Tax Status Based on Legal Structure

• The tax treatment of a JV in India depends on its legal form.
  
• A JV may be formed as a separate legal entity (company or LLP) or as a contractual arrangement (unincorporated JV).
  
• If incorporated as a company, it is treated as a distinct taxable person under the Income Tax Act, 1961.
  
• If unincorporated (like a consortium or partnership), it may be assessed either as an Association of Persons (AOP) or the partners may be taxed individually.
  
• The structure chosen directly impacts how income, expenses, and liabilities are taxed.
  

Taxation of Incorporated JVs

• Incorporated JVs are subject to corporate income tax like any other company in India.
  
• Tax rates depend on turnover and whether the JV opts for concessional regimes under Section 115BAA or 115BAB.
  
• Dividends distributed are subject to dividend withholding tax under Section 194 of the Income Tax Act.
  
• The JV must file annual income tax returns and comply with the Tax Audit provisions under Section 44AB if applicable.
  
• Goods and Services Tax (GST), TDS, and other indirect taxes also apply as per the operations.
  

Taxation of Unincorporated JVs

• Income of an unincorporated JV is either taxed in the hands of the JV (as AOP) or directly in the hands of the individual partners.
  
• If AOP status applies, the JV files a separate return and is assessed as a single entity.
  
• If each partner’s share is clearly defined, they may be taxed individually on their share of profits.
  
• The lead partner may be designated to manage tax compliance and filings.
  
• Deductibility of expenses, applicability of TDS, and GST registration are determined based on the JV’s business model.
  

Tax Deducted at Source (TDS) Compliance

• JVs must comply with TDS requirements when making payments to contractors, professionals, or suppliers.
  
• TDS returns must be filed quarterly, and certificates issued to payees.
  
• Non-compliance may attract penalties, interest, or disallowance of expenses under Section 40(a)(ia).
  
• Specific TDS provisions may apply to royalty, technical services, or management fees.
  

Transfer Pricing and International JVs

• JVs with foreign partners are subject to transfer pricing regulations under Section 92 of the Income Tax Act.
  
• Transactions between related parties must be conducted at arm’s length prices.
  
• Detailed documentation and Form 3CEB must be filed for international transactions.
  
• Advanced Pricing Agreements (APAs) may be used to avoid future tax disputes.
  
• Double Taxation Avoidance Agreements (DTAs) provide relief from double taxation for foreign partners.