India target due diligence, end to end from India.

Standard India target DD covers six workstreams:

1. Financial DD: historical P&L normalisation, revenue recognition quality (ASC 606 / Ind AS 115 adjustments), working capital bridge, debt + cash position, QoE (quality of earnings), key customer concentration, AR aging, inventory valuation.
2. Tax DD: Income Tax exposure (open years, outstanding scrutiny notices, pending appeals, Section 143(2) / 148 risks), GST exposure (unmatched 2A/2B, Section 17(5) blocked ITC taken, pending demand notices), TDS exposure (Section 201 interest, 234E late fee, unmatched Form 26AS), FEMA exposure (missed FC-GPR / FLA / APR, compounding risk), Transfer Pricing exposure (Form 3CEB arm's-length defensibility).
3. Legal DD: incorporation docs + MOA/AOA, share capital history, cap table + dilution, shareholder agreements, employment contracts, customer/vendor contracts, IP ownership (patents, trademarks, copyrights, software licensing), litigation (pending + threatened), regulatory licences (RBI, SEBI, sector-specific).
4. Compliance DD: ROC filings status (AOC-4, MGT-7, PAS-6 for Rule 9B companies, DPT-3, MSME Form 1), board + AGM resolutions, statutory registers, DIR-3 KYC status.
5. HR + payroll DD: employee contracts, PF/ESI compliance, gratuity + leave encashment provisions, labour law compliance (CLRA, Factories Act, Shops & Establishment), ESOP + sweat equity history.
6. IT / cybersecurity DD (if scope): data protection compliance (DPDP Act 2023), security certifications, source code escrow, software licensing.

• Pending Income Tax reassessment under Section 148 / 148A: can resurrect old years. Even if current year is clean, prior-year reassessment can create INR crore exposure. Review Section 148A show-cause notices + any pending appeals.
• GST demand under Section 73 / 74: assessment of unpaid tax within 3 years (73) or 5 years (74) with 100% penalty under 74. Check for ASMT-10, DRC-01, DRC-03 history.
• Section 17(5) GST blocked ITC taken: many Indian companies routinely claim ITC on motor vehicles, construction materials, employee insurance which is specifically blocked. Reverses with interest.
• Form 26AS vs TDS claimed mismatch: TDS claimed in ITR but not reflected in Form 26AS (because deductor didn't file 26Q) — tax department has disallowed. Common issue.
• FEMA non-compliance: missed FC-GPR / FLA Return / APR filings. Compounding penalty under Section 13.
• Transfer pricing weakness: Form 3CEB filed but benchmarks weak / incomparables used. Scrutiny risk + addition exposure.
• Section 56(2)(viib) angel tax: if target raised equity above FMV from non-residents in the past, Section 56(2)(viib) was applicable until Finance Act 2024 abolished it. Historical liability may remain.
• Dematerialisation of unlisted shares (Rule 9B): since Oct 2024, mandatory. Non-compliance blocks share transfer in M&A — see our demat guide. Fix pre-closing.
• Pending Companies Act notices (ROC): AOC-4 / MGT-7 non-filing, Section 164 director disqualification, DIR-3 KYC lapses.
• IP ownership gap: Indian subsidiary developed IP but no written assignment to parent. Patents / trademarks sitting with employees as inventors.

Week 1: data room access, document request list issued, initial review of financials (Ind AS or IFRS). First management session (Q&A).

Week 2: deep-dive into tax position (Income Tax + GST + TDS + FEMA + TP). Site visit / plant audit if operational business. Second management session.

Week 3: legal review, contract review, IP review, HR review, compliance log review. Third management session (clarifications).

Week 4: drafting of final report. Red-flag summary. Quantified tax / FEMA / compliance exposure. Working-paper file. Draft report shared with buyer counsel.

Deliverables:

• Executive summary (3-5 pages) — red flags, quantified exposure, go/no-go on key issues, SPA points.
• Full DD report (40-80 pages) — workstream by workstream findings.
• Working-paper file — schedules, computations, supporting docs.
• SPA input list — representations, warranties, indemnities, specific escrow asks.
• Open-items list — residual questions not resolved during DD.
• Post-closing integration list — items to be fixed in first 90 days of ownership.

Last updated: 2026-10-13.

India DD scope depends on target size + complexity:

• Small target (revenue < INR 10 crore): ~2-3 week turnaround. Financial + tax DD only. Scope-based pricing.
• Mid-market target (INR 10-100 crore): 3-5 week turnaround. Full six-workstream DD. QoE build. Site visit if manufacturing/retail.
• Large target (INR 100 crore+): 6-8 week turnaround. Full DD + QoE + synergy analysis + post-closing integration plan.
• Follow-on diligence: for additional rounds / expansions. Standard retainer basis.

BQP coordinates with buyer counsel (US / UK / Singapore counsel) + buyer internal finance team. Weekly status calls. Final report delivered in buyer's preferred format (PDF + Excel + Word for SPA input).