PLI Semiconductor ATMP / OSAT Scheme Reconciliation

An anchor beneficiary under the ATMP-OSAT sub-scheme of the India Semiconductor Mission Modified Scheme at the scale of the anchor US memory-technology group’s Assembly, Testing, Marking and Packaging facility at Sanand Gujarat — approved by the Union Cabinet in June 2023 at a project cost of approximately USD 2.75 billion (approximately Rs 22,900 crore) with a corresponding 50 percent fiscal-support ceiling of approximately USD 1.375 billion (approximately Rs 11,500 crore) — runs a distinctive reconciliation surface across the multi-year capex-and-commissioning cycle. A packaging-and-test line receives DRAM and NAND wafers from the design-owning parent’s overseas fabs, executes die separation, wire bonding, flip-chip attach, moulding, marking, testing and packaging, and ships finished DRAM and NAND modules to the global market. The reconciliation cascade sits across a capex-per-milestone workbook for the packaging-and-test line, a related-party wafer import register that clears customs Basic Customs Duty and Integrated Goods and Services Tax at the port of import via the Bill of Entry on ICEGATE (without Section 194Q, which does not apply to imports where the seller has no permanent establishment in India), a Section 195 withholding register for the intra-group packaging-technology royalty flowing from the Indian subsidiary to the foreign parent, Rule 10D transfer-pricing documentation for the entire related-party value chain, an employment milestone tracker against the several-thousand direct-jobs commitment, and Ind AS 20 conditional-grant recognition per ISM milestone certification event. This is PLI Semiconductor ATMP OSAT scheme reconciliation at operating scale, and the discipline that keeps these six surfaces simultaneously clean is what separates a beneficiary whose milestone-linked fiscal-support tranches land on schedule from FY 2027-28 onwards from one that spends the following financial year clarifying an ICEGATE BoE exemption line or a Section 195 rate against a delayed Form 15CB.

Quick reference

The reconciliation in one paragraph

An ISM ATMP-OSAT anchor beneficiary runs a six-surface reconciliation cascade across the multi-year capex-and-commissioning cycle. Surface one is the capex ledger by asset category for the sanctioned ATMP facility — land, civil and facility build, clean-room utilities (HVAC, ultra-pure water, chemical delivery, gas distribution), wire bonders, die attach machines, mould presses, singulation dicers, test handlers, burn-in ovens, ATE testers, metrology and inspection equipment, IT and control infrastructure — reconciled against the ISM-sanctioned project cost and the ISM approval letter’s disbursement schedule per milestone. Surface two is the ICEGATE Bill of Entry register for imported capital equipment carrying the invoiced value net of any Basic Customs Duty exemption, with end-use bond execution and periodic end-use certification linkage against the sanctioned facility. Surface three is the related-party wafer import register — each DRAM or NAND wafer shipment from the foreign design-owning parent’s fabs cleared under HSN 3818.00 with BCD paid and IGST paid on the Bill of Entry, the IGST paid on import credited to the electronic credit ledger of the importer’s GSTIN, and the intra-group wafer-supply agreement establishing the pricing basis and value-chain step coverage. Surface four is the intra-group withholding and transfer-pricing register — Section 195 TDS at the applicable Double Tax Avoidance Agreement rate on packaging-technology royalty and technical-services fee flowing from the Indian subsidiary to the foreign parent, Form 15CA-15CB per cross-border remittance, and Section 92E audit report (Form 3CEB) with Rule 10D contemporaneous documentation on the wafer supply, royalty, management-service-fee and packaged-module sales flow. Surface five is the employment milestone tracker — direct headcount build-up against the commitment evidenced by provident fund establishment code linkage, ESIC registration and payroll register extracts. Surface six is the accounting overlay — Ind AS 20 conditional-grant recognition per ISM milestone certification event with the presentation choice between deferred income and deduction from asset carrying amount, Ind AS 38 capitalisation of the packaging-technology intangible with amortisation over its useful life, Section 115JB MAT book-profit adjustment on the recognition-basis tranche, and Section 115BAA regime evaluation. The Wave 3 cornerstone on PLI Semiconductor Rs 76,000 crore ISM MeitY claim reconciliation establishes the four-sub-scheme scheme skeleton within which the ATMP-OSAT sub-scheme sits; this article walks the ATMP-OSAT-specific reconciliation grammar.

What the scenario looks like in India — the illustrative persona

The ATMP-OSAT sub-scheme is anchored by four announced beneficiaries as of the September 2024 approval window: the anchor US memory-technology group’s ATMP facility at Sanand Gujarat (approved June 2023 at project cost of approximately USD 2.75 billion, first-announced ATMP-OSAT project under the Modified Scheme and the largest by project cost and direct-employment target), the Tata Semiconductor Assembly and Test facility at Morigaon Assam (approved February 2024 at approximately Rs 27,000 crore), the CG Power OSAT facility at Sanand Gujarat in joint venture with Renesas Electronics of Japan and Stars Microelectronics of Thailand (approved February 2024 at approximately Rs 7,600 crore), and the Kaynes Semicon OSAT facility at Sanand Gujarat and Mysuru Karnataka (approved September 2024 at approximately USD 200 million). The Sanand ATMP anchor differs structurally from the three OSAT anchors: it is a design-owned ATMP where the Indian subsidiary receives wafers from the foreign parent’s own overseas fabs, executes the packaging-and-test steps in India, and ships finished DRAM and NAND modules to the parent’s global distribution channel; the three OSAT anchors are merchant assembly-and-test providers whose customers are third-party design houses. The reconciliation grammar for the design-owned ATMP is what this article walks; the merchant OSAT grammar is a variant with a different value-chain characterisation but the same underlying ISM disbursement mechanism.

For the illustrative worked example in this article, we take the Sanand ATMP scale — project cost approximately USD 2.75 billion (approximately Rs 22,900 crore) with a 50 percent fiscal-support ceiling of approximately Rs 11,500 crore — and walk the multi-year capex-and-commissioning cycle against the ISM approval letter’s illustrative milestone tranche schedule. The persona is illustrative; the exact per-beneficiary approval letter’s capex-per-milestone breakdown, package-type qualification cadence, employment ramp curve and tranche release schedule are governed by the confidential bilateral instrument between the beneficiary and the ISM, and the numbers below are illustrative of the reconciliation surface rather than a claim about any specific anchor’s exact ISM position. The PLI Semiconductor Modified Scheme fab capex milestone reconciliation Wave 4 sibling walks the equivalent illustrative worked example for the fab sub-scheme; the PLI Semiconductor composite persona walkthrough covers the multi-beneficiary comparative flow across fab, ATMP and OSAT under a single Indian semiconductor ecosystem lens.

The regulatory overlay — ATMP-OSAT sub-scheme, capex-linked disbursement, related-party import reconciliation, Section 195 royalty, Ind AS 20 and Ind AS 38

Five regulatory anchors govern the ATMP-OSAT claim and disbursement chain, and each maps to a specific reconciliation surface.

The Modified Scheme for Semiconductor ATMP-OSAT Facilities was notified by MeitY in September 2022 as one of the four sub-schemes within the aggregate Rs 76,000 crore Modified Scheme outlay. The sub-scheme funds 50 percent of the capital expenditure of an ATMP facility set up by a design-owning company that packages and tests its own semiconductor dies, or of an OSAT facility set up by a third-party provider offering assembly, packaging and test services to multiple design-owning customers. The India Semiconductor Mission under MeitY is the nodal agency; each anchor beneficiary receives an approval letter that sets out the sanctioned project cost, the fiscal-support ceiling, the capex-linked milestone tranche schedule, the package-type qualification requirement, and the direct-employment commitment. Milestone-linked disbursement is contingent on ISM certification of the capex incurred (chartered engineer certification for civil and facility works, statutory auditor cost certification for capitalised plant and equipment, Bill of Entry evidence from ICEGATE for imported capital equipment with the invoiced value net of any BCD exemption), the package-type qualification proof (line yield certification from the customer design house for a design-owned ATMP or by the qualified merchant OSAT process), and the employment milestone (direct headcount evidenced by provident fund establishment codes, ESIC registrations and payroll register extracts).

The related-party wafer import register is the second regulatory anchor and is specific to a design-owned ATMP receiving wafers from a foreign design-owning parent. Each wafer shipment is imported under HSN 3818.00 (chemical elements doped for use in electronics, in the form of discs, wafers) with the applicable Basic Customs Duty rate and Integrated Goods and Services Tax under Section 3(7) of the Customs Tariff Act 1975 collected at the port of import via the Bill of Entry on ICEGATE. The Bill of Entry is the primary evidence of landed cost, BCD paid and IGST paid; the IGST paid on import is credited to the electronic credit ledger of the importer’s GSTIN and is available as input tax credit against outward GST liability on packaged-module supply. Section 194Q of the Income-tax Act, which imposes 0.1 percent buyer-side TDS on aggregate purchases from a single seller above Rs 50 lakh per FY, does not apply to imports where the seller is a non-resident with no permanent establishment in India — the applicable regime on the import leg is Section 195 read with the DTAA for any payment characterised as royalty or fees for technical services, and BCD plus IGST via Bill of Entry for the goods-import leg. The distinction matters because a mis-application of Section 194Q on the intra-group wafer purchase creates a Section 40(a)(ia) disallowance risk on the corresponding cost line that is entirely avoidable with the correct customs-plus-Section-195 characterisation. The tools/section-393-payment-code-finder walks the domestic payment-code table for cross-referencing every vendor payment against the correct withholding requirement.

Section 195 read with the applicable DTAA is the third regulatory anchor and governs the intra-group packaging-technology royalty flowing from the Indian ATMP subsidiary to the foreign design-owning parent. The withholding rate is the lower of the domestic-law rate for royalty and the applicable Article rate of the DTAA between India and the parent’s residence jurisdiction, subject to production of a valid Tax Residency Certificate and Form 10F. For the anchor Sanand ATMP scenario where the parent is a US design-owning group, the India-US DTAA Article on royalty and fees for included services governs. The reconciliation surface has four components: the intra-group royalty agreement setting out the technology-transfer scope and royalty calculation base, the monthly or quarterly accrual of royalty against the packaging output, the Section 195 TDS deduction at the applicable rate on each accrual, and the Form 15CA-15CB filing for each cross-border remittance with the accountant’s certificate. Failure to deduct the correct rate creates a Section 40(a)(i) disallowance on the corresponding royalty expense. The Section 92 transfer-pricing framework independently governs whether the royalty rate itself is at arm’s length — the withholding-rate question and the arm’s-length-rate question are answered separately.

Section 92E audit report (Form 3CEB) and Rule 10D contemporaneous documentation are the fourth regulatory anchor and cover the full related-party value chain: the intra-group wafer supply, the packaging-technology royalty, any intra-group management-service-fee or cost-sharing arrangement, and the intra-group finished-module sales flow (packaged DRAM or NAND modules shipped back to the parent’s global distribution network). The Section 92E audit report is filed by the accountant with the appropriate Rule 10 methodology (comparable uncontrolled price, resale price, cost plus, transactional net margin, profit split, or the CBDT-notified sixth method) applied per transaction category, and the Rule 10D documentation set includes the ownership structure, functional analysis, industry analysis, benchmarking study and the underlying agreements.

Ind AS 20 (Accounting for Government Grants and Disclosure of Government Assistance) and Ind AS 38 (Intangible Assets) are the fifth regulatory anchor. Ind AS 20 governs recognition of the ISM fiscal-support tranche as an asset-related conditional grant, with presentation choice between deferred income (amortised into profit and loss over the useful life of the related packaging-and-test equipment, typically 8 to 15 years for wire bonders, die attach, test handlers and ATE testers) and deduction from the carrying amount of the related asset (reducing depreciation over the useful life). Ind AS 38 governs the capitalisation of the packaging-technology licence acquired from the foreign design-owning parent; where the technology-transfer licence is capitalised as an intangible with a defined useful life, amortisation aligns with the useful-life period and interacts with the Ind AS 20 recognition trajectory. Section 115JB MAT at 15 percent (plus surcharge and cess) applies on the recognition-basis book profit each period; the Section 115BAA concessional 22 percent regime is exempt from MAT but forfeits certain other incentives, and the 115BAA election is re-evaluated at each milestone as the multi-year recognition trajectory clarifies.

A worked example — an ATMP anchor beneficiary across the illustrative capex-and-commissioning cycle

Illustrative — the following figures represent the operating pattern of an ATMP anchor beneficiary at the scale of the Sanand ATMP project (project cost approximately USD 2.75 billion or approximately Rs 22,900 crore with a 50 percent fiscal-support ceiling of approximately Rs 11,500 crore). Public disclosures do not reveal the per-beneficiary exact milestone tranche schedule, per-milestone capex percentage, package-type qualification cadence or employment ramp curve inside the approval letter; the numbers below are illustrative of the reconciliation surface, not a claim about any specific anchor beneficiary’s exact ISM position. Each milestone-linked tranche is subject to the beneficiary’s approval-letter sanctioned ceiling; the illustrative computation below shows the reconciliation grammar before ceiling binding.

Consider an ATMP anchor beneficiary that receives ISM approval in June 2023 for the ATMP-OSAT sub-scheme at a sanctioned project cost of approximately Rs 22,900 crore with a 50 percent fiscal-support ceiling of approximately Rs 11,500 crore. The illustrative multi-year capex profile shows Year 1 (FY 2024-25) capex of approximately Rs 8,500 crore on land, facility build and initial procurement of wire bonders, flip-chip attach machines and test equipment; Year 2 (FY 2025-26) capex of approximately Rs 10,000 crore on the full ATMP line build-out and process qualification for the primary DRAM and NAND package types; Year 3 (FY 2026-27) capex of approximately Rs 4,400 crore on additional package-type qualification and pilot production; with the first milestone-linked fiscal-support tranche typically landing in FY 2027-28.

The illustrative capex ledger for the ATMP beneficiary at the end of M2 (Year 2, FY 2025-26) shows the following approximate mix:

The M2 tranche is recognised under Ind AS 20 when ISM certifies the M2 milestone bundle (capex incurred, package-type qualification for primary DRAM and NAND types, and initial headcount ramp) — presentation choice between deferred income and deduction from asset carrying amount per the beneficiary’s policy election. Section 115JB MAT flow-through applies on the amortisation of deferred income or the reduced depreciation for the period. Cross-border packaging-technology royalty payments to the foreign design-owning parent attract Section 195 withholding at the applicable India-US DTAA royalty Article rate, subject to Form 10F and Tax Residency Certificate. The intra-group wafer supply attracts Section 92 arm’s-length pricing scrutiny with Section 92E Form 3CEB coverage and Rule 10D documentation. The Wave 2 PLI IT Hardware Rs 17,000 crore claim reconciliation sibling walks the equivalent multi-entity vendor withholding discipline for a MeitY PLI IT Hardware beneficiary, and the Wave 1 PLI scheme selector for electronics manufacturers in India cornerstone walks the multi-scheme decision that sits upstream of the ATMP-OSAT anchor slot.

Common reconciliation breakages

Five breakages recur across ISM ATMP-OSAT milestone-linked disbursement cycles, and each maps to a specific control failure.

• Related-party wafer import register-to-ICEGATE Bill of Entry reconciliation gap. Each intra-group wafer shipment must clear customs under HSN 3818.00 with BCD paid and IGST paid captured on the Bill of Entry, the IGST credited to the importer’s GSTIN electronic credit ledger, and the shipment tied to the intra-group wafer-supply agreement pricing basis. Where the internal purchase register (against the parent-invoiced value) drifts from the ICEGATE BoE landed value (which includes assessed CIF plus BCD plus IGST) or the electronic credit ledger IGST does not reconcile to the aggregate BoE IGST paid, the input tax credit against outward packaged-module supply can be delayed or partially blocked. The reconciliation surface is a periodic three-way tie-out between the purchase register, the ICEGATE BoE register and the GSTN electronic credit ledger extract.

• Mis-application of Section 194Q to the intra-group wafer purchase. Section 194Q (0.1 percent buyer-side TDS above Rs 50 lakh per single seller per FY) applies to domestic sellers and does not apply to imports where the seller is a non-resident with no permanent establishment in India. Applying Section 194Q to an intra-group wafer purchase from the foreign parent’s overseas fab is an over-withholding error that creates operational complexity without any tax-collection basis; failing to apply Section 195 to a payment component that is characterised as royalty or fees for technical services is an under-withholding error that creates a Section 40(a)(i) disallowance on the corresponding expense. The reconciliation discipline is to characterise each intra-group payment component (goods-import leg for the wafer supply; royalty leg for the packaging-technology licence; management-service-fee leg for the cost-sharing arrangement) against the correct withholding regime and evidence each with the appropriate BoE, Form 15CA-15CB or Section 194J code where applicable.

• Package-type qualification proof to milestone tranche request linkage gap. Each qualified package type (flip-chip, wire-bond BGA, wafer-level packaging, system-in-package) must be evidenced at the corresponding milestone by line yield certification from the customer design house for a design-owned ATMP or by the qualified merchant OSAT process. Where the pilot lot yield data is not tightly linked to the specific milestone tranche request submitted to the ISM, the ISM certification review can flag a documentation gap and defer the tranche. The reconciliation surface is a per-package-type qualification test log with pilot lot identifiers, lot yield percentage, defect data and the qualification certification letter reference — bound to the milestone tranche request.

• Section 195 rate error on the intra-group packaging-technology royalty and Form 15CA-15CB linkage gap. The Section 195 withholding rate on royalty and fees for included services is the lower of the domestic-law rate and the applicable DTAA Article rate, subject to Form 10F and Tax Residency Certificate. A rate error (applying the domestic-law rate when the DTAA Article rate is lower, or applying an outdated Article rate) or a Form 15CA-15CB filing gap on the cross-border remittance creates a Section 40(a)(i) disallowance risk on the royalty expense. The reconciliation surface is a per-remittance register tying the invoice-level royalty accrual to the Section 195 rate applied, the Form 15CA-15CB filed, the accountant’s certificate, and the remittance advice from the authorised dealer. The reconciliation failure-mode analysis for India methodology treats this recognition-timing-plus-rate failure as a documented control test, and the 57 human errors and the detection envelope trust asset situates the specific error class within the broader taxonomy of process failures.

• Ind AS 20 recognition timing on ISM milestone certification and Section 115JB MAT under-provisioning. Beneficiaries that recognise the milestone-linked fiscal-support tranche only on cash disbursement (rather than on ISM milestone certification and approval-letter disbursement authorisation) create a book-tax timing gap and can under-provision Section 115JB MAT for the period in which the milestone was certified but cash had not yet arrived. The reconciliation discipline is that the ISM milestone certification and the associated disbursement authorisation trigger the Ind AS 20 grant receivable recognition, the same period triggers the Section 115JB MAT book-profit adjustment for the presentation-elected amortisation (deferred income line) or reduced depreciation (deduction from asset carrying amount), and the cash-receipt event only settles the receivable balance without a fresh income event. This is the same recognition-timing mechanic as the fab sub-scheme cornerstone but with an ATMP-specific asset-useful-life register (8 to 15 years for the packaging-and-test tools versus 10 to 25 years for the fab process equipment).

How a reconciliation platform handles this

A purpose-built electronics reconciliation platform ingests the ISM approval letter’s sanctioned project cost, fiscal-support ceiling and milestone tranche schedule, the beneficiary’s SAP FI or Oracle Fusion fixed-asset register with the ISM asset-category re-classification mapping for the ATMP line, the ICEGATE Bill of Entry register for both imported capital equipment (with BCD exemption tracking and end-use bond linkage) and imported wafers (HSN 3818.00 with BCD paid and IGST paid against the electronic credit ledger of the importer’s GSTIN), the chartered engineer certification and statutory auditor cost certification per milestone, the package-type qualification test log with line yield certification per package type, the employment milestone tracker with direct headcount build-up and provident fund establishment code linkage, the Section 195 register for the intra-group packaging-technology royalty at the applicable DTAA rate with Form 15CA-15CB linkage, the Section 92E audit report (Form 3CEB) with Rule 10D contemporaneous documentation on the full related-party value chain, the Ind AS 20 recognition event register per milestone certification, and the Ind AS 38 intangible-asset amortisation for the packaging-technology licence — and produces a milestone-linked ISM claim pack that closes the loop from the capex ledger row and the intra-group flow to the ISM portal milestone reporting. The platform runs the capex ledger reconciliation against the ISM asset-category taxonomy, the ICEGATE-to-end-use-bond three-way tie-out for capital equipment, the wafer import-to-electronic-credit-ledger reconciliation, the package-type qualification linkage against the milestone tranche request, the employment headcount reconciliation, the Section 195 withholding-plus-Form-15CA-15CB reconciliation, and the Ind AS 20 conditional-grant recognition with the Section 115JB MAT adjustment. Match rate improvement from 51 to 88 percent on the capex-to-asset-category taxonomy mapping, the ICEGATE end-use-bond reconciliation, the wafer-import electronic-credit-ledger tie-out, the package-type qualification linkage, the Section 195 withholding register, and the milestone-linked recognition — combined with an ISO 27001:2022 posture, AWS Mumbai residency and DPDP Act 2023 aligned data handling — is what makes the platform an infrastructure investment for an ATMP anchor beneficiary running a multi-year capex-and-commissioning cycle rather than a spreadsheet substitute. The commercial pillar for the sub-cluster is Electronics reconciliation software India; the broader authority is reconciliation software India. The equivalent Department of Pharmaceuticals reconciliation grammar for an eligible pharma beneficiary — with its own conditional-grant conditions and MAT interaction — is walked in PLI pharma Rs 15,000 crore eligibility and incremental sales reconciliation, useful cross-reading for a semiconductor group with an unrelated pharma sub-business under a separate legal entity.

The five FAQs below address the operational questions ATMP controllers, sanctioned-facility compliance leads and CFOs at ISM ATMP-OSAT anchor beneficiaries ask most often when running the capex-linked milestone disbursement cycle against the MeitY ISM portal.

Terra Insight Editorial Team Reconciliation Infrastructure

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Published 22 July 2026

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Navin Krishnan

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Ex Amazon India · Intuit QuickBooks · Tata nexarc

ISO 27001:2022 Patent Pending Incorporated 2024