Repatriation of Profits from India: Legal and Tax Framework for Foreign Investors
For foreign-owned companies, branch offices, or non-resident investors operating in India, understanding the rules governing repatriation of profits is critical. While India allows free repatriation of funds under defined routes, businesses must comply with FEMA regulations, income tax provisions, and proper documentation protocols.
At Jain Prachi & Company, we help international businesses and non-resident shareholders repatriate profits from India legally, efficiently, and in a tax-optimized manner.
Who Can Repatriate Funds from India?
Funds can be repatriated by:
- Foreign companies with branch, liaison, or project offices in India
- Indian companies with foreign shareholders (individuals or entities)
- Non-Resident Indians (NRIs) or Persons of Indian Origin (PIOs) owning equity in Indian entities
- Overseas investors withdrawing capital or profits from their investments
Permissible Repatriation Routes and Methods
The Reserve Bank of India (RBI) permits repatriation of funds under two broad categories:
- Current Account Transactions (freely repatriable)
These include:
- Dividends paid to foreign shareholders
- Interest payments on ECBs or debentures
- Royalties and fees for technical services
- Commission or consultancy fees
- Salary paid to expatriate employees
- Capital Account Transactions (subject to RBI/FEMA conditions)
These include:
- Repatriation of equity capital on sale or exit
- Return of share application money
- Liquidation proceeds from winding up of a company
- Transfer of shares or repurchase by Indian entities
Key Regulatory Requirements for Repatriation
- FEMA Compliance
- Transactions must follow Foreign Exchange Management Act (FEMA) provisions
- Remittances must be routed through authorised dealer (AD) banks
- Necessary declarations and certificates (CA and CS certifications) must be submitted
- Prior RBI approval may be needed in certain capital transactions
- Income Tax Clearance
- No remittance is allowed unless applicable taxes are deducted and paid
- A CA Certificate in Form 15CB and self-declaration in Form 15CA must be filed before sending money outside India
- Tax implications depend on the nature of remittance (dividends, interest, royalties, etc.)
- Transfer Pricing & DTAA Benefits
- If the remittance is to a related party abroad, transfer pricing documentation is essential
- Double Taxation Avoidance Agreements (DTAAs) can be applied to reduce withholding tax rates
- A Tax Residency Certificate (TRC) from the recipient’s home country is mandatory to claim DTAA benefits
Common Repatriation Scenarios and Tax Rates
Nature of Remittance | Withholding Tax Rate (subject to DTAA) |
Dividend to foreign shareholders | 20% (can be reduced via DTAA) |
Interest on ECB | 5% or 10% |
Royalty/Technical Fees | 10% to 15% |
Branch Office profits | 40% (applicable to foreign companies) |
Sale of shares | Capital gains tax based on holding period |
Repatriation for NRIs and Foreign Shareholders
NRIs and foreign individuals can remit:
- Dividends and interest earned
- Capital gains from sale of shares
- Proceeds from disinvestment (after tax)
- Salary, consultancy, or professional fees
They must ensure the shares or assets are held on a repatriable basis and documentation is in order.
How Jain Prachi & Company Assists You
We offer complete legal and compliance support for repatriation of funds from India, ensuring adherence to FEMA, tax laws, and RBI guidelines.
Our Services Include:
- Advisory on repatriation strategy and transaction structuring
- Drafting and filing of Form 15CA and 15CB
- DTAA benefit analysis and tax optimization
- RBI approval applications, if required
- Liaising with authorised dealer banks for remittance processing
- Representation before tax and regulatory authorities
Why Choose Jain Prachi & Company?
- Deep expertise in FEMA, RBI, and Income Tax regulations
- End-to-end compliance for dividend, royalty, and capital remittances
- Transparent pricing with no hidden charges
- Trusted partner for international businesses across industries
Looking to Repatriate Profits from India with Confidence?
Our team ensures that your funds are remitted smoothly, lawfully, and with maximum tax efficiency—no matter the complexity of the transaction.
📧 Email: contactus@jainprachi.com
🌐 Website: https://jainprachi.com
Book a consultation today for expert guidance on profit repatriation and FEMA compliance.
FAQs – Repatriation of Funds from India
Q: Can foreign shareholders remit dividends freely from India?
Yes, provided the dividend distribution tax (if applicable) has been deducted and necessary forms (15CA/CB) are filed.
Q: Is RBI approval required for every repatriation?
Not always. Most current account transactions do not need RBI approval if routed through authorised banks with proper documentation.
Q: Can capital gains be repatriated after selling shares in an Indian company?
Yes, subject to capital gains tax payment and relevant reporting under FEMA.
