish a company similar to a WOS.  The steps required, along with more detailed time and pricing information, can be found at the World Bank Web site. 

Briefly, these steps are:

  1. Obtain a director identification number (DIN) online.
  2. Obtain a digital signature certificate online.
  3. Reserve the company name with the Registrar of Companies (ROC) online.
  4. Pay stamp duties online and file all incorporation forms and documents online and obtain the certificate of incorporation.
  5. Make a seal.
  6. Visit an authorized franchise or agent appointed by National Securities Depository Services Limited (NSDL) or Unit Trust of India (UTI) Investors Services Ltd to obtain a Permanent Account Number (PAN).
  7. Obtain a tax account number for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department.
  8. Register with Office of Inspector, Mumbai Shops and Establishment Act.
  9. Register for VAT online.
  10. *Register for profession tax.
  11. *Register with the Employees' Provident Fund Organization.
  12. *Register for medical insurance (ESIC).

*Takes place simultaneously with another procedure.

(Source:  The World Bank, Doing Business - India)

Additional information regarding assistance in establishing a business can be found below.

India Incorporation Services
http://www.indiaincorporation.com/
National Portal of India

http://india.gov.in/

Reserve Bank of India
 http://www.rbi.org.in/home.aspx
Government of India Department of Commerce
http://commerce.nic.in/

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Taxes

Residents of India are normally taxed on their worldwide income. Persons not ordinarily resident (see next section) generally do not pay tax on income earned outside India unless it is derived from a business controlled in India, is accrued or first received in India, or is deemed to have accrued in India.

Residence

An individual is resident in India if he or she spends at least 182 days in the country in a given year or 60 days if the individual has spent at least 365 days in India in the preceding four years. The threshold for the five-year test is 182 days in the given year instead of 60 days for Indian citizens leaving India for employment or as members of the crew of an Indian ship, and for an Indian citizen or person of Indian origin working abroad who visits India while on vacation. A "not ordinarily resident" individual is one who has either not been a resident in 9 out of the 10 preceding years or who has been in India for less than 730 days during the preceding seven years.

The assessment year is the 12-month period  from April 1 to March 31. Income earned in the period of 12 months or less immediately preceding the assessment year is taxed in the assessment year.

In certain cases, income is taxed on a presumptive basis. The income under each head is computed separately and aggregated to arrive at the gross total income after allowing permissible deductions under each head.

Tax Filing Status 

All individual taxpayers are required to file an individual tax return and are assessed separately.

Taxable Income

Income from employment is fully taxable, including most employment benefits. Profits an individual derives from a trade or profession generally are taxed in the same way as profits companies derive.

Tax Deductions and Tax Allowances

Deductions are granted for medical expenses and insurance, retirement annuities, mortgage interest, education loans, and so forth.

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Online Resources Used for This Template

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