Set Up Back Office in India
How to Set Up a Back Office Operation for Foreign Companies

A back office in India is an operation set up by a foreign company to handle its internal, non-customer-facing functions from India — finance and accounting, IT and software support, data processing, HR and payroll administration, research, customer support, and other shared services. The work serves the parent company and the wider group rather than the Indian market, which is exactly what distinguishes a back office from a sales or trading presence.

This model — sometimes called an offshore back office, a shared services centre, or a global capability centre (GCC) — has made India the world's leading destination for back office operations. Setting one up runs through company law, tax, and India's foreign-exchange framework under FEMA, and the structure you choose at the start shapes the compliance you carry for years. This guide covers what a back office is, why India, the structure options, the step-by-step setup process, and the compliance that follows.

Together, these make the Indian back office one of the highest-return moves a growing international business can make — provided the entity, tax, and compliance side is set up correctly from day one.

The first decision in any back office plan is the legal structure, and three options are typically weighed. An Indian subsidiary — usually a private limited company wholly owned by the foreign parent — is by far the most common and most suitable structure for a back office. It is a separate legal entity, can hire employees, lease offices, invoice the parent for services, and gives the parent limited liability with full ownership under the automatic FDI route.

A branch office is an extension of the parent rather than a separate entity; it can carry out specified activities but carries a higher tax rate and tighter restrictions, so it suits only specific cases. A liaison office cannot earn any income at all, so it cannot run a billing back office — it is only a representative presence. For a genuine, operating back office that employs staff and charges the parent for services, the wholly owned subsidiary is the right route in almost every case, and it is the structure the step-by-step process below follows.

A back office structured as an Indian subsidiary is taxed as a domestic company, with a corporate tax rate of approximately 25.17% on its income, including surcharge and cess. Because the back office typically earns a cost-plus margin from its parent, the taxable income is the mark-up — which is why setting the arm's length margin and maintaining transfer pricing documentation is the core annual tax obligation. Services exported to the foreign parent are generally zero-rated under GST as an export of services, subject to the conditions being met and documented.

The ongoing compliance calendar includes ROC annual filings, statutory audit (mandatory irrespective of turnover), income tax return and TDS compliance, GST returns, transfer pricing certification, and annual FEMA reporting on the foreign investment. We manage the full calendar through our company compliance support, so the back office stays in good standing while the team focuses on the work it was built to do.

Setting up a back office touches company law, tax, GST, transfer pricing, and foreign-exchange rules at once — and the inter-company arrangement that makes a back office work is precisely where inexperienced setups go wrong. That is exactly where an experienced local partner earns its place.

We provide end-to-end support: structure advisory, incorporation and SPICe+ filing, PAN, TAN and GST registration, FDI reporting under FEMA and RBI rules, the inter-company service agreement and transfer pricing documentation, payroll and accounting setup, and the full ongoing compliance calendar. For overseas parents without a local presence, we also offer nominee director and virtual office solutions to meet the resident-director and registered-office requirements smoothly. Whether you are moving two functions or building a full capability centre, we set your back office up correctly from day one — so it delivers the savings without the surprises.