The question most US founders are almost afraid to ask out loud: “If I put money into my Indian company, can I actually get it back out?”
The answer is yes. You can move money in and take profits out cleanly and legally. You just need to follow the process and keep your paperwork straight. Money moving into and out of an Indian company is governed by two things: FEMA (the Foreign Exchange Management Act) and India’s tax treaties. Both are well-established and used by thousands of companies every year.
India has been one of the top destinations for FDI into India for over a decade. In FY 2023-24 alone, India received over $70 billion in foreign direct investment, much of it from US parent companies funding wholly owned subsidiaries. But funding in and repatriating profits out are two different processes, each with its own deadlines and paperwork. Getting either one wrong can mean penalties, blocked transfers, or double taxation.
Money in: funding your Indian company
When your US parent company invests, it wires share capital into the Indian company’s bank account. That single event triggers a deadline you cannot afford to miss.
Within 30 days of the money landing in the account, you must report the foreign investment to the Reserve Bank of India using Form FC-GPR (Foreign Currency-Gross Provisional Return), filed through your bank on the RBI’s FIRMS portal.
The FC-GPR filing, in numbers
- Deadline: 30 days from the date funds are received
- Penalty for missing it: 1% of the investment amount per day, with a minimum of ₹5,000 per day
- Example: On a $50,000 investment, even a two-to-three-week delay can cost more in penalties than the entire cost of incorporating the company
There’s also a pricing rule to know. Shares issued to a foreign investor cannot be priced below a fair value, calculated under RBI guidelines by a registered valuer. This is simple to handle with a valuation report ready before the round closes.
Money out: the three routes home
Once your Indian company starts making profit, there are three main ways to send money back to the US parent.
- Dividends. The cleanest and most common route. Under FEMA, dividends are “current account” transactions, so they don’t need prior RBI approval — as long as the tax is paid.
- Service or royalty fees. If the Indian company pays the US parent for real services, software, or IP, that flows out as a business expense. It must reflect actual work and be priced at arm’s length, which is where transfer pricing rules apply.
- Salary. If you or another US-based founder are doing real work for the company, drawing a salary is a normal, tax-deductible payment.
The dividend tax — and how the treaty cuts it
This is the part worth getting right, because paperwork changes the final number a lot.
Without treaty relief, India taxes dividends paid to a foreign shareholder at a base rate of 20%, plus surcharge and cess — deducted before the money leaves the country. With surcharge and cess added, the effective rate can climb close to 21-22%.
The India-US tax treaty (DTAA) brings that number down. For a corporate shareholder owning at least 10% of the Indian company, the treaty caps dividend withholding tax between India and the US at 15% — this is the DTAA 15% benefit founders should plan around.
To get the 15% rate, your US parent must submit three documents:
- A valid Tax Residency Certificate (TRC) from the IRS
- An electronic Form 10F
- A No Permanent Establishment declaration
Skip any one of these, and the Indian company must withhold tax at the higher domestic rate. Submit all three before the dividend is paid, and you lock in 15%. On a $100,000 dividend, that gap is roughly $6,000-7,000 in tax saved.
Don’t forget the US side
Getting money out of India is only half the job.
- A dividend from your Indian subsidiary counts as income for the US parent. The good news: the US-India treaty generally lets you claim a foreign tax credit for tax already withheld in India, so the same money isn’t taxed twice.
- If you personally have signature authority over the Indian company’s bank account, and its balance crosses $10,000 at any point in the year, you must file an FBAR (FinCEN Form 114). Penalties for missing this can be steep, even when no tax is owed.
Coordinating both sides — Indian withholding and US reporting — is where a cross-border accountant earns their fee.
Quick checklist
| Step | Action | Deadline |
| Money in | File Form FC-GPR on RBI’s FIRMS portal | Within 30 days |
| Share pricing | Get a fair value certificate | Before shares are issued |
| Dividend payout | Submit TRC + Form 10F + No PE declaration | Before dividend is paid |
| US tax filing | Claim foreign tax credit | With annual US tax return |
| FBAR | File FinCEN Form 114 if balance over $10,000 | Annually |
The short version
Getting money into India is easy, as long as you file FC-GPR within 30 days. Getting profits out is just as straightforward, as long as you pay the right tax and, for dividends, produce the TRC and Form 10F to unlock the 15% treaty rate.
None of this is exotic. It’s a routine that thousands of US-owned Indian companies run every year. It rewards founders who stay organized — and penalizes the ones who wait too long.
Want your India profits to come home at the lowest legal rate, with FC-GPR and treaty paperwork handled correctly? FinGuru manages funding, RBI reporting, and repatriation for US-owned Indian companies. Let’s map it out.
📧 business@finguruindia.com | 🌐 finguruindia.com
