Toll Manufacturing &
Bonded Zone Tax Advisory
Advisory for non-resident capital goods providers and Indian contract manufacturers. We architect Schedule IV exemptions, optimise Section 65 customs bonding, and secure strategic TP safe harbours.
Schedule IV Defensibility
Capitalizing on the Finance Act 2026 Schedule IV exemption. We structure arrangements to ensure foreign capital goods providers do not trigger unintended corporate tax liabilities in India.
Section 65 Bonded Mfg
Establishing highly efficient customs bonded manufacturing units. We defer import duties on capital goods and raw materials, integrating component warehousing under Rules 99-100.
TP Safe Harbours
Securing exact markup thresholds for contract manufacturers. We implement the 12% safe harbour for auto/Li-ion components and up to 24% for specialized contract R&D operations.
Core Advisory Deliverables
Our practice unites complex supply chain logistics with stringent anti-avoidance tax defense, ensuring contract manufacturing operations remain fully optimized and legally insulated.
Schedule IV Exemption Structuring
Designing the operational and contractual frameworks necessary for non-resident entities to supply capital goods tax-free under the strict boundaries of the Finance Act 2026.
TP Safe Harbour Implementation
Executing and defending transfer pricing margins. We apply the 12% auto-component and 24% contract R&D safe harbours, shielding the Indian manufacturer from extensive TPO litigation.
Section 65 Bonded Setup
Advising on the transition to, or greenfield establishment of, Customs Bonded Manufacturing under Section 65, maximizing working capital by deferring BCD and IGST on imported inputs.
Component Warehousing
Structuring vendor-managed inventory (VMI) models and component warehousing compliant with MOOWR and Rules 99-100, ensuring seamless just-in-time manufacturing.
GST Job Work Optimisation
Aligning the physical movement of goods with GST job work provisions. We map the exact Input Tax Credit (ITC) flow to prevent blockages or working capital drain.
GAAR Resilience & Defence
Every toll manufacturing and bonded zone strategy is locked down with contemporaneous Anti-Avoidance (GAAR) and Principal Purpose Test (PPT) documentation to prevent aggressive re-characterisation by authorities.
Contract Manufacturing Supply Chain Lifecycle
Structuring a cross-border manufacturing operation requires integrating direct tax exemptions with real-world physical logistics. We map this transition from the pre-setup feasibility to post-operational audit defense.
Pre-Setup & Feasibility
We evaluate the specific manufacturing profile against available regimes. This includes modelling the financial benefits of the Schedule IV exemption against establishing a Section 65 Bonded Zone (MOOWR) or operating within a traditional SEZ.
Operational Structuring
As operations commence, we establish the Transfer Pricing policy (applying Safe Harbours where eligible), map the GST job work (ITC-04) compliance flows, and structure the underlying FEMA remittance parameters for the capital goods.
Compliance & Audit Readiness
To protect the structure, we finalize the GAAR resilience documentation, ensuring the arrangement cannot be unwound as a tax-avoidance scheme. We also prepare the facility for mandatory ongoing customs and TP audits.
Who Needs Toll Manufacturing Advisory?
Our practice is built to serve large-scale contract manufacturers and global brands seeking to establish capital-efficient, legally insulated production hubs within India.
| Client Profile | Indicative Scale | Strategic Imperative & Solutions |
|---|---|---|
| Foreign Auto / EV OEMs | Global Revenue USD 5B+ | Providing capital goods to Indian subsidiaries/vendors while shielding the parent from tax exposure, leveraging the specific 12% safe harbour for automotive and Li-ion components. |
| Semiconductor & Electronics Brands | India production ₹1,000 Cr+ | Executing high-volume contract manufacturing setups. We optimize Section 65 customs bonding to drastically reduce working capital tied up in imported silicon and raw materials. |
| Contract R&D Centres | 1,000+ India engineers | Protecting advanced research operations. We structure the IP and cost-plus models to firmly secure the elevated 24% safe harbour margins specifically designed for contract R&D. |
| Indian Contract Manufacturers | Capex ₹500 Cr+ | Optimizing the domestic tax footprint when receiving foreign-owned capital goods, ensuring seamless GST job-work compliance and robust defence during TP scrutiny. |
Implementation & Compliance
We do not stop at the advisory memo. Strategix executes the necessary filings and coordinates seamlessly across interconnected tax and regulatory frameworks.
| Service Area | Filings & Cross-Vertical Connections |
|---|---|
| Customs & Bonded Setup | Executing the specific licensing applications for Section 65, managing the execution of warehouse bonds, and handling ongoing MOOWR compliance. |
| Transfer Pricing Execution | Vertical 13 Submitting annual Form 3CEB and architecting comprehensive Local/Master File documentation to validate the selected contract manufacturing safe harbours. |
| GST Job Work Filings | Managing the continuous submission of ITC-04 forms for job work operations, alongside overseeing e-way bill compliance for physical goods movement. |
| Corporate Tax Exemption | Securing the structural foundation to accurately claim the Schedule IV exemptions during annual corporate income tax return assessments. |
Every referral begins with a confidential,
no-obligation assessment.
CA firms, law firms and professional services partners — contact Shreyansh Verma directly to discuss referral arrangements, co-advisory engagements, or a specific client mandate.