In secondary transactions, deferred consideration, milestone-based payments or earn-out payments are often used when the seller expects a higher valuation for the target, but the buyer believes the valuation should be justified based on future performance or achievement of specific milestones. As a result, the buyer may agree to pay an additional amount to the seller for the transfer of the asset, provided certain conditions are met, typically linked to the performance of the underlying business. 

A key decision that multi-national corporations must make while establishing a business in India is the choice of a business vehicle. While incorporating companies or limited liability partnerships are popular choices for doing business in India, several foreign corporations also choose to conduct business by setting up a ‘branch’ in India. 

In the landscape of onshore or cross-border transactions, the no-objection certificate (NOC) from tax authorities under Section 281 of the Income Tax Act, 1961 (IT Act) plays a critical role. The complexities of negotiating NOCs can often place sellers and buyers at odds, making it imperative to understand the fundamentals and relevance of this certificate, as well as its potential ramifications.