Key takeaways from our India–Belgium Tax and TP Pulse 2026

On 19 May 2026, KPMG held an exclusive session on how India’s tax reforms, incentives, and regulatory changes are reshaping investment opportunities for European multinationals.

India continues to strengthen its position as a key investment destination for European multinational groups, driven by regulatory refinements, an increased emphasis on tax certainty, the emergence of new growth hubs such as GIFT City, and state-level incentives. The objective of this session was to offer a clear, structured overview of these developments and discuss how they may influence business growth, risk management, and future decision‑making. Our experts focused on practical perspectives and emerging trends rather than technical deep dives.

We are pleased to provide you with some key insights from our webinar, offering valuable information on India’s evolving tax, regulatory, and policy landscape, and how European multinational groups may plan to invest and operate in India.

Topics covered: Group restructuring, holding structures, exit strategies, capital structuring, anti-abuse framework (General Anti-Avoidance Rule (“GAAR”)/ Principal Purpose Test (“PPT”)) and substance requirements.

Key insights:

• Organizations are actively revisiting group structures to align with evolving global anti-abuse frameworks and commercial priorities.
• Increased focus on efficient cash repatriation and exit readiness, including share vs asset deal considerations.
• Recent rulings (e.g., Tiger Global) indicate limited protection for legacy structures, raising the bar for new investments.
• Strict adherence required for GAAR, PPT and beneficial ownership tests
• Substance over form is critical; demonstrable offshore control, governance, and decision-making processes are key.
• Capital structuring (debt vs equity, hybrids) is being used strategically to balance tax efficiency and funding flexibility.
• Structuring is now dynamic and lifecycle-driven, rather than one-time exercise.

KPMG support:

KPMG supports end-to-end restructuring, from entry to exit, including advice on jurisdiction selection, tax-efficient structuring, optimization of capital structure, governance design, and litigation preparedness. We help align substance with regulatory expectations and build robust documentation to ensure defensible positions.

Topics covered: International Financial Services Centre (Gujarat International Finance Tec-City) (“IFSC”) tax incentives, treasury and financing structures, regulatory framework, and global adoption trends.

Key insights:

• IFSC offers compelling tax benefits: tax holiday, concession rates, capital gains, and interest exemptions.
• Evolution from a Banking, Financial Services and Insurance (“BFSI”)-focused hub to a multi-functional platform including treasury, leasing, financing, and fintech.
• Increasing adoption by multinational groups, including European investors.
• Clear shift from “wait-and-watch” to execution and implementation.
• Strong use case for global treasury centers, cash pooling, and financing structures.
• Requires careful navigation of Transfer Pricing (“TP”) implications, Foreign Exchange Management Act, 1999 (“FEMA”) regulations and anti-abuse provisions.
• Substance and operational presence remain critical for sustaining benefits.
• IFSC can act as a strategic jurisdiction for regional and global structuring.

KPMG support:

KPMG assists with feasibility assessments, IFSC entity setup, treasury structuring, tax modelling, and regulatory approvals. We also support ongoing compliance, TP alignment and operationalization to maximize benefits while managing risks.

Topics covered: Upcoming Central govt schemes, state incentives, manufacturing growth, India–European Union Free Trade Agreement (“India–EU FTA”) and Rules of Origin (“ROO”).

Key insights:

• India’s manufacturing growth is policy-driven, supported by Production Linked Incentive (“PLI”) and sector-focused initiatives.
• Businesses can unlock significant value through layered incentives: subsidies, Goods and Services Tax (“GST”) refunds, and duty exemptions.
• Incentives can materially improve project Internal Rate of Return (“IRR”) and reduce capital costs.
• Location strategy and scheme selection are critical to maximize benefits.
• India–EU FTA enhances export competitiveness with preferential or zero-duty access.
• Benefits contingent upon strict ROO compliance.
• Requires aligned supply chain design and sourcing strategy.
• Combined impact of incentives + FTA positions India as a strategic manufacturing and export hub.

KPMG support:

KPMG supports incentive identification, application strategy, location analysis, negotiations with Government for customized packages and end-to-end implementation. We also assist with FTA readiness, ROO evaluations, and supply chain optimization to maximize long-term value.

Topics covered: TP compliance trends, advance pricing agreements (“APAs”), safe harbor rules, mutual agreement procedures (“MAP”), and new disclosure requirements.

Key insights:

• APA regime (especially bilateral) gaining momentum for certainty and double taxation mitigation. Turnaround time and success rate is higher than most countries.
• APA framework provides an additional rollback option (up to four years) compared to safe harbor rules.
• Safe harbor rules provide simplified compliance options for routine transactions for a fixed margin of 15.5%.
• Mandatory requirement of annual local compliance including year-on-year local files.
• Expanded TP forms require complete details of comparables taken, margin of tested party and comparables in Form itself.
• Increased emphasis on timely dispute resolution via MAP.

KPMG support:

KPMG provides comprehensive TP support including policy design, feasibility study for APA/ Safe harbor, documentation, audit defense, and MAP assistance. Our approach ensures proactive risk management and alignment with evolving regulatory expectations.