Australian banks, insurers, retailers, miners and technology companies run global capability centres (GCCs) in India for technology, finance, operations, analytics and customer support, usually through a wholly owned Indian subsidiary billing the Australian parent at cost plus a mark-up. The Australian angle is distinctive: the 4.5 to 5.5 hour time difference gives a useful morning-afternoon overlap, APRA-regulated groups must manage the centre under CPS 230 and CPS 234, Australian payroll and tax file number work has its own limits, and an input-taxed Australian recipient such as a bank may owe reverse-charge GST on the centre's fees. Dividends back to the Australian parent are generally non-assessable under section 768-5.
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Key facts
| Usual vehicle | A private limited company wholly owned by the Australian parent, under the automatic route |
|---|---|
| Typical pricing | Cost plus an arm's length mark-up, billed to the Australian parent |
| Time difference | India is 4.5 hours behind Australian Eastern Standard Time and 5.5 hours behind during daylight saving |
| APRA standards | CPS 230 Operational Risk Management (from 1 July 2025) and CPS 234 Information Security |
| Australian GST | Reverse charge on imported services where the Australian recipient is not entitled to full input tax credits |
| Dividends to Australia | Generally non-assessable non-exempt income for a company holding at least 10% (section 768-5, ITAA 1997) |
| Indian corporate tax | About 25.17% effective under the concessional regime |
| Social security | India-Australia social security agreement, in force since 1 January 2016 |
What Australian groups move to India
| Function | Typical Indian scope | Australian consideration |
|---|---|---|
| Technology and engineering | Application development, cloud operations, data engineering, testing | Security standards and, for APRA entities, CPS 234 controls |
| Finance and accounting | Accounts payable, reconciliations, management reporting, AASB-based group reporting support | Month-end timing and the Australian financial year ending 30 June |
| Payroll and HR operations | Australian payroll processing, Single Touch Payroll reporting support, superannuation reconciliation | Tax file number rules and award interpretation stay under Australian oversight |
| Insurance and banking operations | Claims processing, underwriting support, loan operations, KYC | APRA standards, privacy and, for some data, onshore-only rules |
| Analytics and digital | Data science, digital marketing operations, product analytics | Privacy Act APP 8 accountability for customer data |
Australian groups have been offshoring to India for over two decades, often through vendors first. Many GCCs now being set up are insourcing work that a vendor did before, which brings a transition plan for staff, knowledge and contracts, not just a new entity.
Designing around the time difference
India is 4.5 hours behind Sydney and Melbourne in the Australian winter and 5.5 hours behind during daylight saving, and 2.5 hours behind Perth. In practice, an Indian team starting at 8:00 or 9:00 covers the Australian working afternoon, and a later shift extends coverage into the Australian evening.
- Shift patterns are common for support functions; Indian law requires overtime, transport and safety arrangements, particularly for women working late shifts, under state rules.
- Daylight saving changes twice a year move the overlap by an hour, so standing meetings need to be re-timed.
- Month-end close works well: the Indian team can finish reconciliations overnight Australian time and hand results to Australia the next morning.
- Australian public holidays and Indian festival holidays differ, so plan coverage calendars for both.
APRA-regulated groups: CPS 230 and CPS 234
Banks, insurers and superannuation trustees face prudential requirements that apply directly to an Indian captive, even though it is part of the same group.
| Standard | What it means for the Indian centre |
|---|---|
| CPS 230 Operational Risk Management (in force since 1 July 2025) | Identify whether the centre is a material service provider, manage it under a formal arrangement with performance and risk terms, include it in business continuity planning, and notify APRA before entering or materially changing an offshore arrangement with a material service provider |
| CPS 234 Information Security | Assess the centre's information security capability, test controls, and notify APRA of material information security incidents within 72 hours |
| Other prudential and conduct rules | Outsourcing of some functions can raise ASIC, AUSTRAC or privacy questions, especially customer-facing work and anti-money laundering processes |
Build the APRA steps into the project plan from the start: the notification and the security assessment should be complete before the first critical process goes live in India. For the privacy side, see the Privacy Act and the DPDP Act.
Running Australian payroll and finance from India
- Tax file numbers: the Privacy (Tax File Number) Rule 2015 limits use and disclosure of TFNs to tax and related purposes, so restrict TFN access in India to the people processing payroll and log it.
- Single Touch Payroll and superannuation: Indian teams can prepare and reconcile, but lodgement credentials and approvals usually stay with the Australian employer.
- Awards and enterprise agreements: interpreting Australian awards is high-risk; keep sign-off in Australia even if calculations move to India.
- My Health Record and some health data cannot be held or processed outside Australia, so exclude them from the centre's scope.
- Financial year: the Australian group year usually ends on 30 June while the Indian subsidiary's statutory year ends on 31 March, so the centre supports two year-ends and the transfer pricing true-up needs a clear timetable.
GST at both ends of the service fee
The GCC's fee crosses two GST systems, and the Australian side often surprises financial services groups.
| India | Australia | |
|---|---|---|
| Tax on the fee | Indian GST generally does not apply: services to the Australian parent qualify as zero-rated exports when the conditions are met, under a letter of undertaking | The Australian recipient may owe GST under the reverse charge on imported services |
| Who is affected | The Indian subsidiary, which must meet export conditions and receive payment in foreign currency | Recipients not entitled to full input tax credits, such as banks and insurers making input-taxed financial supplies |
| Cost effect | Input tax credits on the Indian centre's costs can be refunded | For an input-taxed bank, the reverse-charge GST is largely a real cost and belongs in the business case |
For most non-financial Australian groups the reverse charge nets to nil, because they can claim the matching input tax credit. For banks and insurers it can add materially to the cost of the centre, so model it early.
Transfer pricing, dividends and Australian CFC rules
- Transfer pricing in both countries: the cost-plus mark-up must be arm's length under India's rules and under Subdivision 815-B in Australia. Use one functional analysis for both files. India's safe harbour rules and advance pricing agreements can give certainty on the Indian side; see transfer pricing for Australian groups.
- Dividends home: dividends from the Indian subsidiary to an Australian company holding at least 10% are generally non-assessable non-exempt income under section 768-5 of the Income Tax Assessment Act 1997. India withholds tax on dividends at the treaty rate; see repatriating profits to Australia.
- Australian CFC rules: India is not a listed country, but a GCC earning active service income from real operations should generally pass the active income test, so attribution is unlikely.
- Capital and funding: fund the subsidiary with equity at the start; parent loans bring Indian external commercial borrowing rules and interest withholding.
Australian staff in India and Indian employment law
- Australians posted to the centre need an Indian employment visa. Under the India-Australia social security agreement, a certificate of coverage keeps them in the Australian superannuation system and out of Indian provident fund for the period it covers; see foreign employees and social security.
- Indian employees are covered by India's labour codes and state shops and establishments laws, not by the Fair Work Act. Concepts like long service leave and the National Employment Standards do not carry over; Indian equivalents include gratuity, provident fund and statutory bonus.
- Equal treatment expectations from Australian head office, such as parental leave or flexible work policies, can be adopted as company policy in India, but they sit on top of Indian statutory minimums, not instead of them.
See hiring and payroll for Australian companies for the Indian employment basics.
The first year, step by step
- Agree the scope and business case, including reverse-charge GST and APRA steps where they apply.
- Incorporate the Indian subsidiary and open its bank account; see incorporation from Australia.
- Sign the intragroup services agreement, set the transfer pricing method, and put the APP 8 data arrangements in place.
- For APRA entities, complete the CPS 234 assessment and give the CPS 230 notification before go-live.
- Lease space, register for GST, provident fund and state laws, and hire the leadership team first.
- Transition the first function with a parallel run and agreed service levels.
- Close the Indian year on 31 March and the Australian year on 30 June with consistent transfer pricing.
How AU Corporate handles this
AU Corporate sets up and runs Indian capability centres for foreign groups: incorporation, the intragroup services agreement and transfer pricing, GST export registration and refunds, payroll and statutory registrations, secondment tax and social security, and the annual audit, tax and ROC calendar, timed around an Australian 30 June year end.
Related services: GCC setup in India and corporate tax, GST and transfer pricing.
Frequently asked questions
What structure do Australian companies use for an Indian GCC?
Usually a wholly owned private limited company under the automatic route, billing the Australian parent at cost plus an arm's length mark-up.
How many working hours overlap between India and Australia?
India is 4.5 to 5.5 hours behind the Australian east coast depending on daylight saving, so the Indian morning overlaps the Australian afternoon, and later Indian shifts extend coverage.
Does CPS 230 apply to an Indian captive of an Australian bank?
Yes, if the centre is a material service provider. The bank must manage the arrangement under CPS 230 and notify APRA before entering or materially changing the offshore arrangement.
Is GST payable on the GCC's fees?
In India, generally no, because the services qualify as zero-rated exports when conditions are met. In Australia, the recipient may owe reverse-charge GST, which is a real cost for input-taxed businesses such as banks.
Are dividends from the Indian subsidiary taxed in Australia?
Generally not, for an Australian company holding at least 10%: they are non-assessable non-exempt income under section 768-5. India withholds tax at the treaty rate.
Can the Indian team process Australian payroll?
Yes, within the Privacy (Tax File Number) Rule 2015 for TFNs, with lodgement and award interpretation usually kept under Australian control.
Do Australian staff in India pay into Indian provident fund?
Not if they hold a certificate of coverage under the India-Australia social security agreement for the period it covers.
Do Australian employment laws apply to Indian GCC staff?
No. Indian employees are covered by India's labour codes and state laws, although the company can offer benefits above the Indian minimums as policy.
Related guides
Sources
Last updated 3 November 2026. General information only, not legal or tax advice. Indian rules change often; confirm current requirements before acting.