Implication of FEMA and other Acts for to open a Product Development Centre outside India.

[LAVA INTERNATIONAL LTD LAVA INTERNATIONAL LTD]

Hi, We want to open a Product Development Centre outside India, it only involve costs like -Manpower Cost (Salaries and Reimbursements) - Rental Cost for Office - Misc Admin Costs The office does not generate any kind of revenue. Pls advise implication of FEMA and other Acts for this nature of transaction as we will be required to remit money for this. Regards

[Anuj Gupta]

You are permitted by FEMA to do the activity you are planning to do.Your only requirement is to intimate the AD for such transaction . Regarding implication under the Income Tax Act you need to specify in detail the exact nature of transactions to be done by Product Development Centre outside India.

[Anuj Gupta]

You are permitted by FEMA to do the activity you are planning to do.Your only requirement is to intimate the AD for such transaction . Regarding implication under the Income Tax Act you need to specify in detail the exact nature of transactions to be done by Product Development Centre outside India.

AI Summary

Foreign exchange remittance: FEMA permits funding overseas development centres but AD intimation and tax details required. Opening and funding a Product Development Centre abroad that only incurs operational costs and yields no revenue is permitted under FEMA, subject to the procedural requirement to intimate the Authorised Dealer for remittances. Income Tax consequences depend on the specific nature of transactions, requiring detailed documentation to assess deductibility, withholding, transfer pricing and treaty effects.