Compliant before day one
Entity, PAN, TAN, GST and labour law handled as one workstream, so the legal foundation is finished before your first engineer accepts an offer.
The legal work is not one task, it is nine running in parallel
Most delays in setting up an India centre are not hiring delays. They are sequencing failures in the statutory workstream, where one registration silently blocks three others.
Entity formation
A private limited company or a wholly owned subsidiary, with the right shareholding structure, authorised capital and directors. The structure you choose here constrains what you can do for years, so it is worth deciding deliberately rather than by default.
PAN and TAN
The permanent account number and tax deduction account number are prerequisites for opening a bank account, running payroll and deducting tax at source. Nothing downstream moves until both exist.
GST registration
Required for invoicing between your Indian entity and the parent, and for reclaiming input credit. Registration is state specific, which matters when you choose a city.
Labour law compliance
Provident fund, employee state insurance, professional tax, gratuity and the shops and establishments registration. Each has its own threshold, filing calendar and penalty regime.
Transfer pricing
An intercompany agreement and a defensible cost plus or cost sharing basis, documented before the first invoice rather than reconstructed at assessment.
FEMA and banking
Foreign direct investment reporting, the bank account, and the inward remittance path that funds the entity. Missed filings here are among the most expensive to correct.
Your entity, not a service on top of one
A Nano GCC is your own Indian company. That is the whole point of the model, and it is also what makes the legal work non negotiable. There is no employer of record absorbing the obligation on your behalf, which means the compliance posture is genuinely yours.
In practice this is a benefit rather than a burden. The engineers are your employees under your policies, your IP assignment is direct rather than flowing through a vendor contract, and your auditors see one entity rather than a chain of intermediaries.
What it requires is that the statutory work is finished properly and on a calendar, not treated as paperwork to catch up on once the team is running. We run it as a designed workstream with named owners and dated milestones.
Owned entity, employer of record, or contractor arrangement
| Dimension | Owned entity (Nano GCC) | Employer of record | Contractor arrangement |
|---|---|---|---|
| Who legally employs the team | Your Indian subsidiary | The EOR provider | Nobody, they are vendors |
| IP assignment path | Direct to you | Via provider contract | Via vendor contract |
| Appears in your vendor register | No | Yes, permanently | Yes, permanently |
| Per head cost at scale | Lowest | Premium per head | Variable, often highest |
| Setup time | 8 to 12 weeks | 1 to 2 weeks | Immediate |
| Permanent establishment risk | Managed and documented | Provider dependent | Highest |
| Viable above 25 people | Yes | Cost prohibitive | Rarely |
| Statutory obligation sits with | You | The provider | Ambiguous |
The statutory workstream, by elapsed time
These run in parallel, but the dependencies are real. Bank account opening cannot start before PAN, and payroll cannot run before TAN.
How we run it
Structure decided and filed
Shareholding, authorised capital, directors and registered office agreed against your tax position, then incorporation filed. Getting the structure right here avoids an expensive restructuring later.
Tax registrations and banking
PAN and TAN obtained, bank account opened, and the inward remittance path established so the entity can actually be funded.
Employment framework
GST, provident fund, professional tax and shops and establishments registrations completed, with employment contracts, IP assignment and the employee handbook drafted against Indian law.
Intercompany agreements
Transfer pricing basis documented, the intercompany services agreement executed, and the audit evidence plan agreed with your finance team.
The compliance calendar
Monthly, quarterly and annual filings run on a published calendar with named owners. You receive the evidence pack rather than having to ask for it.
What you get that a vendor arrangement cannot give you
IP assignment is direct
Work product vests in your entity through employment contracts governed by Indian law. There is no vendor in the chain of title, which is the question that matters in diligence.
One entity in the audit trail
Auditors and customers see a subsidiary rather than a chain of intermediaries. That is materially easier to explain in a security review or a funding round.
Cost falls as you scale
Per head cost drops as the team grows because the fixed statutory base is spread wider. An employer of record does the opposite.
Policy applies directly
Your access policy, background check standard and change control apply to your own employees, without a provider translating them first.
Everything that has to exist before an offer can be issued
The deliverable is not advice. It is a registered entity with a working bank account, a payroll that runs, and a filing calendar with named owners.
- Private limited company incorporated, with shareholding, authorised capital and directors structured against your tax position
- PAN and TAN obtained, and a corporate bank account opened with the inward remittance path established
- GST registration in the operating state, with the intercompany invoicing flow agreed
- Provident fund, professional tax, gratuity and shops and establishments registrations completed
- Employment contracts, IP assignment and the employee handbook drafted against Indian law
- Transfer pricing basis documented and the intercompany services agreement executed
- FEMA and foreign direct investment filings made on time, with evidence retained
- A published compliance calendar with monthly, quarterly and annual filings and named owners
When an owned entity is the right answer, and when it is not
The honest version. The model has a floor, and below it something else is cheaper.
A good fit when
You expect fifteen or more people within eighteen months, the work is long lived rather than project shaped, IP ownership matters to your diligence position, or you operate in a regulated context where a vendor in the data path is a problem you would rather not have.
A poor fit when
You need fewer than ten people, your horizon is under two years, or the work is a bounded project with a defined end. In those cases an employer of record or a contract arrangement is cheaper, faster and far easier to exit, and we will tell you so before you commit.
One honest caveat. An owned entity carries permanent obligations. Filings continue whether or not the team is at full strength, and winding one down is slower than ending a contract. Below roughly fifteen people over a horizon shorter than two years, an employer of record is usually the more rational choice, and we will tell you so.
Frequently asked questions
How long does the legal setup actually take?
Eight to twelve weeks from decision to a fully registered entity that can employ people and run payroll. Incorporation itself is faster, but the tax and labour registrations that follow have real processing times and genuine dependencies on each other.
Can we start hiring before the entity is complete?
Sourcing and interviewing can start immediately, and usually should, because senior hiring is the longer lead time. Offers can be issued once the entity exists and payroll registrations are in place. Running the two tracks in parallel is how the three to four month timeline is achieved.
What is a permanent establishment risk and does this create one?
Permanent establishment is the question of whether your foreign parent becomes taxable in India through its activity there. A properly structured subsidiary with an arm’s length intercompany agreement is the well established way to manage it. It is a documentation discipline rather than a reason to avoid the model. Take qualified tax counsel on your specific facts.
Who owns the intellectual property our India team creates?
Your entity does, through employment contracts with explicit IP assignment clauses governed by Indian law. Because the engineers are your employees rather than a vendor’s, there is no third party in the chain of title. This is one of the clearest structural advantages over outsourcing.
What happens if we need to wind the entity down?
Closing an Indian company is a formal process taking roughly six to nine months, involving employee settlements, statutory clearances and final filings. It is manageable but not instant, which is why we are direct about the minimum scale at which an owned entity makes sense.
Do we need a resident director?
Indian law requires at least one director who has stayed in India for the required period in the financial year. This is a standard requirement with standard solutions, and it is addressed as part of the structuring decision in the first two weeks.
How is transfer pricing handled between the parent and the entity?
Typically on a cost plus basis, where the Indian entity recovers its costs plus an agreed margin. The basis must be documented contemporaneously and supported by a benchmarking study. Doing this at setup rather than at assessment is considerably cheaper.
Is Hexominds providing legal advice?
No. We run the setup workstream, coordinate the filings and work alongside qualified Indian counsel and chartered accountants who provide the advice and sign the returns. You should take your own tax and legal advice on your specific circumstances.
Related reading
Get the compliance path mapped
Tell us where you plan to operate and how large the team is likely to get. We will come back with the entity structure, the registration sequence, the dated milestones and a fully loaded cost.