—Guide
Pillar Two and Hyderabad's Global Capability Centres: SEZ Units and Data Readiness
Why Pillar Two matters for Hyderabad's global capability centres of large multinationals, especially those with SEZ units, and how to prepare data.
Many of Hyderabad's global capability centres belong to the world's largest multinational groups — exactly the groups subject to the 15% global minimum tax under Pillar Two. For most, Indian tax rates mean the effect is limited, but some features of the Hyderabad GCC landscape make it worth a closer look. This guide explains.
Why GCCs Are in Scope
Pillar Two applies to multinational groups with consolidated revenue of €750 million or more. Most large GCCs in Hyderabad belong to such groups, so their parents need Pillar Two data from India each year.
SEZ Units and Tax Holidays
A significant number of Hyderabad GCCs and IT companies operate from Special Economic Zones in areas like Madhapur, Gachibowli and the city's IT corridors. SEZ units have enjoyed income-tax deductions for export profits for a period. These reduce Indian tax and can bring the GloBE effective tax rate for India below 15%, especially in the years the deduction is at its highest.
Cost-plus Profits and the Substance Exclusion
GCCs typically earn modest cost-plus margins with large payrolls. Pillar Two's substance-based income exclusion — based on payroll costs and tangible assets — can exclude a large share of such profit from top-up tax. For many GCCs, this reduces or eliminates any top-up tax even where the ETR is low.
Data the Group Will Ask For
- Financial data adjusted to the group's accounting framework.
- Current tax, deferred tax, and the effect of SEZ and other incentives.
- Payroll costs and tangible assets, for the substance exclusion.
- Details of each Indian entity and unit.
Practical Steps for Hyderabad GCCs
- Confirm the group is in scope and how it's applying Pillar Two.
- Build a repeatable data pack aligned with transfer pricing and CbCR data.
- Estimate the India ETR, including SEZ effects and deferred tax.
- Compute the substance-based exclusion.
- Track India's own position on Pillar Two.
Getting Help
Think Filing helps Hyderabad GCCs assess Pillar Two effects and prepare the data their groups need.