Profit and Dividend Repatriation from India – FEMA & Tax Compliance Guide
If your business has earned profits in India—through a subsidiary, branch office, or investment—you’ll eventually want to repatriate those funds to your home country. However, India regulates outbound remittances through the Foreign Exchange Management Act (FEMA), and such transfers require strict compliance with taxation, documentation, and RBI procedures.
At Jain Prachi & Company, we assist foreign companies and investors in legally and efficiently remitting profits and dividends from India, ensuring FEMA and Income Tax compliance at every stage.
Who Can Repatriate Funds from India?
The following entities or individuals are eligible to repatriate earnings from India:
- Foreign companies with wholly owned subsidiaries or branch offices in India
- Non-resident shareholders receiving dividends
- Foreign investors exiting from Indian startups or assets
- Overseas service providers who receive income in India
What Types of Funds Can Be Repatriated?
Under FEMA and RBI guidelines, the following can be remitted abroad:
Type of Remittance | Conditions |
Profits of a Subsidiary | After tax payment, board approval, and auditor verification |
Dividends to Foreign Shareholders | No RBI approval if paid from post-tax profits |
Capital Gains | Tax paid and Chartered Accountant certificate required |
Fees for Technical Services | Subject to withholding tax |
Consultancy or Royalty Payments | Allowed under specific agreements |
Compliance Steps for Profit or Dividend Repatriation
- Pay Applicable Indian Taxes
- Corporate taxes or capital gains must be discharged before remittance.
- Dividend tax is no longer deducted at source, but recipients may pay tax abroad depending on the DTAA (Double Taxation Avoidance Agreement).
- Obtain Chartered Accountant Certificates
Two key forms are required:
- Form 15CA: Filed online on the Income Tax portal
- Form 15CB: Issued by a Chartered Accountant certifying tax compliance
- Submit Documentation to Authorized Dealer Bank
Banks require:
- Board resolution (in case of dividend remittance)
- Form 15CA and 15CB
- Tax payment challans
- FEMA declaration
- Invoice or agreement, if applicable
- RBI Reporting (if applicable)
Remittances involving capital account transactions (e.g., FDI returns) may also need reporting via RBI’s FIRMS portal.
What are the FEMA Regulations for Outbound Remittance?
- FEMA governs the transfer of funds outside India by any resident or entity based in India.
- There are automatic and approval routes depending on the sector and nature of payment.
- All remittances must be routed through an Authorized Dealer (AD) Bank.
- Documentation, valuation, and regulatory reporting must be accurate to avoid delays or penalties.
Tax Implications of Remittance from India
Nature of Remittance | Withholding Tax |
Dividends | 10% (may vary under DTAA) |
Royalty/FTS | 10% to 20% |
Capital Gains | 10% to 30% depending on asset type |
Repatriation of profits | No TDS, but taxes must be paid before distribution |
We help structure these transactions under the most favorable tax treaties to minimize tax outgo.
Common Mistakes to Avoid
- Sending funds without proper Form 15CB and 15CA
- Ignoring withholding tax or DTAA provisions
- Using unauthorized or unlicensed banks
- Missing FEMA or RBI filing deadlines
- Attempting remittances without verifying source of funds or purpose code
These can attract heavy penalties or remittance blocks.
How Jain Prachi & Company Helps with Fund Repatriation
- Drafting and filing Form 15CB and 15CA
- Ensuring tax compliance under Indian law and DTAA
- Coordinating with banks for documentation and remittance execution
- Advising on optimal repatriation structure to reduce tax liability
- End-to-end assistance for both dividend and profit remittance
Ready to Transfer Your Indian Earnings Legally and Efficiently?
We’ve helped global businesses, funds, and non-resident shareholders repatriate millions from India without delays or compliance errors. Let us handle the regulations so you can focus on results.
📧 Email: contactus@jainprachi.com
🌐 Website: https://jainprachi.com
FAQs – Repatriation of Profits from India
Q: Do I need RBI approval to send profits abroad?
No, if remittance is from post-tax profits and all documents are in order, approval is not needed under the automatic route.
Q: What is Form 15CA and 15CB?
They are forms certifying tax compliance and are mandatory for most foreign remittances.
Q: Can a foreign shareholder receive dividends in USD?
Yes, subject to correct documentation and compliance via an Authorized Dealer bank.
