What are the tax implications of having a US entity and an Indian entity?

The tax implications vary significantly depending on where your entity is incorporated and where you conduct business.

A US entity (such as a Delaware C-Corp) is subject to US federal corporate income tax and, depending on where you do business, may also be liable for state-level taxes. If your company has employees, generates revenue, or owns assets in specific states, those states may impose additional tax obligations.

On the other hand, an Indian entity (such as a Private Limited Company or LLP) is governed by Indian tax laws, including corporate tax, Goods and Services Tax (GST), and withholding tax rules. Indian corporations are taxed on global income, and there may be specific compliance requirements based on the entity type and turnover.

If you operate across both jurisdictions (e.g., with an Indian LLP holding shares in a US company), there are additional complexities to consider:

• Transfer pricing regulations: These rules ensure that cross-border transactions between related entities (e.g., your Indian LLP and US C-Corp) are priced fairly and at arm’s length.
• Withholding taxes: If money flows between your Indian and US entities (e.g., royalties, dividends, service payments), withholding tax may apply depending on the nature of the transaction.

Because every company’s structure and operations are unique, it’s important to consult with qualified tax professionals who understand both Indian and US tax systems. At Inkle, our tax experts can help you design a compliant, tax-efficient structure tailored to your business goals. Inkle has helped hundreds of cross border companies in this space.

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