Nri taxation

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jhalak tank (Querist)
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22 November 2013 Background: Software Edu LLC is a Company incorporated in the U.S with 3 US Citizens of Indian origin as its promoters. The Company is in the Business of Software development. The Company develops software & sells it in US Markets.

Present situation: The Company wants to open a 100% subsidiary of SoftwareEdu LLC in India with the main objective of developing software in India & selling it in US. Slowly the Company will also undertake contracts in India to develop software & sell its products in India.
The Company will initially operate with a staff of 3-5 developers & over a period of 1 year wants to increase its head count to 10.
The Parent company is still yet to decide the shareholding pattern & the structure of the company. Depending on your expertise & company’s Objectives a final decision would be arrived at.

Major Objectives:
1. To reduce the development cost.
2. The Indian company should be in a position to send maximum (if possible 100%) profits to its parent LLC in US.
3. To expand its services & reach in India.

Based on the above scenario we would request you to give your inputs to us & help structure the company in best possible manner which would meet our objectives listed above.
In view of the above we request you to kindly answer the following scenarios with its advantages, disadvantages etc.

Sr. No Scenario Whether Incorporation Possible (Yes/NO) If yes then Advantages If Yes the Disadvantages other Comments (if Any)
1 Proprietorship
(100% M/s software Edu LLC)
2 Partnership
A M/s software Edu LLC along with 1 or many local individuals
B M/s software Edu LLC & another Indian Partnership Company
C M/s software Edu LLC + 1 or many local individuals + another Indian Partnership Company
3 Private Limited Company
A M/s software Edu LLC & one or many individual directors
B M/s software Edu LLC & Indian Pvt. Ltd. Company
C M/s software Edu LLC & Indian Partnership Company
D M/s software Edu LLC & Indian Pvt. Ltd. Company & Indian Partnership Company

Arihanth Jain

Arihanth Jain (Expert)
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24 November 2013 My suggestion would be you discuss with your CA in detail.

Few quick points would be:
a. Pvt company may be more comfortable to operate.
b. PAT can be distributed back.
c. Tranfer pricing law shall apply.