SPOTLIGHT ON INDIAN ELECTRONICS Spotlight on Indian Electronics | Page 52

ESDM & FDI QUERIES
9. Permanent establishment( PE)
LO ' s generally do not constitute PE under DTAA due to limited scope of actvities in India. However, if the activities of the LO go beyond the realm of preparatory or auxiliary character as provided for in the DTAA, a PE / taxable presence is likely to be constituted
Generally constituting a PE and a taxable presence under DTAA and domestic IT proisions
An independent taxable entity and not a PE of the foreign company
An independent taxable entity; however, whether interest in LLP results in PE for a foreign partner, is still an ambiguous position under LLP
10. Repatriation of funds on ongoing basis
Typically the LO is not permitted to undertake any business activity in India; as such, there may not be any repatriations from the LO. However, in case of closure of the LO, any surplus money may be repatriated with RBI approval
Approval not required for remittance of post-tax profits to the HO outside India, subject to filing of requisite documents to the RBI
Subsidiary does not require any approval for remittance of post-tax profits; dividends declared will be subject of distribution tax
LLP does not rquire any approval for remittance of post tax profits
11.
Exit mechanism
Prioir approval of RBI,
Prioir approval of RBI,
ROC and income tax
ROC and income tax
authorities
authorities
Exit can be through sale of shares or winding up or liquidation
Foreign partner permitted to transfer its stake in LLP and can also dissolve the LLP
Office space: At the time of incorporation of company, it is mandatory to submit particulars of registered office. Business entities are free to buy or lease the office space.
Section IV

Queries relating to starting a manufacturing unit

Q. 23 What are the different steps for starting a manufacturing unit?
Approvals / Registration / Filing information for setting up a
Setting up a company or any other form of business: The
project
business structure can be a company, a branch office in an
Preparing the detailed project report and getting an approval
SEZ, or the LLP. The details about each form are given in
from the concerned state government department.
Section I and Section II.
Procedure Applicability Authority SSI Registration
Industrial Entrepreneur ' s Memorandum( IEM)
Filing Industrial Entrepreneur’ s Memorandum( IEM)( IEM)
Small Scale Units
The small and medium enterprises as classified are required to file EM
Part-I for starting an industrial project. On completion of the project, the entrepreneur is required to file Entrepreneurs Memorandum( EM) Part-II.
Industries exceeding Investment of INR 5 Cr( which are exempt from the provisions of industrial licensing)
District Industries Centre( DIC) of the district where the unit is to be located
District Industries Centre / Industries Commissionerate
Secretariat for Industrial Assistance, Ministry of Commerce and Industry, Government of India
Letter of Intent( LOI)
Industries where licensing is required
Secretariat for Industrial Assistance,
Ministry of Commerce and Industry,
Government of India, New Delhi
Under the Micro, Small and Medium Enterprises Development Act 2006 by Government of India, Micro, Small and Medium Enterprises are classified as under:
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