IT & ITES Services
The IT and ITES industry operates in a unique regulatory landscape — export-driven revenue, global workforce, SEZ benefits, transfer pricing complexities, and fast-evolving tax rules. We help IT companies maximize tax efficiency while staying fully compliant across jurisdictions.
Our Solutions
International Tax & DTAA Advisory
Cross-border tax structuring, withholding tax optimization, DTAA treaty benefit claims, Form 15CA/15CB filings, and foreign tax credit management.
Transfer Pricing Documentation
TP study, benchmarking analysis, master file and local file preparation, CbCR compliance, and APA advisory for IT service companies.
SEZ & Export Compliance
Section 10AA deduction claims, STPI annual filings, GST zero-rating for software exports, SOFTEX filing, and RBI compliance for export receivables.
Industry Challenges
Challenges Faced by IT & ITES Services
International Taxation & DTAA
IT companies earning from foreign clients face complex withholding tax, DTAA treaty benefit claims, PE risk, and foreign tax credit reconciliation.
Transfer Pricing for Global Entities
Multi-entity IT groups with offshore subsidiaries, intercompany service agreements, and cost-sharing arrangements need robust TP documentation to avoid disputes.
SEZ & Export Incentive Compliance
Claiming SEZ deductions under Section 10AA, STPI benefits, and managing LUT/bond requirements for zero-rated GST on software exports.
Our Approach
How We Help
International Tax & DTAA Advisory
Cross-border tax structuring, withholding tax optimization, DTAA treaty benefit claims, Form 15CA/15CB filings, and foreign tax credit management.
Transfer Pricing Documentation
TP study, benchmarking analysis, master file and local file preparation, CbCR compliance, and APA advisory for IT service companies.
SEZ & Export Compliance
Section 10AA deduction claims, STPI annual filings, GST zero-rating for software exports, SOFTEX filing, and RBI compliance for export receivables.
Proven Results
Client Case Studies
Real examples of how we've helped it & ites services businesses solve complex financial challenges.
Mid-Size IT Services Company (Rs 50 Cr Revenue)
Challenge
An IT services company with Rs 50 crore annual revenue from US and UK clients was paying withholding tax in both countries without claiming foreign tax credits in India. DTAA benefits were not being utilized, resulting in effective double taxation on approximately Rs 12 crore of revenue.
Our Solution
Analyzed all foreign client contracts for PE risk and withholding tax applicability. Filed Form 15CA/15CB for treaty-rate withholding on inbound payments. Prepared foreign tax credit computation under Rule 128 for 3 prior years. Restructured client agreements to clearly establish independent contractor status and avoid PE exposure.
Result
Foreign tax credit of Rs 72 lakh claimed for current and 2 prior years under Rule 128. Withholding tax rate reduced from 25% to 15% on US payments through proper DTAA application. Ongoing annual tax savings of approximately Rs 28 lakh through optimized cross-border structuring.
SEZ-Based IT Company
Challenge
An IT company operating from an SEZ unit was not properly claiming Section 10AA deductions due to incorrect profit attribution between SEZ and non-SEZ units. GST zero-rating was not consistently applied, and SOFTEX filings were backlogged for 8 quarters.
Our Solution
Conducted proper profit attribution analysis between SEZ and DTA units using transfer pricing principles. Filed all pending SOFTEX returns with STPI. Implemented GST zero-rating mechanism with proper LUT filing for software exports. Set up quarterly compliance calendar for SEZ-specific filings (annual performance report, SOFTEX, Form 56F).
Result
Section 10AA deduction increased by Rs 85 lakh through corrected profit attribution methodology. All SOFTEX backlogs cleared with zero penalties. GST refund of Rs 18 lakh processed for incorrectly paid IGST on export services. SEZ compliance regularized for ongoing quarters.
IT Company with US Subsidiary
Challenge
An Indian IT company with a US subsidiary (LLC) had no transfer pricing documentation for Rs 28 crore in intercompany transactions. The Indian entity was providing development services at cost-plus margins significantly below market rates. Assessment proceedings initiated with a proposed TP adjustment of Rs 4.5 crore.
Our Solution
Prepared comprehensive TP documentation with economic analysis using TNMM method. Conducted benchmarking study with comparable Indian IT companies. Represented before the TPO and provided detailed functional analysis demonstrating the arm's length nature of transactions. Filed CbCR for the group. Restructured intercompany agreement with proper cost-plus markup aligned with benchmarking results.
Result
TP adjustment reduced from Rs 4.5 crore to Rs 2.1 crore through proper documentation and representation — a 53% reduction. New intercompany agreement structured at arm's length markup of 15%, aligned with benchmarking. CbCR compliance achieved for the first time, regularizing the group's reporting obligations.
Disclaimer: As per the guidelines of the Institute of Chartered Accountants of India (ICAI), the names of clients cannot be disclosed. The case studies presented above are based on actual engagements, with client identities anonymized to comply with ICAI professional standards and maintain confidentiality.
Common Questions
Frequently Asked Questions
Yes, we handle the complete foreign tax credit process — analyzing DTAA applicability, computing credits under Rule 128, filing Form 67, and ensuring credits are claimed within the statutory timeline. We also advise on structuring to minimize withholding tax in source countries.
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Learn MoreReady to Optimize Your IT & ITES Services Finances?
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