Reference

The cross-border glossary.

105 terms of Indian cross-border tax, FEMA, NRI taxation and startup law — defined the way we explain them to clients, in plain English, with the practical consequence attached.

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409A Valuation: A US-tax valuation of a private company's common stock, required to price stock options for employees of US entities. Indian subsidiaries of flipped startups typically need a 409A for the US parent and a Rule 11UA / registered-valuer report for India — two different valuations of the same business. Valuation Advisory →

A

AIF (Alternative Investment Fund): A SEBI-regulated pooled investment vehicle in India. Category I covers venture capital and angel funds, Category II most private equity and debt funds, Category III hedge-fund strategies. Most Indian VC funds are Category I or II AIFs.
AIS (Annual Information Statement): The income-tax department's ledger of your reportable financial transactions — deposits, securities trades, property deals, dividends — compiled from third-party reporting. Returns that contradict the AIS attract automated notices, so it is reconciled before filing. NRI return-filing guide →
Angel Tax: The former tax under Section 56(2)(viib) on share premium received by a closely held company above fair market value, historically feared in startup fundraises. Abolished for all investors from assessment year 2025-26.
AoA (Articles of Association): A company's internal constitution — board powers, share transfers, meetings. In funded startups the shareholders' agreement is mirrored into the AoA so investor rights bind the company as a matter of company law, not just contract.
APA (Advance Pricing Agreement): An agreement between a taxpayer and the CBDT fixing transfer-pricing outcomes for up to five future years (nine with rollback). Used by GCCs and captives to buy certainty on cost-plus margins. GCC India desk →
Authorised Dealer (AD Bank): A bank licensed by the RBI to handle foreign-exchange transactions. Every FDI inflow, ODI outflow, LRS remittance and NRO repatriation is executed and reported through an AD bank — in practice, your compliance gatekeeper for FEMA.

B

Beneficial Owner: The natural person who ultimately owns or controls an entity or receives the income, looked through nominee and holding structures. Treaty rates and FEMA reporting both turn on beneficial ownership, not legal title.
Black-Scholes Model: The standard option-pricing model used to value ESOPs for Ind AS 102 accounting and share-based payment disclosures.
Buyback: A company repurchasing its own shares from shareholders. From October 2024 buyback proceeds are taxed in shareholders' hands as deemed dividend, ending the earlier company-level buyback tax regime.

C

Cap Table: The capitalisation table: who owns what across equity, preference shares, ESOPs, SAFEs and convertibles, on a fully diluted basis. Diligence starts here, and most cap-table disputes trace back to paper that was never issued properly. Startup Legal →
CbCR (Country-by-Country Reporting): A transfer-pricing report filed by multinational groups above €750 million revenue, breaking out income, taxes and substance by jurisdiction. Indian arms of large groups file intimations in Form 3CEAC.
CCD (Compulsorily Convertible Debenture): A debenture that must convert into equity — the only debenture form that counts as an equity instrument under India's FDI rules. Optionally convertible instruments are treated as debt (ECB) instead.
CCPS (Compulsorily Convertible Preference Shares): The default instrument of Indian venture rounds: preference shares that must convert to equity, carrying the liquidation preference and anti-dilution economics, FDI-compliant because conversion is mandatory.
CGAS (Capital Gains Account Scheme): A designated bank account for parking unutilised capital gains before the return-filing due date, preserving Section 54/54F exemption while you find the replacement property.
Compounding (FEMA): The RBI's process for regularising FEMA contraventions — late FC-GPR filings, missed pricing guidelines — by paying a compounding fee instead of facing adjudication. Most legacy startup FEMA defects end in compounding.
Convertible Note: A debt instrument that converts into equity at the next priced round. In India, only DPIIT-recognised startups may issue convertible notes (minimum ₹25 lakh per investor); everyone else uses CCDs or CCPS.

D

DIN (Director Identification Number): The lifetime identification number every director of an Indian company must hold, obtained before appointment and quoted on every filing.
DPIIT Recognition: Registration of an eligible startup with the Department for Promotion of Industry and Internal Trade. Unlocks the Section 80-IAC tax holiday, ESOP tax deferral for employees, convertible-note eligibility and self-certified compliance. Startup Legal →
Drag-Along Right: An investor's right to force other shareholders to sell in an exit the investor approves, ensuring a buyer can acquire 100%. Paired with tag-along rights protecting minorities.
DTAA (Double Taxation Avoidance Agreement): A tax treaty allocating taxing rights between two countries and capping withholding on interest, dividends and royalties. India has 90+ DTAAs; Section 90(2) lets a taxpayer apply whichever of treaty or domestic law is more beneficial. DTAA rate checker →
Due Diligence: The investigation of a company before an investment or acquisition — corporate records, cap table, contracts, tax, FEMA, employment and IP. Findings become condition-precedent fixes, warranties or price adjustments. VC Advisory →

E

ECB (External Commercial Borrowing): Foreign-currency or rupee debt raised from non-resident lenders under the RBI's ECB framework — routes, all-in-cost ceilings, minimum maturities and end-use restrictions apply. Loans from a foreign parent are ECB, not FDI.
ESOP (Employee Stock Option Plan): Options granted to employees to buy shares at a fixed price after vesting. Taxed twice in India: as salary on the exercise-date spread, and as capital gains on sale. Employees of DPIIT-recognised startups can defer the exercise tax. ESOP tax calculator →

F

FATCA: The US Foreign Account Tax Compliance Act, under which Indian financial institutions report accounts held by US persons to the IRS via CBDT. The reason your Indian bank asks for a W-9 or US tax residency declaration.
FBAR: The US FinCEN filing (Form 114) a US person must make when aggregate non-US financial accounts exceed USD 10,000 at any point in the year — NRE/NRO accounts included. Separate from, and in addition to, IRS Form 8938.
FC-GPR: The FEMA form an Indian company files with the RBI (via its AD bank on the FIRMS portal) within 30 days of allotting shares to a foreign investor, evidencing that FDI came in at or above fair value.
FC-TRS: The FEMA form reporting a transfer of Indian shares between a resident and a non-resident — secondaries, founder sales to foreign funds — filed within 60 days of transfer or remittance.
FCNR(B) Account: A foreign-currency fixed deposit for NRIs at Indian banks, holding the currency risk away from the rupee. Interest is exempt from Indian tax while the holder remains resident outside India under FEMA.
FDI (Foreign Direct Investment): Equity investment by a non-resident into an Indian company under the FEMA Non-Debt Instruments Rules — automatic route for most sectors, government approval for a restricted list and for investors from land-border countries (Press Note 3). India Entry →
FEMA: The Foreign Exchange Management Act, 1999 — India's exchange-control law governing every cross-border capital movement: FDI, ODI, ECB, LRS, NRI accounts and repatriation. Tax answers and FEMA answers are separate questions; a transfer can be tax-clean and FEMA-defective.
FIRC (Foreign Inward Remittance Certificate): The AD bank's certificate evidencing a foreign-currency inflow — demanded in every diligence to prove share subscriptions actually came from abroad, and by STPI/SEZ units to evidence export realisation.
FLA Return: The RBI's annual Foreign Liabilities and Assets return, due 15 July, from every Indian company with FDI or ODI on its balance sheet. The most commonly missed FEMA filing in startup diligence.
Flip Structure: Re-domiciling an Indian startup under a foreign holding company — typically Delaware or Singapore — via a share swap, so investors hold the foreign parent. Requires FEMA (ODI/round-trip) clearance and triggers Indian capital-gains analysis. Flip Structuring →
Form 10F: The electronic form a non-resident files on the Indian tax portal to claim DTAA benefits, supplying the treaty-relevant particulars alongside the Tax Residency Certificate.
Form 13 (Lower-Deduction Certificate): The application for a certificate directing a payer to withhold TDS at the actual tax on the transaction instead of the statutory flat rate — the standard fix for NRI property sales, where default TDS applies to the full sale price. Property TDS calculator →
Form 15CA / 15CB: The remittance-reporting pair for payments to non-residents: 15CB is the chartered accountant's certificate of taxability, 15CA the remitter's declaration filed with the bank. Required for NRO repatriation under the USD 1 million scheme. Repatriation note →
Form 26AS: The consolidated tax-credit statement showing all TDS and TCS deposited against your PAN. Refunds are won or lost on the match between 26AS and the return.
Form 3CEB: The chartered accountant's certificate of international related-party transactions, filed by 31 October by every Indian entity with cross-border group dealings — the entry document of Indian transfer pricing.
Form 67: The form for claiming foreign tax credit in an Indian return, filed before the return itself. Missing Form 67 is the most common reason returning NRIs lose credit for taxes paid abroad.
FTS (Fees for Technical Services): Payments for managerial, technical or consultancy services, taxed in India at 20% (plus cess) domestically for non-residents, often capped lower by treaty. The classification battleground of most India–foreign service contracts.

G

GAAR (General Anti-Avoidance Rules): India's statutory power to disregard arrangements whose main purpose is a tax benefit and that lack commercial substance. Applies above a ₹3 crore tax-benefit threshold; the backstop consideration in every aggressive structure.
GIFT City / IFSC: India's International Financial Services Centre in Gujarat — an offshore-equivalent jurisdiction inside India with a 10-year tax holiday, no GST on IFSC services and its own regulator (IFSCA). Now the onshore alternative to Singapore for funds and holding structures. Flip Structuring →
GILTI: Global Intangible Low-Taxed Income — the US tax charging US shareholders annually on a controlled foreign corporation's active earnings above a routine return. A key cost of a US person owning 10%+ of an Indian company. India–US tax guide →
GST (Goods and Services Tax): India's unified indirect tax on supplies of goods and services. Exports qualify as zero-rated supplies — refundable input credits — which is why service exporters register even below thresholds.

H

HUF (Hindu Undivided Family): A separate taxable entity under Indian law comprising a family and its joint property, with its own PAN, slabs and deductions — a legitimate second file in family tax planning.

I

IEC (Import Export Code): The DGFT registration required to import or export goods (and claim many export benefits) — a one-time, PAN-linked code.
Indexation: Adjusting an asset's purchase cost for inflation using the Cost Inflation Index before computing capital gains. Largely withdrawn from 23 July 2024, when long-term rates moved to a flat 12.5% without indexation. Capital-gains calculator →
ITR (Income Tax Return): India's annual return forms. ITR-1 is closed to non-residents; NRIs file ITR-2 (or ITR-3 with business income) by 31 July. NRI return-filing guide →

L

Liquidation Preference: An investor's right to take money out first — typically 1x non-participating — before common shareholders in an exit or winding-up. Lives in the CCPS terms and the SHA waterfall.
LLP (Limited Liability Partnership): A partnership with limited liability and no dividend-distribution friction, taxed at a flat 30% with tax-free profit withdrawal by partners. FDI in LLPs is permitted in sectors with 100% automatic-route FDI and no FDI-linked performance conditions.
LRS (Liberalised Remittance Scheme): The RBI scheme letting resident individuals remit up to USD 250,000 per financial year abroad for investment, education, travel and family maintenance — with TCS collected on aggregate remittances above ₹10 lakh. TCS calculator →
LTCG (Long-Term Capital Gains): Gains on assets held beyond the qualifying period — 12 months for listed equity, 24 months for unlisted shares and property. Taxed at 12.5% from 23 July 2024, with a ₹1.25 lakh annual exemption for listed equity. Capital-gains calculator →

M

Master File: The group-level transfer-pricing document (Form 3CEAA) describing a multinational's global business, intangibles and financing, required above prescribed revenue and transaction thresholds.
MFN Clause (Most Favoured Nation): A treaty protocol promising a country the benefit of any lower rate India later agrees with a third state. After the 2023 Supreme Court ruling in Nestlé, MFN benefits apply only when India specifically notifies them.
MoA (Memorandum of Association): The charter document stating a company's name, registered office, objects and capital — the outer boundary of what the company may do.
MSME Registration (Udyam): Registration as a micro, small or medium enterprise, unlocking the 45-day payment protection under the MSMED Act, priority-sector lending and various schemes.

N

NRE Account: A rupee account for NRIs funded from foreign earnings. Fully repatriable, and interest is exempt from Indian tax while the holder is resident outside India under FEMA.
NRI (Non-Resident Indian): For tax: an individual who fails the day-count tests of Section 6 (183 days, or the 120-day rule for high-income visitors). For FEMA: a person resident outside India who is an Indian citizen. The two definitions differ, and each governs different consequences. Residential-status checker →
NRO Account: The rupee account for an NRI's India-sourced income — rent, dividends, sale proceeds. Interest is fully taxable (30% TDS), and repatriation is capped at USD 1 million per financial year with Form 15CA/15CB. Repatriation note →

O

OCI (Overseas Citizen of India): A lifelong visa-and-residency status for foreign citizens of Indian origin. OCI is an immigration status — it does not by itself change tax residence or FEMA treatment.
ODI (Overseas Direct Investment): Investment by an Indian party into a foreign entity under the FEMA ODI rules — the regime governing outbound subsidiaries, and the gate every flip structure must clear, including the round-tripping restrictions on structures that re-enter India. Flip Structuring →
OPC (One Person Company): A private company with a single shareholder — full limited liability with one owner. NRIs have been eligible to incorporate OPCs since 2021.

P

PAN (Permanent Account Number): India's tax identification number, required for filing, TDS credit, property transactions and treaty claims. Without a PAN, higher withholding applies under Section 206AA.
PE (Permanent Establishment): The treaty threshold of presence — a fixed place, dependent agent or (in some treaties) services over time — beyond which a foreign company's business profits become taxable in India. The central risk managed by GCC and cross-border service structures. GCC India desk →
PFIC (Passive Foreign Investment Company): The US tax classification that makes non-US pooled investments — including Indian mutual funds — punitive for US persons, with interest-charged taxation or annual mark-to-market. The reason US-based NRIs think twice before buying Indian mutual funds. India–US tax guide →
POEM (Place of Effective Management): The test making a foreign company an Indian tax resident if its key management decisions are effectively made from India. The reason flipped parents need real board substance outside India.
Pre-Money / Post-Money Valuation: The company's agreed value before and after new investment; post-money equals pre-money plus the round. Option-pool top-ups are typically taken from the pre-money, diluting founders rather than investors.
Private Placement: The Companies Act route for issuing shares to a select group (up to 200 persons a year) with a PAS-4 offer letter, separate bank account and PAS-3 allotment filing — the legal machinery of every Indian priced round.

R

RBI (Reserve Bank of India): India's central bank and the administrator of FEMA — the regulator behind FDI reporting, ODI approvals, ECB norms, NRI accounts and compounding.
Reverse Flip: Moving a startup's offshore holding company back to India — by inbound merger or share swap — typically ahead of an Indian IPO. The wave that brought PhonePe, Groww and others home, with the exit tax as the central cost question. Flip Structuring →
RNOR (Resident but Not Ordinarily Resident): The transitional status for returning NRIs: Indian resident by day-count, but foreign income stays outside Indian tax. Available when you were non-resident in 9 of the 10 preceding years or spent 729 days or fewer in India across the preceding 7 — typically two to three landing years. Residential-status checker →
RoC (Registrar of Companies): The MCA office where companies and LLPs are incorporated and file annual returns, charges and event-based forms. 'RoC compliance' is shorthand for Companies Act housekeeping.
ROR (Resident and Ordinarily Resident): Full Indian tax residence: worldwide income taxable in India, foreign assets reportable in Schedule FA, foreign tax credit via Form 67 where treaties apply.
Round-Tripping: Indian money flowing out and returning as foreign investment. The FEMA ODI rules restrict structures with more than two layers of subsidiaries and bar set-ups designed to re-enter India without genuine business rationale.
Rule 11UA: The income-tax valuation rule fixing fair market value of unquoted shares for share-issue and transfer taxation — the Indian counterpart to a 409A, done by a merchant banker or registered valuer. Rule 11UA vs 409A note →

S

SAFE (Simple Agreement for Future Equity): The Silicon Valley pre-seed instrument converting to equity at the next round. A US-law SAFE does not map onto Indian company law — Indian issuers replicate it with CCDs, CCPS or (if DPIIT-recognised) convertible notes.
Safe Harbour (Transfer Pricing): Prescribed cost-plus margins the tax department accepts without question for eligible IT/ITeS and R&D services — certainty for captives that opt in at the published mark-ups.
Schedule FA: The foreign-assets schedule of the Indian return, mandatory for ordinarily residents — foreign bank accounts, shares (including unexercised parent-company ESOPs), and immovable property. Non-residents and RNORs do not file it.
Section 111A / STCG: Short-term capital gains on listed equity where STT is paid — taxed at 20% from 23 July 2024. Other short-term gains are taxed at slab rates. Capital-gains calculator →
Section 112 / 112A: The long-term capital-gains charging sections: 112A for listed equity with STT (12.5% above the ₹1.25 lakh exemption), 112 for everything else — unlisted shares, property — at 12.5% without indexation from 23 July 2024. Capital-gains calculator →
Section 115A: The flat-rate section for non-residents' Indian dividends, interest, royalties and FTS — 20% on dividends and royalties/FTS domestically, routinely capped lower by treaty. DTAA rate checker →
Section 195: The TDS provision for payments to non-residents: the payer withholds on any sum chargeable to Indian tax — on property, on the entire sale consideration — making the payer personally liable for shortfalls. The reason NRI transactions are withheld heavily and reconciled by return. Property TDS calculator →
Section 54 / 54F: Capital-gains exemptions for reinvesting in an Indian residential property: Section 54 rolls over gains from a house, 54F from any other long-term asset (investing the full consideration). Both capped at ₹10 crore of reinvested gain.
Section 54EC: Exemption for long-term gains on land or building reinvested within six months into NHAI/REC-class bonds, up to ₹50 lakh per year, with a five-year lock-in.
SEZ (Special Economic Zone): Designated export zones with customs and (legacy) tax benefits. The direct-tax holiday has sunset for new units — GIFT City is the successor jurisdiction with live incentives.
SHA (Shareholders' Agreement): The contract among founders, investors and the company governing board seats, reserved matters, transfer restrictions, anti-dilution, exits and founder vesting — the constitution of a funded startup, mirrored into the AoA. SSA/SHA guide →
Share Swap: Exchanging shares of one company for shares of another — the mechanism of most flips and reverse flips. Under FEMA it needs valuation on both legs; under tax law it is a transfer, taxable unless a specific merger exemption applies.
Softex Form: The STPI/SEZ filing valuing software exported electronically, required for IT exporters to evidence export realisation against inward remittances.
SSA (Share Subscription Agreement): The investment contract for a priced round: how much, at what valuation, the representations and warranties, conditions precedent and indemnities. Signs the cheque in; the SHA governs life after. SSA/SHA guide →
Startup India / Section 80-IAC: The scheme giving DPIIT-recognised startups a 3-of-10-year profit tax holiday (incorporation window extended to 1 April 2030), plus ESOP deferral and easier compliance.
STT (Securities Transaction Tax): The small tax on stock-exchange trades whose payment is the gateway to the concessional listed-equity capital-gains rates under Sections 111A and 112A.
Surcharge: The additional tax on higher incomes (10–37% of the tax), layered before the 4% cess. Capital gains and dividends enjoy a capped 15% surcharge; the headline rates on this site generally exclude it.

T

Tag-Along Right: A minority shareholder's right to sell alongside a majority selling out, on the same terms — the counterpart of drag-along.
TAN (Tax Deduction Account Number): The registration a deductor needs to withhold and deposit TDS. Buyers of NRI property must obtain a TAN — one of the surprises of buying from a non-resident.
TCS (Tax Collected at Source): Tax the collector adds on specified transactions — most visibly on LRS foreign remittances above ₹10 lakh. A prepaid credit visible in 26AS, adjustable against tax or refunded on filing. TCS calculator →
TDS (Tax Deducted at Source): India's withholding system: the payer deducts tax before paying you and deposits it against your PAN. For non-residents the rates are flat and gross — the filed return is where the excess comes back. NRI return-filing guide →
Term Sheet: The pre-contract summary of a deal's economics and control terms — valuation, liquidation preference, board, exclusivity. Mostly non-binding, but it sets the negotiating baseline the long-form documents rarely escape.
Transfer Pricing: The rules requiring related-party cross-border transactions to be priced at arm's length, documented annually and certified in Form 3CEB. The core compliance of every GCC, captive and foreign subsidiary in India. Cross-Border Tax →
TRC (Tax Residency Certificate): The certificate from your country of residence proving treaty eligibility for a financial year. Mandatory for any DTAA claim in India, alongside electronic Form 10F. DTAA rate checker →

U

UBO (Ultimate Beneficial Owner): The natural person at the top of an ownership chain, identified for KYC, the Companies Act significant-beneficial-owner register (BEN-2) and FDI reporting from land-border countries.

V

Valuation Report: The prescribed opinion of value: registered valuer under the Companies Act, merchant banker under Rule 11UA, or CA certificate under FEMA pricing guidelines — different laws, different valuers, sometimes different numbers for the same transaction. Valuation Advisory →
Vesting: Earning ownership over time — typically four years with a one-year cliff for founder equity and ESOPs. Unvested shares return on exit; the clause that protects co-founders and investors from an early departure.
Virtual CFO: An outsourced finance leadership function — reporting, cash-flow forecasting, board packs, compliance calendar — giving a startup CFO-level control without a full-time hire. Virtual CFO desk →

W

WOS (Wholly Owned Subsidiary): An Indian company 100% held by a foreign parent — the default India-entry vehicle: full control, FDI under the automatic route in most sectors, transfer pricing from day one. India Entry →

Definitions are simplified general information as of FY 2025-26, not legal or tax advice. If one of these terms is currently your problem, speak with a partner.

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