{"id":90942,"date":"2026-10-31T10:00:00","date_gmt":"2026-10-31T04:30:00","guid":{"rendered":"https:\/\/www.taxaj.com/learn\/?p=90942"},"modified":"2026-10-27T09:31:59","modified_gmt":"2026-10-27T04:01:59","slug":"us-company-gcc-hyderabad-setup-telangana-tax","status":"publish","type":"post","link":"https:\/\/www.taxaj.com/learn\/us-company-gcc-hyderabad-setup-telangana-tax\/","title":{"rendered":"Setting Up a GCC in Hyderabad for a US Company (2026): Entity, Telangana Incentives, SEZ, GST and Transfer Pricing"},"content":{"rendered":"<p class=\"wp-block-paragraph\"><strong>Hyderabad had about 515 global capability centres by March 2026, roughly a fifth of India&#8217;s total, and US companies such as DoorDash, Billtrust and JLL opened or expanded there in 2026. A US company usually sets up a wholly owned private limited subsidiary under the automatic route, registered with the RoC Hyderabad, which bills the parent on a cost-plus basis. Three 2026 changes make the arithmetic easier: the intermediary rule that once denied GST export status to many support services was removed by the Finance Act 2026; the safe harbour for IT and ITeS services now accepts a 15.5% markup for companies with transactions up to \u20b92,000 crore; and Telangana is drafting a dedicated GCC policy, though it had not been notified when we checked.<\/strong> This guide covers the Hyderabad-specific decisions; for the general structure see our guide to <a href=\"https:\/\/www.taxaj.com\/learn\/setting-up-a-global-capability-centre-gcc-in-india-tax-fema-structurin\/\" target=\"_blank\" rel=\"noopener\">setting up a GCC in India<\/a>.<\/p>\n<h2 class=\"wp-block-heading\">Hyderabad in numbers<\/h2>\n<figure class=\"wp-block-table\">\n<table>\n<thead>\n<tr>\n<th>Measure<\/th>\n<th>Figure<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>GCCs in Hyderabad<\/td>\n<td>About 515 (March 2026), with 50 to 70 more expected within a year<\/td>\n<\/tr>\n<tr>\n<td>People employed in GCCs<\/td>\n<td>More than 3 lakh<\/td>\n<\/tr>\n<tr>\n<td>Office space leased by GCCs<\/td>\n<td>4.5 million sq ft in 2025; more than 3 million sq ft in the first half of 2026<\/td>\n<\/tr>\n<tr>\n<td>Prime office rents<\/td>\n<td>About \u20b995 to \u20b9115 per sq ft a month<\/td>\n<\/tr>\n<tr>\n<td>State target<\/td>\n<td>100 new GCCs in 2026<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<p class=\"wp-block-paragraph\">Source: FICCI-Anarock report of September 2026 and statements of the Telangana IT Minister. Healthcare and life sciences companies took close to 30% of GCC leasing in 2024 and 2025.<\/p>\n<h2 class=\"wp-block-heading\">Choosing a location<\/h2>\n<ul class=\"wp-block-list\">\n<li><strong>HITEC City, Madhapur, Kondapur and Raidurg:<\/strong> the established cluster, with low vacancy (around 7.5% in early 2026) and the highest rents.<\/li>\n<li><strong>Gachibowli, Nanakramguda, Kokapet and the Financial District:<\/strong> large new Grade A supply and vacancy near 40% in early 2026, which gives tenants room to negotiate rent-free periods and fit-out support.<\/li>\n<li><strong>Beyond Hyderabad:<\/strong> the state&#8217;s draft policy is meant to steer GCCs to Warangal, Karimnagar and Nizamabad with extra incentives; STPI has a sub-centre at Warangal.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Telangana incentives: where things stand<\/h2>\n<ul class=\"wp-block-list\">\n<li><strong>No notified GCC policy yet.<\/strong> The Chief Minister directed officials in May 2026 to frame one, and a draft reported in September 2026 focuses on AI, semiconductors, space, quantum and life sciences, with selective incentives for investors that build ecosystems rather than broad-based subsidies.<\/li>\n<li><strong>ICT Policy 2021-26<\/strong> ran to 31 March 2026. Its incentives (stamp duty reimbursement on the first transaction, lease rental and recruitment support for SME, Tier-2 and women- or SC\/ST-led units) were never automatic for large captives.<\/li>\n<li><strong>In practice:<\/strong> large GCCs negotiate incentives with the state, often announced as MoUs. The Invest Telangana Global Summit on 7 to 9 December 2026 is expected to see GCC announcements and possibly the new policy. Do not build incentives into the business case until they are in a signed MoU or a notified policy.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Entity and registration<\/h2>\n<ul class=\"wp-block-list\">\n<li><strong>Structure:<\/strong> a private limited company, wholly owned by the US parent (with a second shareholder, often an affiliate), under the automatic route; IT and ITeS allow 100% foreign investment. A branch office is not a good fit: its services to the head office do not qualify as exports for GST.<\/li>\n<li><strong>RoC:<\/strong> the Registrar of Companies, Hyderabad covers the whole of Telangana since Andhra Pradesh moved to RoC Vijayawada in February 2026. The Regional Director for Telangana sits in Hyderabad under the 2026 reorganisation of RD offices.<\/li>\n<li><strong>FEMA:<\/strong> report the share allotment in FC-GPR within 30 days and file the annual FLA return by 15 July.<\/li>\n<li><strong>Directors:<\/strong> at least one director must have stayed in India for 182 days or more in the previous year; foreign directors need a DIN, and their documents are apostilled. See our guide to <a href=\"https:\/\/www.taxaj.com\/learn\/foreign-director-in-indian-company-din-kyc-visa-requirements\/\" target=\"_blank\" rel=\"noopener\">foreign directors in an Indian company<\/a>.<\/li>\n<\/ul>\n<p class=\"wp-block-paragraph\">Our page on <a href=\"https:\/\/www.taxaj.com\/private-limited-company-registration-in-hyderabad\" target=\"_blank\" rel=\"noopener\">company registration in Hyderabad<\/a> covers incorporation steps and timelines.<\/p>\n<h2 class=\"wp-block-heading\">SEZ, STPI or plain office space?<\/h2>\n<ul class=\"wp-block-list\">\n<li><strong>No income-tax holiday:<\/strong> the SEZ deduction under the old section 10AA is not available to units that started after 31 March 2020, so a new GCC gains nothing on income tax by locating in an SEZ.<\/li>\n<li><strong>What an SEZ still offers:<\/strong> GST-free procurement of services and goods for authorised operations, and duty-free imports. Against that are SEZ approvals, reporting and restrictions on domestic sales.<\/li>\n<li><strong>Space is moving out of SEZs:<\/strong> since December 2023, IT SEZ floors can be converted floor by floor to non-processing areas, and several Hyderabad IT SEZs, including Cognizant&#8217;s at Nanakramguda and Adibatla, were fully or partly denotified in 2025 and 2026. Many GCCs now lease ordinary office space.<\/li>\n<li><strong>STPI:<\/strong> registration is optional and mainly useful for software export certification and duty-free imports. See our <a href=\"https:\/\/www.taxaj.com\/stpi-registration\" target=\"_blank\" rel=\"noopener\">STPI registration service<\/a>.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">GST on services billed to the US parent<\/h2>\n<ul class=\"wp-block-list\">\n<li><strong>Export of services:<\/strong> services from the Indian subsidiary to its US parent qualify as exports if the conditions in section 2(6) of the IGST Act are met, including payment in foreign exchange. CBIC Circular 161\/17\/2021-GST confirms that a subsidiary and its foreign parent are not &#8220;merely establishments of a distinct person&#8221;, so the related-party condition does not block export status.<\/li>\n<li><strong>Intermediary rule removed:<\/strong> the Finance Act 2026 omitted section 13(8)(b) of the IGST Act from 30 March 2026, so services such as customer support, procurement support or sales support for the parent are no longer taxed in India as intermediary services. The place of supply is now the recipient&#8217;s location.<\/li>\n<li><strong>LUT and refunds:<\/strong> file a Letter of Undertaking each financial year to export without paying IGST, and claim refunds of input tax credit through RFD-01.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Transfer pricing in 2026<\/h2>\n<ul class=\"wp-block-list\">\n<li><strong>Safe harbour:<\/strong> from 1 April 2026, IT services, ITeS, KPO and contract software R&amp;D are merged into one IT services category. A markup of 15.5% on operating cost is accepted where the international transactions do not exceed \u20b92,000 crore in the first year, for a block of five years, by opting in through Form 49 by the return due date.<\/li>\n<li><strong>Accountant&#8217;s report:<\/strong> the transfer pricing report formerly in Form 3CEB is now Form 48, due one month before the return due date. The master file is in Form 56.<\/li>\n<li><strong>Sections:<\/strong> arm&#8217;s length price is now under section 161 of the Income-tax Act, 2025, and documentation under section 171.<\/li>\n<li><strong>APAs:<\/strong> CBDT signed a record 219 advance pricing agreements in 2025-26, and the Budget 2026 introduced a fast-track route for IT services aiming at two years. A larger GCC that wants certainty beyond safe harbour should consider one.<\/li>\n<li><strong>Cross-charges from the US:<\/strong> payments to the parent for management or support services are taxable in India as fees for included services under the India-US treaty only if they &#8220;make available&#8221; technical knowledge or skills. Document what each cross-charge covers before deciding on withholding.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Telangana employment and local rules<\/h2>\n<ul class=\"wp-block-list\">\n<li><strong>Shops and Establishments:<\/strong> IT and ITeS establishments in Telangana are exempt from the hours, opening times, holidays and night-work provisions of the Shops and Establishments Act until 30 May 2028, on conditions such as a 48-hour week, overtime pay, a weekly off, and for women working at night, transport with vetted drivers, a monitoring control room and no woman picked up first or dropped last.<\/li>\n<li><strong>Professional tax:<\/strong> \u20b9200 a month on salaries above \u20b920,000 (\u20b9150 between \u20b915,001 and \u20b920,000), deducted and paid by the 10th of the next month; the company itself pays \u20b92,500 a year.<\/li>\n<li><strong>Minimum wages<\/strong> were revised from 1 June 2026. They rarely bind a GCC&#8217;s own staff but matter for facility, housekeeping and security contracts.<\/li>\n<li><strong>Labour codes:<\/strong> the four codes took effect on 21 November 2025; Telangana&#8217;s own rules were still in draft when we checked, so the old state rules continue for now.<\/li>\n<li><strong>Trade licence:<\/strong> GHMC was split in February 2026, and HITEC City, Madhapur, Gachibowli and Kokapet now fall under the new Cyberabad Municipal Corporation. Check which body issues your trade licence for the premises.<\/li>\n<li><strong>GST registration:<\/strong> Telangana registers businesses at \u20b920 lakh turnover. A GCC will register from the start to export under LUT. See <a href=\"https:\/\/www.taxaj.com\/learn\/gst-registration-limit-telangana-20-lakh-goods\/\" target=\"_blank\" rel=\"noopener\">the GST registration limit in Telangana<\/a>.<\/li>\n<\/ul>\n<h2 class=\"wp-block-heading\">Launch checklist<\/h2>\n<ol class=\"wp-block-list\">\n<li>Board resolution of the US parent, name approval and incorporation with RoC Hyderabad.<\/li>\n<li>PAN, TAN, bank account and FC-GPR for the share capital.<\/li>\n<li>GST registration and LUT; Shops and Establishments registration and professional tax enrolment.<\/li>\n<li>Intercompany services agreement with a cost-plus markup, and a safe harbour or benchmarking decision.<\/li>\n<li>Lease, fit-out and the trade licence for the premises.<\/li>\n<li>Payroll set-up with PF, ESI where applicable, and gratuity under the labour codes.<\/li>\n<li>A compliance calendar for TDS, GST, ROC, FLA and Form 48.<\/li>\n<\/ol>\n<h2 class=\"wp-block-heading\">Frequently asked questions<\/h2>\n<h3 class=\"wp-block-heading\">Does Telangana have a GCC policy?<\/h3>\n<p class=\"wp-block-paragraph\">A draft was reported in September 2026, but no GCC policy had been notified when we checked. Incentives for large GCCs are negotiated case by case.<\/p>\n<h3 class=\"wp-block-heading\">Is GST charged on services a Hyderabad GCC provides to its US parent?<\/h3>\n<p class=\"wp-block-paragraph\">No, if the export conditions are met and the GCC exports under LUT. The removal of the intermediary rule in March 2026 has widened the range of services that qualify.<\/p>\n<h3 class=\"wp-block-heading\">What markup should a GCC charge its US parent?<\/h3>\n<p class=\"wp-block-paragraph\">It must be at arm&#8217;s length. A 15.5% markup on operating cost is accepted under the safe harbour from 2026-27 for IT and ITeS services up to \u20b92,000 crore, if the company opts in through Form 49.<\/p>\n<h3 class=\"wp-block-heading\">Should a GCC in Hyderabad be in an SEZ?<\/h3>\n<p class=\"wp-block-paragraph\">Often not. New SEZ units get no income-tax holiday, and the GST benefit can usually be achieved by exporting under LUT from ordinary office space.<\/p>\n<p class=\"wp-block-paragraph\">TAXAJ sets up Indian subsidiaries for US companies and runs their FEMA, GST, transfer pricing documentation and payroll compliance. See our <a href=\"https:\/\/www.taxaj.com\/launch-indian-entity-services\" target=\"_blank\" rel=\"noopener\">India entity set-up service<\/a> or our guide for <a href=\"https:\/\/www.taxaj.com\/learn\/setting-up-subsidiary-in-bangalore-by-us-company-step-by-step-2026\/\" target=\"_blank\" rel=\"noopener\">US companies setting up in Bengaluru<\/a>.<\/p>\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link wp-element-button\" href=\"https:\/\/wa.me\/918802912345?text=We%20are%20planning%20a%20GCC%20in%20Hyderabad\" target=\"_blank\" rel=\"noopener\">WhatsApp our team<\/a><\/div>\n<div class=\"wp-block-button is-style-outline\"><a class=\"wp-block-button__link wp-element-button\" href=\"tel:+918802812345\">Call 88028 12345<\/a><\/div>\n<\/div>\n<p class=\"has-small-font-size wp-block-paragraph\"><em>Last updated 27 October 2026. Sources: FICCI-Anarock, &#8220;Hyderabad: The Rise of a Global Capability Powerhouse&#8221; (September 2026); Telangana Government statements (May to October 2026); Telangana ICT Policy 2021-26; MCA notifications S.O. 4852(E) of 23 October 2025 and S.O. 698(E) of 10 February 2026; SEZ Rules, 2006, Rule 11B and denotification notifications on sezindia.gov.in; IGST Act, 2017, sections 2(6) and 13 as amended by the Finance Act, 2026; CBIC Circular 161\/17\/2021-GST; Income-tax Act, 2025, sections 161 to 173; Income-tax Rules, 2026, Rules 85 to 93; CBDT release on APAs for 2025-26; India-US tax treaty, Article 12; Telangana orders on IT\/ITeS exemption under the Shops and Establishments Act (June 2024), minimum wages (G.O.Ms. No. 6 of 2026) and the GHMC reorganisation (G.O.Ms. No. 55 of 2026). General information only; check incentives and your transfer pricing position with us before committing.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What a US company needs to know before opening a global capability centre in Hyderabad in 2026: the market, where Telangana&#8217;s incentives stand, entity and RoC, SEZ or not, GST on services to the US parent, the new safe harbour and Form 48, and Telangana&#8217;s labour and municipal rules.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"_kad_post_classname":"","footnotes":""},"categories":[5],"tags":[],"class_list":["post-90942","post","type-post","status-publish","format-standard","hentry","category-income-tax"],"_links":{"self":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts\/90942","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/comments?post=90942"}],"version-history":[{"count":1,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts\/90942\/revisions"}],"predecessor-version":[{"id":90943,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/posts\/90942\/revisions\/90943"}],"wp:attachment":[{"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/media?parent=90942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/categories?post=90942"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxaj.com/learn\/wp-json\/wp\/v2\/tags?post=90942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}