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      As global organisations continue to deal with global headwinds, riding the tailwinds presented through the new emerging technologies, we have witnessed a tremendous potential and uptake in the GCC model. An increasing number of Global organisations continue to establish their GCCs in India. 

      The functional scope of these GCCs span across the entire business value chain, with GCCs taking greater end to end process accountability and driving innovation and transformation from India. Deep capabilities are being established, which present the opportunity to establish global centers of excellence within the GCC.

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      GCCs in India: Key Tax Insights

      Unpack key tax and regulatory considerations that enable strategic decision-making across the lifecycle of a GCC in India

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      Across the GCC life cycle, be it at the initial build phase when one is determining the scope, structure, outcomes and roles, or at a mature phase, when one revisits either of these elements - there are several aspects from a tax and regulatory perspective that warrant consideration. It is imperative that one understands, appreciates and plans accordingly, given the Indian tax and regulatory requirements and their implications.

      We thought it timely to pull together this paper which highlights these considerations which are critical, depending on which stage in the GCC life cycle one might be.

      GCCs in India – A panoramic business view


      GCCs have traditionally been set up as offshore units by MNCs to provide a wide range of services to their parent organisation/affiliates.

      Initially, GCCs were set up as cost saving outsourcing hubs, however today, GCCs undertake complex, high value adding functions directly contributing to revenue generation and business growth and have developed as strategic hubs for innovation, analytics and operations for the group as a whole.

      India has emerged as a preferred location for GCCs, not only due to traditional cost arbitrage benefits, but also due to the presence of a robust digital economy, a skilled talent pool and a stable government focused on ensuring ease of doing business.

      Total number of GCCs have risen to over 1,700 in FY 2024, with over 2,975 centers. As of FY 2024, Indian GCCs are estimated to have earned USD64.6 billion in revenue and have employed over 1.9 million people. GCC market size is expected to reach around USD100 bn by 2030 and the headcount expected to cross 2.5 million.

      Tax considerations for GCCs in India


      The journey of a GCC is a strategic transformation that mirrors the growth of an enterprise itself. It can be broadly classified into three phases-build phase, operational phase and mature phase - each marked by evolving priorities, capabilities and impact. These phases are broad markers and in practice, one phase evolves seamlessly into another.

      Build phase

      In the initial phase, typically the focus is on establishing the GCC’s infrastructure, governance and talent pool

      Operational phase

      Once the foundation is set, the GCC can be said to be in the operational phase, where it begins service delivery and attains a business-as-usual momentum

      Mature phase

      In this phase, the GCC can add more functions or take on higher value added roles and have increased people responsibilities within the MNC group in which it operates

      Typical audit issues

      Direct tax audit issues

      GST issues

      Transfer pricing audit issues

      Global mobility

      Dispute resolution mechanism for transfer pricing disputes


      Over the years, India has witnessed huge litigation in the GCC sector, wherein MNCs were subjected to transfer pricing additions. Currently, most of the TP disputes are routinely carried from the field audits levels, i.e. from the Transfer Pricing Officers, to the Dispute Resolution Panels (DRP)s or the Commissioner of Income-tax (Appeals) (CIT(A)) leading to the Income-tax Appellate Tribunal. While the Act does prescribe a mandatory time limit for completion of TP audits (after being through the DRPs appeal route), no such time limit has been prescribed for completion of appellate proceedings before the CIT(A) or subsequent appellate proceedings [i.e. post DRP or CIT(A)] before the Tribunal, High Courts and the Supreme Court. Further, IRAs at the field audit level have routinely made adjustments for each of the subsequent years leading to multiplicity of cases for taxpayers suffering year-on-year adjustments and resulting a huge backlog in the tribunal and courts. On the other hand, in cases where the taxpayer receives favorable judgements, the IRA have been filing appeals against the said favorable judgements. This has resulted in taxpayers carrying a large burden of uncertain tax positions.

      Tax center of excellence


      A Center of Excellence (CoE) is a team or entity focused on specific expertise, often within a GCC, to drive innovation and improvement in a particular area. GCCs can act as CoEs, leveraging their specialised talent and resources to establish and manage these focused units. In essence, GCCs provide the structure and resources, while CoEs provide the specialised expertise to drive innovation and efficiency within an organisation. 

      In recent past, MNCs have started centralising their functions particularly in the area of tax and have established tax CoEs. A tax COE is a centralised unit within a group that focuses exclusively on managing and optimising tax- related activities across regions or business units. 

      • Standardising tax policies, processes and technologies
      • Centralising expertise in areas like direct tax, indirect tax (GST/VAT), transfer pricing, international tax and regulatory matters
      • Supporting local tax teams of the global enterprise with technical guidance and oversight
      • Managing tax risk, governance and compliance globally or across regions

      Tax technology tools and interventions


      As India's tax administration evolves into a more digital framework, corporations need to embrace technology-driven tax processes to boost efficiency and mitigate risks. GCCs can significantly transform global tax operations by utilising advanced tools and automation. Tax technology provides real-time oversight of compliance and litigation, while digitising core functions reduces human error.

      Navigating the road ahead


      GCCs have firmly established themselves as transformative forces in the international tax arena. Their deep expertise, technological prowess and cost efficiencies empower multinational corporations to effectively manage the intricacies of global taxation.

      As businesses confront the evolving challenges of tax reform, digital disruption and globalisation, GCCs are expected to continue to lead the way in tax innovation-offering strategic insights and robust support to help organisations succeed in a fast-changing environment.

      Looking forward, the evolution of global tax functions could hinge on how well companies harness the strengths of GCCs to foster innovation and maintain a competitive edge. It is our aspiration that this publication serves as a comprehensive and authoritative guide for tax professionals, business leaders and stakeholders across the GCC-enabling them to navigate the complexities of the region with assurance and to strategically leverage the opportunities presented by its dynamic and evolving landscape.

      GCCs in India: Key Tax Insights

      Unpack key tax and regulatory considerations that enable strategic decision-making across the lifecycle of a GCC in India

      Download the report (3.4 MB)

      Key Contacts

      Sunil Badala
      Sunil Badala

      Partner, National Head of Tax

      KPMG in India

      Ajay Mehra
      Ajay Mehra

      Non-Executive Chairman

      KPMG in India

      Shalini Pillay
      Shalini Pillay

      India Leader - Global Capability Centres

      KPMG in India

      How can KPMG in India help

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