Taxation of joint ventures in india

Is joint venture legal in India? What is an example of Indian joint venture? What are the top joint venture companies in India? These Companies may be a private limited or a public limited.

Joint Ventures Companies are generally formed under Indian Companies Act. A very common method used by foreign companies entering the Indian market is to work on a joint venture with an Indian company. An unincorporated joint venture could lead to such joint venture being characterised as an ‘association of persons ’, which would be a distinct entity (ie , separate taxable entity in India ), and is. Shareholders could extract profits from a joint venture company by the payment by the joint venture company of dividends , interest or royalties or licence fees.

Interest, royalties and licence fees may be tax deductible for the joint venture company, subject to anti avoidance provisions such as the transfer pricing rules. Basics of Taxation in India ii. Tax implications of Various Investment Options iv. Use of Intermediate jurisdiction v.

Due Diligence II. The shareholders agreement prescribes share transfer restrictions, if any, which are then incorporated into the articles of association of the joint venture company. This is a legal concept found between many companies in India. Treated as a partnership for tax purposes – fiscal transparency means that each JV party will be taxed directly on its share of the profits and losses of the venture. The LLP itself is not taxed on its profits (provided it is carrying on a trade or business with a view to profit).

Limited liability of members. The Companies Incorporated in India even upto 1 foreign equity in defined sectors are treated the same as domestic Companies. There are no separate laws for joint ventures in India.

As per emerging market requirements, joint ventures have proved to be beneficial in many ways. An overview of the main tax issues to consider when forming and operating a cross-border international joint venture. A joint venture may take place between corporations, limited liability companies, partnerships, or any other type of legal entities.

It may be for a short perio or for several years. The purpose of a joint venture determines its type or mode. Some of the fundamental types of joint ventures in India are described below.

Joint venture company is the preferred form of corporate structure for foreign investors who are interested in doing business in India. Through joint ventures , foreign investors have access to distribution channels, financial resources, and contacts of the Indian partners. Normally, Indian joint ventures have a - equity break-up between the foreign and Indian partners, respectively.

Indian partner’s ability to invest The investments (cash or otherwise) being made by the parties are also relevant. Generally, foreign companies are the main investors in joint ventures. Joint ventures work best when one partner has a proven model, and the other brings something to the party that allows them to execute that model better, cheaper or more frequently. They can be used for something more experimental, but there’s a higher probability of something going wrong and at least one person being unhappy.

On the other han for taxation purposes, if the joint venture parties are ‘jointly in receipt of income’, the joint venture will be treated as a tax partnership, even though it is not a common law partnership.