"Clarification on FDI Policy on Facility sharing Arrangements between Group Companies"

"Clarification on FDI Policy on Facility sharing Arrangements between Group Companies".

DIPB:

The Department of Industrial Promotion & Policy has issued a "Clarification on FDI Policy on Facility sharing Arrangements between Group Companies". The Department has received certain references on the issue as to whether entering into facility sharing arrangements through leasing/ sub-leasing arrangements within group Companies for the larger purpose of Business Activities would be constructed to mean "Real Estate" business within the provisions of Consolidated FDI Policy Circular of 2015.

 

Clarification:

Facility sharing arrangements between group Companies through leasing/ sub-leasing arrangements for the larger interest of business will not be treated as "Real Estate Business" within the provisions of the Consolidated FDI policy Circular of 2015, provided such arrangements are at Arm's Length price in accordance with relevant provisions of Income Tax Act 1961, and annual lease rent earned by the lessor Company does not exceed 5% of its total revenue."