Quick Answer
India is one of the world’s fastest-growing major economies, offering foreign investors access to a 1.4 billion-strong consumer market, 100% FDI under the automatic route in most sectors, and a streamlined incorporation process that can be completed in approximately 15 working days. The Private Limited Company is the preferred structure for foreign investors, requiring a minimum of 2 shareholders, 2 directors (with at least one Indian-resident director), and a registered office in India. India’s direct tax framework is now governed by the Income-tax Act, 2025, effective from 1 April 2026, which simplifies the previous law without changing tax rates. For Turkey-based companies, India represents a strategic gateway to South Asian markets across IT, manufacturing, fintech, and outsourcing sectors.
Why India for Foreign Investors
India has emerged as one of the most compelling destinations for global businesses seeking long-term growth, market expansion, and strategic diversification. With its large consumer base, rapidly digitizing economy, and increasingly investor-friendly regulatory environment, the country continues to attract multinational companies, entrepreneurs, and international investors from across the world.
As one of the world’s largest democracies and the most populous nation, India plays a central role in global commerce, technology, financial services, and manufacturing. For Turkey-based companies, India can be considered as a strategic gateway to South Asian markets, particularly for trade, technology partnerships, sourcing, IT services, and regional expansion strategies.
Country Overview
- Official Name: Republic of India (Bharat Ganarajya)
- Capital: New Delhi
- Population: Approximately 1.43 billion
- Official Languages: Hindi and English (with 22 scheduled languages)
- Legal System: Common law system based on the Indian Constitution
- Time Zone: UTC+05:30
- Country Code: +91
- Currency: Indian Rupee (INR)
- Federal Structure: 28 states and 8 union territories
How to Set Up a Company in India
Main Types of Legal Entities
Foreign investors may choose from several legal structures depending on the nature of business, commercial objectives, and regulatory requirements:
- Private Limited Company — most preferred structure for foreign investors
- Public Limited Company
- Limited Liability Partnership (LLP)
- Wholly Owned Subsidiary (WOS) — Private Limited Company with 100% foreign equity
- Joint Venture (JV) — partnership with an Indian partner
- Liaison Office
- Branch Office
- Project Office
- The Private Limited Company remains the most commonly preferred structure by foreign investors due to its flexibility, limited liability protection, and international credibility. It is broadly comparable to an LLC structure in several other jurisdictions.
Establishment Process
- Selection of company name and name approval
- Obtaining Digital Signature Certificate (DSC) for directors
- Obtaining Director Identification Number (DIN)
- Preparing the Memorandum of Association (MoA) and Articles of Association (AoA)
- Appointment of directors and shareholders
- Company registration with the Ministry of Corporate Affairs (MCA)
- Issuance of Certificate of Incorporation
- Tax registration (PAN and TAN)
- Opening a corporate bank account
- GST registration, where applicable
- In a well-prepared case, company registration in India can typically be completed within approximately 15 working days, although banking compliance and sector-specific approvals may require additional time.
Documents Required for Company Formation
For Foreign Individual Shareholders and Directors
- Passport copy, duly notarized and apostilled in the country of residence
- Proof of residential address (utility bill or rental agreement)
- Passport-size photograph for the digital signature application
- DIN and DSC application forms
For Foreign Corporate Shareholders
- Certificate of Incorporation of the parent company
- Memorandum and Articles of Association of the parent company
- Shareholding details, duly notarized and apostilled
- Board resolution authorizing the investment and appointing the representative
- Proof of registered address
For Indian Resident Directors
- Self-attested PAN card copy
- Passport-size photograph
- Proof of address (utility bill or rental agreement)
If Turkey-based companies participate as shareholders, translation, notarization, and apostille processes may affect the overall timeline and should be planned in advance.
Is a Local Director or Local Partner Required?
- Foreign investors can own up to 100% of the shares of an Indian company in most sectors under the automatic route. A local shareholder is generally not required.
- However, every Indian company must have at least one director who is a resident of India (defined as a person who has stayed in India for at least 182 days during the financial year). A private limited company must have a minimum of two directors in total, while a public limited company must have a minimum of three directors.
Foreign Direct Investment Framework
Foreign investment in India is governed by the Government of India and the Reserve Bank of India (RBI). In many sectors, 100% FDI is permitted under the automatic route, meaning prior government approval is not required.
Important Restriction for Border-Sharing Countries
- With effect from 17 April 2020, citizens or companies of countries that share a land border with India (Pakistan, Afghanistan, Bangladesh, China, Nepal, Bhutan, and Myanmar) require prior government approval even when investing in sectors that fall under the automatic route. Entities from other countries with beneficial owners from any of these countries are also subject to this approval requirement.
Sectors with FDI Caps or Conditions
- Broadcasting and certain media-related activities
- Private security services
- Telecom services
- Banking
- Insurance
- Power exchanges
- Defense
Prohibited Sectors
Foreign investment is not permitted, directly or indirectly, in the following sectors:
- Lottery business (government, private, and online lotteries)
- Gambling and betting, including casinos
- Chit funds
- Nidhi companies
- Trading in Transferable Development Rights (TDRs)
- Real estate business or construction of farm houses (excluding township development, residential/commercial construction, roads, bridges, and SEBI-regulated REITs)
- Manufacturing of cigars, cigarettes, and tobacco substitutes
- Atomic energy and railway operations (other than permitted activities)
India’s Tax System and Tax Comparison with Turkey
New Tax Framework: Income-tax Act, 2025
India’s direct tax framework underwent a major modernisation with the Income-tax Act, 2025, which came into force on 1 April 2026, replacing the six-decade-old Income-tax Act, 1961. The new Act consolidates the previous law into 536 sections across 23 chapters, simplifies language, and introduces the unified concept of “Tax Year” (replacing the earlier dual concepts of “previous year” and “assessment year”).
Importantly, the Income-tax Act, 2025 is designed to be revenue neutral: it does not introduce new taxes or change existing rates. Tax slabs and corporate rates continue to be set annually through the Finance Act presented with the Union Budget. Income earned from 1 April 2026 onwards is governed by the Income-tax Act, 2025 and assessed for Tax Year 2026-27 and onwards. Income earned during FY 2025-26 remains governed by the Income-tax Act, 1961 and is assessed in AY 2026-27.
The Central Board of Direct Taxes (CBDT) has also notified the Income-tax Rules, 2026 to provide detailed procedural and compliance rules under the new framework.
Corporate Tax in India
India operates a two-track corporate tax system: an old regime with deductions and exemptions, and a new concessional regime with lower rates but limited deductions.
Domestic companies — old regime:
- 25% if previous year turnover does not exceed INR 400 crore
- 30% for all other domestic companies
Domestic companies — new regime (optional):
- 22% under Section 115BAA (any domestic company)
- 15% under Section 115BAB (new manufacturing companies, subject to conditions)
Foreign companies:
- 35% standard rate on India-sourced income (reduced from 40% under Finance Act 2024)
- 50% on royalties and fees for technical services under specific agreements with the Indian government
Additional levies (apply on top of base rates):
- Surcharge: 7% or 12% for domestic companies; 2% or 5% for foreign companies, depending on income
- Health and Education Cess: 4% on tax plus surcharge
The effective corporate tax rate ranges from approximately 25.17% for domestic companies under Section 115BAA to 38.22% for foreign companies in the highest surcharge bracket.
In Turkey, corporate tax rates may vary depending on current legislation, and cross-border structures should be reviewed in light of the applicable bilateral framework.
Goods and Services Tax (GST)
India applies a multi-tier GST system with standard rates of 5%, 12%, 18%, and 28% depending on the category of goods or services. Most B2B services fall under the 18% bracket. Turkey applies VAT at different standard rates depending on the goods or services.
Withholding Taxes
India imposes withholding tax on dividends, royalties, technical service fees, and interest paid to non-residents. The applicable rates may be reduced under the India-Turkey Double Taxation Avoidance Agreement (DTAA), which should be reviewed when structuring cross-border flows.
Cross-border tax planning should be evaluated carefully for Turkish investors operating through Indian structures, particularly with regard to permanent establishment risks, transfer pricing, and treaty benefits.
Accounting System and Operational Alignment with Turkey
India follows Indian Accounting Standards (Ind AS), which are largely converged with International Financial Reporting Standards (IFRS). Smaller companies may apply Accounting Standards (AS) issued by the Institute of Chartered Accountants of India.
Companies must maintain proper accounting records and prepare annual financial statements in accordance with the Companies Act, 2013.
Key Compliance Requirements
- Annual financial statements
- Statutory audit by a Chartered Accountant
- Annual filing with the Registrar of Companies (ROC)
- Income tax return for the relevant Tax Year (typically due 31 October following the Tax Year end)
- Advance tax payments in four quarterly instalments
- GST returns (monthly, quarterly, or annual depending on turnover)
- TDS (Tax Deducted at Source) compliance — note that TDS provisions have been consolidated under the Income-tax Act, 2025, reducing the number of separate TDS sections from approximately 37 to around 20
- Transfer pricing documentation for international transactions, including Tax Residency Certificate (TRC) requirements for treaty benefit claims
For companies familiar with the accounting system in Turkey, local Indian accounting practices and statutory filings may require specialized advisory support.
Opening a Bank Account and Companies Linked to Turkey
Turkey-based companies establishing an Indian structure should consider the following during banking processes:
- Transparency of ultimate beneficial owners (UBO declaration)
- Clear explanation of business activities and source of funds
- Detailed presentation of the business model
- FDI reporting requirements with the RBI (Form FC-GPR)
- Compliance documentation under FEMA (Foreign Exchange Management Act)
Indian banks conduct rigorous KYC and compliance procedures, particularly for international structures with foreign beneficial ownership.
India Tax Residency Assessment
If the effective management and control of an Indian company is conducted outside India, tax residency and Place of Effective Management (POEM) implications may arise.
Important factors include:
- Location of key management decisions
- Actual place of business activities
- Board meeting locations and frequency
- Intra-group agreements and transfer pricing arrangements
- Permanent establishment exposure
These aspects should be evaluated during the company structuring phase to avoid unintended tax exposure in either jurisdiction.
Checklist for Starting a Company in India
- Selection and approval of company name
- Obtaining DIN and DSC for directors
- Appointment of directors (including at least one Indian resident)
- Appointment of shareholders
- Drafting Memorandum and Articles of Association
- Registered office address in India
- Incorporation filing with MCA
- PAN, TAN, and GST registration
- Opening a corporate bank account
- FDI reporting with the Reserve Bank of India
- Accounting system setup (Ind AS or AS)
- Payroll, Provident Fund, and ESI registrations
- Planning financial flows between Turkey and India
- Sector-specific licenses, where applicable
Employment and Labor Regulations
Employers in India must comply with a range of central and state labor laws and maintain proper payroll records.
Key statutory contributions include:
- Provident Fund (PF): retirement savings scheme
- Employees’ State Insurance (ESI): social security and medical benefits
- Professional Tax: levied at the state level
- Gratuity: payable to employees on completion of qualifying service
Company Formation Timeframe in India and Planning Perspective with Turkey
Average Durations
- Document preparation, notarization, and apostille: 7–10 business days
- DIN and DSC issuance: 2–3 business days
- Company incorporation with MCA: 7–10 business days
- PAN and TAN allocation: 5–7 business days
- GST registration: 7–10 business days
- Bank account opening and compliance: 15–30 business days
- Operational activation: 5–7 business days
Average total process: approximately 4–8 weeks, depending on document readiness and sector-specific approvals.
Common Timing Mistakes Made by Investors
- Assuming company incorporation alone allows immediate operations
- Underestimating banking compliance and KYC procedures
- Overlooking the requirement for an Indian-resident director
- Leaving FDI reporting and FEMA compliance until after incorporation
- Failing to assess sector-specific FDI caps or government approval requirements
- Postponing tax structuring and DTAA planning until after operations begin
Frequently Asked Questions
Can a Turkish company own 100% of an Indian subsidiary?
Yes, in most sectors, Turkish companies can own 100% of an Indian subsidiary under the automatic route, without requiring prior government approval. However, sector-specific FDI caps and conditions should be verified before incorporation.
Is a minimum capital required to incorporate a Private Limited Company in India?
There is no statutory minimum paid-up capital requirement under current Indian law. Companies typically begin with a practical share capital amount aligned with operational needs.
How long does it take to set up a company in India?
In a well-prepared case, incorporation can be completed within approximately 15 working days. The full operational setup, including bank account opening and tax registrations, typically takes 4–8 weeks.
Does India have a Double Taxation Avoidance Agreement with Turkey?
Yes, India and Turkey have a bilateral DTAA in force. The treaty provides relief from double taxation and typically reduces withholding tax rates on dividends, interest, and royalties.
Is a registered office in India mandatory?
Yes, every company must have a registered office in India at the time of incorporation or within 30 days of incorporation. The address must be a physical location, not a PO Box.
Has India’s tax law changed recently?
Yes. The Income-tax Act, 2025 came into force on 1 April 2026, replacing the Income-tax Act, 1961. The new Act simplifies the structure and language of the law, consolidates provisions, and introduces a unified “Tax Year” concept replacing the earlier “previous year” and “assessment year” framework. Tax rates and core principles remain unchanged. Income earned from 1 April 2026 onwards is assessed under the new Act for Tax Year 2026-27 and beyond.
As the Özbek CPA team, we provide support in company formation, tax compliance, accounting structuring, FDI reporting, and corporate governance processes for investments structured between Turkey and India. Contact us for tailored guidance and end-to-end support.
