CII seeks tax holiday, rule harmonisation to boost India's GCC sector

CII suggests tax holidays, concessional rates, GST clarity and harmonised permanent establishment rules for GCCs, projecting $600 bn GDP impact and 25 mn jobs by 2030

The government should consider offering concessional corporate tax rates or tax holidays to global capability centres (GCCs) set up within the notified special economic zones, the Confederation of Indian Industry (CII) has suggested. It also called for the harmonisation of permanent establishment rules.

 

In its suggestions for a national framework of GCCs, CII has proposed that the new government policy should also provide clarification on the nature of services being provided by the GCCs, thereby removing them from the category of ‘intermediary’. This, CII said, will help expedite goods and services tax (GST) refunds and detailed scrutiny by authorities on tax refund applications.

 

 

“Further, since GCCs pay tax under the reverse charge mechanism on various services imported from their offshore vendors, the policy may allow payment of GST under the reverse charge mechanism by utilising input tax credit (ITC),” CII said.

 

India has the potential to scale its GCC ecosystem from the current 1,800 to 5,000 by 2030. This will position it as a global hub for high-value enterprise capabilities, according to the industry body. 

 

Overall, the GCC sector has the potential to contribute up to $600 billion to India's gross domestic product (GDP) by 2030, with a gross value addition (GVA) potential of $199 billion during this period.

 

The GCC sector can generate a total of up to 25 million jobs, with as many as 5 million being directly employed, CII said.

 

“The emergence of nano-GCCs, increased functional ownership, and the establishment of technology-focused centres of excellence (CoEs) are central to this evolution. Together, these objectives position India to lead the next wave of global enterprise transformation. It would cement its status as the premier destination for innovation-driven, talent-led capability centres,” the industry body said.

 

To support the talent requirement of these GCCs, the government’s national policy should aim to develop specialised talent that aligns with the sector’s demands.

 

This could include steps such as the development of industry-focused GCCs, industry-focused research and guaranteed employment plans, CII said.

 

“The idea is to foster a symbiotic relationship where academic institutions produce job-ready professionals, reducing onboarding and training efforts for companies. A key focus may also be on promoting global roles for the GCCs in India, enabling Indian centres to take on end-to-end ownership of strategic functions, innovation mandates, and leadership positions that serve global markets,” CII said.