Ref. No.

: JACNOIDA/ FEMA201718/001 Dated: 14th March 2018

To,
Mr. Pankaj Khatri

Subject: Opinion on Logistic Services in USA by an Indian Incorporation

This with reference to subject matter work we had a meeting with you in our good office. We are pleased to provide our
opinion with respect to the query raised as follows:

1. What type of formation should be created in India i.e., LLP or Private Limited Company?
2. Opening of Branch or Subsidiary in USA.
3. Conditions for investment outside India.
4. Tax Liability of Indian Company for operation outside India

Our Opinion as follows:

 Private Limited Company is the best option, because for the purpose of ODI (Overseas Direct Investment) of The
Foreign Exchange Management Act, 1999 (FEMA) we suggest that to create a WOS (Wholly Owned Subsidiary) in
United States of America.

 We suggest investing in WOS (Wholly Owned Subsidiary) in USA through overseas direct investment master circular
2017 (ODI) through AD is the best way to transfer fund. Designated AD will look into the proposal submitted by the
Indian Person (IP).

 Designated AD will report to RBI before approval is granted by RBI on the Prima facie viability of the JV/ WOS outside
India. A project report to be made by the IP and the same is vetted by the CA firm for its viability with respect to the
proposed business. In addition to this the designated AD will submit its report to the RBI on the following
parameters:
• Contribution to external trade and other benefits which will accrue to India through such investment;
• Financial position and business track record of the IP and the foreign entity if any;
• Expertise and experience of the IP in the same or related line of activity of the JV/ WOS outside India.

 An Indian Company first get open the FCNR (Current Account) open in India with authorized Bank in India and
introduce paid up capital as amount desire to invest in USA as per overseas direct investment master circular 2017.
Overseas direct investment allows 4 times of net worth (Paid up Capital plus free reserves if any) of an Indian
company.
 In United States of America a WOS (Wholly Owned Subsidiary) will be formed as LLC (Limited Liability Company).
 Consultancy fee (Approx $5000) of known consultant, who will complete the formation of Wholly Owned Subsidiary
as LLC will be paid.
 Double taxation avoidance agreement and net Impact of Taxation :

a) The central govt. may enter into an agreement with the govt. of USA via notification
No.77/2015 [F.NO.500/137/2011-FTD-I]/SO. 2676(E), DATED 30-9-2015, for the granting of relief or for the
avoidance of double taxation of income for the prevention of evasion or avoidance of income-tax u/s
Section 90 Of The Income-Tax Act, 1961 - Double Taxation Agreement, Where the Central Government has
entered into an agreement, under sub-section (1) for granting relief of tax then the provisions of this Act
shall apply to the extent they are more beneficial to that assesses.
Enclosed : Annexure A (Understanding of of Reliefs procedure under Section-90 of income Tax Act, 1961)

Thanking You,

For J A C & Company

Authorised Signatory

Annexure: A

Particulars
Assumptions Case I Case II
(INR) (INR)
Income in India 1,50,000 1,50,000
Income in foreign country 1,00,000 1,00,000

Global income 2,50,000 2,50,000

Tax rate in India 30% 30%

Tax rate in foreign state 25% 35%

Workings

(
Income tax on global income A) 75,000 75,000

(
Indian tax on foreign income B) 30,000 30,000

(
Foreign tax on foreign income C) 25,000 35,000

Unilateral tax relief as per the (

Act – Lower of (B) or (C) D) 25,000 30,000

(
Tax payable in India (A) – (D) E) 50,000 45,000
Total tax outflow (B) + (E) 75,000 80,000
Effective global tax rate 30% 32%