In Indian business, GCC stands for Global Capability Center: a company's own unit in India that does engineering, technology, analytics, finance or operations work for the group's businesses abroad. It is not a vendor and it is not the Gulf Cooperation Council, which shares the initials and half the search results. In law it is usually a wholly owned Indian subsidiary that exports services to its parent at cost plus a margin, and every regulatory question a centre faces follows from that description.
India has 2,117 such centres employing 2.36 million people and earning $98.4 billion a year, on the Nasscom-Zinnov count published in May 2026. The guides that rank for this subject are written by people selling office space, talent or programme management. This page is the other half: the structure, tax and foreign-exchange rules a centre is built on, written by people who administered them, and what changed in 2026, which is more than in any year since GST arrived. It is for a foreign headquarters deciding to set up a centre, and for the finance head of one that already exists.
What is a GCC company in India, in regulatory terms
Strip the branding and a centre is four things at once. An Indian company under the Companies Act, owned by a foreign parent under the FDI rules. An exporter of services under GST, invoicing a foreign group entity in foreign currency. A related party under transfer pricing, whose cost-plus margin the tax department can question. And an earner of foreign exchange under FEMA, whose invoices the bank tracks until the money arrives. A centre that gets those four right can sit in an SEZ, register under STPI or stay a plain domestic company; the choice of premises comes last. In a job posting, "GCC experience" means time inside one of these captives rather than at an IT services vendor.
What changed in 2026
| Change | What it does for a centre |
|---|
| Finance Act 2026 deleted Section 13(8)(b) of the IGST Act, in force from 30 March 2026, on the GST Council's recommendation of 3 September 2025 | The "intermediary" rule that taxed some captive services as domestic supplies is gone. A centre's services to its foreign group are exports if they meet the ordinary conditions, zero rated, with refund of input tax |
| Transfer-pricing safe harbour rewritten for tax year 2026-27 | Software development, IT-enabled services, KPO and software R&D merged into one "IT services" category at a 15.5 per cent margin, replacing 17, 18 and 24 per cent. Ceiling raised from ₹300 crore to ₹2,000 crore of operating revenue, with a five-year continuous option |
| FEMA export regulations, effective 1 October 2026 | SOFTEX is withdrawn; a single Export Declaration Form covers services, the bank replaces STPI as the authority that closes each export, and the realisation window changes |
| Laptop and server import authorisation for 2026 | Laptops, tablets, all-in-one and small form factor computers and servers stay restricted. Authorisation is applied for on the DGFT portal, issued automatically, and runs to 31 December 2026 |
| Seven state GCC policies, the newest Haryana and Odisha in 2026 | Capital, payroll, rent and stamp-duty support, most of it larger outside the state capital. Together the states are targeting about 1,380 new centres by 2031 |
| National framework for GCCs in tier-2 cities and a MeitY single-window portal | Announced in Budget 2025-26 as guidance to states; the portal is being built. Not yet a rule a centre can rely on |
Entity and FDI: the filings a parent forgets
The parent incorporates an Indian private limited company and funds it. IT and ITeS are on the automatic route, so no approval is needed, but the reporting is not optional: the inflow is reported to the bank, the share allotment is reported on the RBI's FIRMS portal in Form FC-GPR within thirty days, and the Foreign Liabilities and Assets return is filed every year by 15 July. Miss a filing and the company pays a Late Submission Fee, or for older lapses goes through compounding with the Reserve Bank. An Importer Exporter Code is needed for equipment imports and for an SEZ or STPI unit. If the parent must sign contracts or pay Indian vendors before the entity exists, an SNRR account bridges the gap.
SEZ, STPI or a domestic company
| SEZ unit | STPI unit | Domestic company |
|---|
| Where | Inside a notified IT/ITeS zone | Anywhere, registered with Software Technology Parks of India | Anywhere |
| Equipment imports | Duty free for authorised operations | Duty free for capital goods under the STP scheme | Duty and IGST paid |
| GST on inputs | Zero rated to the unit | Paid, refunded on export | Paid, refunded on export |
| Export obligation | Positive Net Foreign Exchange over five years, Rule 53 | Positive NFE under the scheme | None |
| Export paperwork | Export Declaration Form from 1 October 2026; SOFTEX until then | Same | Same |
| Income tax | Section 10AA closed to units starting after 31 March 2020 | No holiday | No holiday |
| Regulator | Development Commissioner, Unit Approval Committee, Customs in the zone | STPI, with Customs for duty-free imports | Ordinary corporate, GST and FEMA compliance |
Most new centres are domestic companies in leased space, and for a centre whose cost is payroll that is right. An SEZ unit earns its keep when equipment is large against payroll or when the campus itself matters; the NFE test then rides on the parent paying at arm's length, in foreign currency, on time. STPI suits a centre in a tier-2 city that wants duty-free equipment without a zone.
GST: a centre's service is an export, if four things are true
Under Section 2(6) of the IGST Act a supply of services is an export when the supplier is in India, the recipient is outside India, the place of supply is outside India, the payment comes in convertible foreign exchange, and the two are not merely establishments of one person. Until 30 March 2026 the third condition failed whenever the department called the centre an "intermediary", because Section 13(8)(b) placed the supply in India. That clause is gone. The place of supply is now the recipient's location under the general rule, and the centre exports under a Letter of Undertaking and claims refund of the input tax on rent, software and travel.
Two things still break it. Invoicing an Indian affiliate of the group, which is a domestic supply at 18 per cent, and a branch structure: a branch of the foreign company is the same person as its head office and cannot export to it, which is why the subsidiary form is standard. Past periods are a separate matter; disputes on the old clause are still being adjudicated, and the repeal is an argument in them, not a settlement.
Transfer pricing: cost plus and the 15.5 per cent
The parent pays the centre its costs plus a margin. The question is what margin the department accepts. From tax year 2026-27 a centre providing IT services, ITeS, KPO or software R&D can elect the safe harbour at 15.5 per cent on operating cost, provided operating revenue does not exceed ₹2,000 crore, and can lock it for five years. Elect it and the margin is accepted without audit. Above the ceiling, or where the group wants a lower margin, an Advance Pricing Agreement is the route. Whatever the margin, the inter-company agreement must make the parent pay monthly in foreign currency: a cost-plus invoice the parent settles late is a transfer-pricing problem, an NFE problem for a zone unit, and an unrealised export in the bank's system all at once.
Equipment: laptops, servers and duty
Laptops, tablets, all-in-one and ultra-small form factor computers and servers under heading 8471 are restricted imports. The authorisation for 2026 is applied for on the DGFT portal, issued automatically, allows amendment during the year, and is valid to 31 December 2026; the application window closes on 15 December. It applies whichever structure the centre chooses. What the structure decides is the duty: an SEZ or STPI unit imports for authorised operations without it, a domestic company pays duty and IGST at the gate and recovers the IGST as credit. For a centre buying in India instead, an SEZ unit buys zero rated and the others pay and claim refund.
Export proceeds after 1 October 2026
Every invoice a centre raises on its parent is an export the bank must see closed. Under the export regulations effective 1 October 2026 the SOFTEX form goes; the centre lodges a single Export Declaration Form and the authorised dealer bank, not STPI, is the authority that matches it to the inward remittance in the RBI's monitoring system. The realisation window changes with the same regulations, and a centre with invoices open beyond it finds its next remittance questioned. The FEMA 2026 changes are set out separately; the point for a centre is that a monthly cost-plus invoice, paid monthly, never meets any of it.
State incentives, and what they do not decide
| State | What the policy offers |
|---|
| Karnataka | Target of 500 centres; capital support, a ₹100 crore research fund with academia, an AI centre of excellence, internship stipend reimbursement, and larger incentives outside Bengaluru |
| Maharashtra | 2025 policy; target of 200 centres; capital and payroll support |
| Telangana | Target of 120 new centres by 2026, weighted to R&D and AI mandates |
| Uttar Pradesh | Full stamp-duty exemption, payroll subsidy, and operating-expense support of ₹40 to ₹80 crore a year for five years by size of centre |
| Gujarat | Target of more than 250 centres; capital and employment support, GIFT City for financial-services centres |
| Haryana | 2026 policy; target of more than 100 centres and 30,000 jobs |
| Odisha | Policy released February 2026 |
The incentives are real money and worth the application; check each policy's cut-off, since several require it before operations begin. They sit alongside the central regime and do not change it: a state subsidy does not alter whether a service is an export, what the safe-harbour margin is, or whether the NFE test is met. Choose the structure on those, then the state.
The set-up sequence
- Settle the inter-company agreement and the transfer-pricing model before anything is incorporated: scope of services, cost base, margin, currency and payment terms.
- Incorporate the subsidiary, receive the parent's funding, and report it: bank intimation, FC-GPR within thirty days, FLA return each July.
- Choose SEZ, STPI or domestic on equipment, campus and location, and obtain the Letter of Approval or STPI registration if either is chosen.
- Register for GST, file the Letter of Undertaking, and set the invoicing so that only the foreign group entity is billed.
- Obtain the Importer Exporter Code and the laptop and server authorisation before the first shipment.
- Set up the bank for the Export Declaration Form process and the monitoring system that follows each invoice.
- Apply for the state incentive before the policy's cut-off, usually commencement of operations.
Done in that order the centre opens compliant. Done in the usual order, premises first and paperwork after, it opens with an invoice the bank cannot match, equipment in customs without an authorisation, and a cost-plus agreement signed after the first payment it was meant to govern. The firm's GCC advisors come from the departments that administer SEZ, Customs, GST and FEMA; send your headcount plan, equipment budget and city shortlist and one of them will map the structure, tax and foreign-exchange route for your centre.
