How Can Foreign Investors Repatriate Profits From India in 2026?

Foreign investors can generally repatriate profits from India through dividends from an Indian subsidiary or through net-of-tax profit remittances from an Indian branch office. The remittance must comply with the Companies Act, 2013, FEMA/RBI rules, Indian tax withholding requirements, the applicable Double Taxation Avoidance Agreement (DTAA) and the authorised dealer bank's documentation requirements.

For remittances made on or after 1 April 2026, businesses should also note an important procedural change: the Income-tax Act, 2025 and Income-tax Rules, 2026 now apply, and Form 145 and Form 146 have replaced the old Form 15CA and Form 15CB framework for applicable foreign remittances.

Profit Repatriation From India: Quick Answer for Foreign Investors

Indian presence / payment

Can money generally be repatriated?

Main compliance issue

Indian subsidiary — dividend

Yes

Companies Act dividend rules, tax/DTAA, FEMA and bank documentation

Branch office — branch profits

Yes

Indian taxes, audited accounts and CA certification

Project office — surplus

Yes, subject to conditions

Project completion, taxes and RBI documentation

Liaison office

Normally no operating profit to repatriate

LO cannot ordinarily conduct revenue-generating commercial business

Royalty to foreign parent

Yes, if genuine and permitted

Withholding tax, treaty, FEMA and transfer pricing

Technical/service fee

Yes, if genuine

Taxability, treaty and arm's-length pricing

Interest

Yes where underlying borrowing is permitted

FEMA/ECB rules, withholding and treaty

Share buyback

Possible, but this is a capital-return route

Companies Act, FEMA and capital-gains tax

Sale of shares

Possible

FEMA pricing/transfer rules and capital-gains tax

Liquidation proceeds

Possible

Corporate winding-up, tax and FEMA remittance requirements

The correct repatriation method depends first on the legal structure through which the foreign investor operates in India.

Profit repatriation means transferring income or returns earned from an Indian investment to the overseas investor or foreign head office.

For a foreign investor that owns an Indian private limited company or wholly owned subsidiary, the clearest distribution of company profits is ordinarily a dividend.

For a foreign enterprise operating in India through a branch office, there is no separate Indian shareholder receiving a dividend. Instead, RBI rules permit the branch to remit its eligible net profits to its overseas head office, subject to prescribed documentation and Indian taxes.

Royalties, technical fees, management charges and interest are different. They are payments for IP, services or financing and should not merely be relabelled as a mechanism for distributing profits.

Yes, dividends on repatriable foreign investment are generally freely repatriable from India after applicable tax deductions.

DPIIT's FDI policy framework states that dividends are freely repatriable without restrictions, net of applicable tax, with the remittance governed by India's foreign-exchange rules.

This does not mean the Indian subsidiary can simply transfer surplus cash overseas whenever it wants.

Before remittance, the company generally needs to establish:

1. that a dividend can legally be declared under the Companies Act;

2. that the correct shareholder is entitled to receive it;

3. the applicable Indian tax and DTAA position;

4. the appropriate tax withholding;

5. Form 145/Form 146 compliance, where applicable;

6. the documentation required by its AD Category-I bank; and

7. that no separate regulatory restriction applies to the particular investment.

For most ordinary foreign-owned subsidiaries, specific prior RBI approval is not ordinarily required merely because a lawful dividend is being remitted abroad. The payment is typically processed through the company's authorised dealer bank under the general FEMA framework.

A dividend is generally the most direct legal mechanism for an Indian subsidiary to distribute accumulated profits to its foreign shareholder.

That does not mean it is always the most tax-efficient structure. The correct approach depends on the investor's jurisdiction, applicable DTAA, financing arrangements, commercial contracts and long-term exit plan.

The major alternatives can be compared as follows:

Method

What it represents

Recurring profit distribution?

Key risk

Dividend

Return on equity

Yes

Tax/DTAA and distributable-profit requirements

Royalty

Payment for IP rights

Only where genuine IP exists

Transfer-pricing and beneficial-ownership scrutiny

Service/management fee

Payment for actual services

Possible if genuine

Deductibility, evidence and transfer pricing

Interest

Return on genuine debt

Yes where borrowing structure permits

ECB/FEMA, withholding, thin-capitalisation considerations

Buyback

Return of capital/value to shareholder

Usually not routine

Capital-gains and corporate-law rules

Capital reduction

Restructuring of equity capital

No

NCLT/company-law and tax implications

Sale of shares

Investor exit

No

Capital gains and FEMA transfer rules

A foreign group should therefore distinguish profit distribution from commercial payments and from capital repatriation.

Step 1: Confirm that the company has legally distributable profits

The company must first establish that the proposed dividend is permitted under Section 123 of the Companies Act, 2013.

Section 123 regulates the sources from which a company may declare dividends, including current-year profits after providing depreciation and eligible accumulated profits, subject to statutory conditions. Carried-forward losses and unprovided depreciation must also be dealt with as required by the section.

A company therefore cannot treat:

• its entire bank balance;

• foreign investment received as share capital;

• asset revaluation gains; or

• arbitrary accounting reserves

as automatically available for dividend distribution.

Step 2: Complete the corporate approval process

The company should follow its Articles of Association and the Companies Act procedure for the relevant dividend.

Section 123 expressly permits the Board to declare an interim dividend within the statutory conditions. Once a dividend is declared, the amount of the dividend, including an interim dividend, must be deposited in a separate scheduled-bank account within five days from declaration.

The corporate records should clearly establish:

• the amount declared;

• the relevant shares;

• the shareholder entitled to receive it;

• the date of declaration;

• applicable withholding; and

• the authority for the international remittance.

Under Section 207 of the Income-tax Act, 2025, ordinary dividend income of a non-resident or foreign company is subject to a 20% special tax rate under domestic law, subject to the application of a more beneficial DTAA and other applicable tax components.

A separate 10% rate applies under Section 207 to the specified category of dividend from an International Financial Services Centre unit.

The 20% figure should not automatically be treated as the final amount to deduct in every cross-border dividend case. The payer must determine the applicable withholding rate after considering:

• the Income-tax Act;

• the relevant Finance Act/rates in force;

• the applicable DTAA;

• treaty eligibility;

• Tax Residency Certificate documentation;

• beneficial-ownership conditions where relevant;

• surcharge and cess, where applicable; and

• any special status of the shareholder.

Yes. A valid Indian tax treaty can provide a lower rate than Indian domestic law where its requirements are satisfied.

Section 159(4) of the Income-tax Act, 2025 provides that where an applicable tax agreement has been notified, the provisions of the Act apply to the assessee to the extent they are more beneficial.

This is why the shareholder's country of tax residence can materially affect the net cash ultimately received abroad.

For example, the analysis may be:

Domestic tax treatment → applicable DTAA → treaty conditions → documentation → withholding → remittance.

Do not simply search online for “India–[country] dividend rate” and apply the first percentage found.

A foreign shareholder claiming treaty relief generally needs a valid Tax Residency Certificate and the additional prescribed information required under Indian law.

Section 159(8) of the Income-tax Act, 2025 requires a non-resident claiming treaty relief to obtain a residence certificate from the government of the relevant country or territory and provide the other prescribed information and documents.

Under the Income-tax Rules, 2026, Form 41 is the current form for prescribed DTAA information. It is the successor to the former Form 10F used under the Income-tax Act, 1961 regime. Income Tax Department guidance identifies information such as the TRC, foreign tax identification number and other prescribed particulars.

Practical treaty-document checklist

A company considering a treaty rate should normally collect, as applicable:

• Tax Residency Certificate;

• Form 41 information;

• foreign tax identification details;

• declaration of treaty eligibility;

• beneficial-ownership declaration where relevant;

• Permanent Establishment declaration where relevant;

• shareholder details; and

• supporting documents requested by the AD bank or tax adviser.

No. Treaty claims involving Most Favoured Nation clauses require careful review of India's notified treaty position.

In Assessing Officer Circle (International Taxation) 2(2)(2), New Delhi v. Nestle SA, 2023 INSC 928, decided on 19 October 2023, the Supreme Court considered whether certain MFN benefits could operate automatically. The judgment is an important warning against assuming that a lower rate found in another treaty automatically becomes available without satisfying India's legal and notification requirements.

For profit repatriation, this means a foreign shareholder should verify the actual notified DTAA position applicable on the payment date rather than relying only on a treaty comparison table.

For remittances made on or after 1 April 2026, Form 145 and Form 146 under the Income-tax Rules, 2026 replace the old Form 15CA and Form 15CB procedure.

The Income Tax Department's transition guidance confirms:

• Form 145 is the successor to Form 15CA; and

• Form 146 is the successor to the CA certificate in Form 15CB.

This is a particularly important SEO and compliance point because a large volume of existing online material still tells businesses to prepare Form 15CA/15CB.

How is Form 145 structured?

For applicable payments to non-residents, the current framework broadly operates as follows:

Form 145 part

Broad situation

Part A

Taxable remittance where amount/aggregate during the tax year does not exceed ₹5 lakh

Part B

Taxable remittance above ₹5 lakh where prescribed AO certificate/order has been obtained

Part C

Taxable remittance above ₹5 lakh supported by accountant's certificate in Form 146

Part D

Certain sums not chargeable to tax, subject to Rule 220 exceptions

The ₹5 lakh framework and the relationship between Forms 145 and 146 are prescribed under Rule 220 of the Income-tax Rules, 2026.

AEO answer

Are Form 15CA and 15CB still used for September 2026 remittances?
For remittances made on or after 1 April 2026, the current procedural forms are Form 145 and Form 146.

The authorised dealer bank will ordinarily verify the corporate, tax and FEMA basis for the remittance before releasing foreign currency.

Exact bank requirements differ, but a dividend-remittance pack commonly includes:

• board/shareholder corporate approvals, as applicable;

• dividend calculation;

• shareholder and bank-account details;

• audited financial statements or financial information supporting distributable profits;

• tax-withholding working;

• proof of tax payment where applicable;

• Form 145;

• Form 146 where applicable;

• TRC and Form 41 where treaty relief is claimed;

• beneficial-ownership/PE declarations where relevant;

• bank remittance application;

• KYC documents; and

• any bank-specific FEMA declaration.

A company should ask its AD bank for its current checklist before declaring or scheduling a large remittance, particularly when treaty relief is involved.

An Indian branch office of a foreign entity can generally remit its branch profits overseas after Indian taxes, subject to RBI documentation requirements.

RBI's branch-office framework permits remittance of branch profits net of applicable Indian taxes through the authorised dealer. The required documentation includes:

1. a certified copy of the audited balance sheet and profit and loss account for the relevant year; and

2. a Chartered Accountant's certificate confirming:

• how the remittable profit was calculated;

• that the profit arose from activities the branch was permitted to conduct; and

• that the profit does not include gains from revaluation of the branch's assets.

This is fundamentally different from an Indian subsidiary paying a dividend.

Subsidiary vs branch profit repatriation

Issue

Indian subsidiary

Indian branch

Separate Indian legal entity

Yes

No

Typical profit repatriation

Dividend

Branch-profit remittance

Companies Act dividend rules

Yes

Not as a shareholder dividend

Audited branch P&L required by RBI for profit remittance

Not this branch rule

Yes

CA certificate on remittable branch profits

Not under branch rule

Yes

Indian taxes

Apply

Apply

AD bank involved

Yes

Yes

Foreign businesses deciding between a subsidiary and a branch should therefore consider repatriation mechanics at the entry-structure stage, not after profits accumulate.

A liaison office should not ordinarily have business profits to repatriate because it is not permitted to undertake ordinary commercial, trading or industrial activity in India.

An LO is designed principally to act as a communication or representation channel for its foreign head office.

If an office established as an LO is generating significant Indian operating revenue and “profits”, the first question should be whether the office is operating within its RBI-approved scope.

Yes, a qualifying project office can generally remit surplus upon completion of its Indian project, subject to RBI conditions.

The RBI framework requires documents including final audited project accounts, a CA certificate showing how the remittable surplus was calculated, evidence concerning Indian tax liabilities and confirmation regarding outstanding statutory liabilities.

Again, this is a project-surplus remittance, not an ordinary dividend.

An Indian subsidiary can pay a genuine royalty to its foreign parent where there is a real IP licence or similar commercial arrangement, but a royalty should not be created merely to move profits out of India.

Under Section 207(2) of the Income-tax Act, 2025, qualifying royalty and fees for technical services received by a non-resident/foreign company are generally subject to a 20% special domestic tax rate where the provision applies, subject to applicable treaty rules and cases where the income is effectively connected with an Indian permanent establishment or fixed place.

Where the Indian company and foreign recipient are associated enterprises, the transaction must also comply with India's transfer-pricing provisions.

Section 161 requires income, expenditure and interest arising from international transactions to be determined with reference to the arm's-length price. It specifically covers cost allocations for benefits, services and facilities between associated enterprises.

Therefore, a foreign parent charging ₹5 crore of “management fees” needs more than an invoice.

The group should be able to establish matters such as:

• what services were actually provided;

• who provided them;

• why the Indian company needed them;

• what benefit the Indian company received;

• how the price was calculated;

• why the charge is arm's length; and

• whether Indian withholding and FEMA requirements have been met.

Management or service fees are legitimate cross-border payments only where they represent genuine services rather than disguised distributions.

They may require analysis of:

• the service agreement;

• withholding-tax rules;

• DTAA definition of fees for technical/included services;

• Permanent Establishment exposure;

• deductibility in India;

• transfer pricing;

• GST/import-of-services consequences; and

• FEMA documentation.

A company should therefore not start with the question:

“How much profit do we want to send overseas?”

and then reverse-engineer a management fee of the same amount.

The payment must have independent commercial substance.

Yes, where the foreign investor has genuinely financed the Indian company through a permitted debt instrument or borrowing structure.

But equity cannot simply be re-labelled as debt after profits arise.

Cross-border borrowing may be subject to:

• India's External Commercial Borrowing framework;

• permitted lender rules;

• all-in-cost or other regulatory conditions;

• maturity requirements;

• withholding tax;

• applicable DTAA;

• transfer pricing for associated-enterprise financing; and

• restrictions on interest deductibility.

Interest should therefore be analysed when designing the capital structure, not simply at the point of repatriation.

A buyback can return value to a foreign shareholder, but it is a capital transaction rather than an ordinary dividend remittance.

The tax position changed again from 1 April 2026.

Under the current Section 69 of the Income-tax Act, 2025, the difference between the cost of acquisition and consideration received by a shareholder on a company's purchase of its own shares is treated as capital gains. The Finance Act, 2026 also introduced additional tax rules where the shareholder is a “promoter”.

For an unlisted company, the promoter definition for this provision can include a Companies Act promoter or a person holding, directly or indirectly, more than 10% of the shareholding.

A foreign-shareholder buyback must therefore be tested separately for:

• Companies Act buyback conditions;

• available reserves/capital;

• FEMA rules;

• pricing/valuation;

• tax treaty treatment;

• capital-gains taxation;

• promoter-specific tax provisions; and

• AD-bank documentation.

Do not apply articles discussing the pre-2026 buyback regime without checking their date.

No. Selling shares is an investment-exit transaction, not an operating-profit distribution.

Where a foreign investor sells shares of an Indian company, the remittance can involve:

• FEMA pricing rules;

• buyer/seller residency;

• share-transfer reporting;

• capital-gains tax;

• DTAA provisions;

• withholding obligations;

• historic FDI compliance; and

• AD-bank documentation.

Likewise, liquidation and capital reduction have their own legal and tax regimes.

A recurring dividend and a full investment exit should therefore be planned separately.

There is no single universal rupee cap applicable to every lawful dividend repatriation by a foreign-owned Indian company.

The real constraints are instead legal and financial:

• available distributable profits;

• Companies Act requirements;

• the investor's repatriable investment status;

• sector-specific conditions;

• applicable tax;

• treaty eligibility;

• FEMA compliance; and

• banking documentation.

A company with ₹100 crore in its bank account but only ₹10 crore of legally distributable profits cannot simply describe ₹100 crore as a dividend.

Ordinary dividend repatriation and compliant branch-profit remittance generally operate through the authorised dealer banking framework rather than requiring a separate RBI approval merely because money is being sent overseas.

DPIIT's FDI policy describes dividends as freely repatriable after applicable tax deduction, while RBI expressly permits qualifying branch-profit remittances through authorised dealers upon production of the prescribed documentation.

However, approval or additional regulatory consideration may arise where:

• the original investment was non-repatriable;

• sector-specific restrictions apply;

• the underlying transaction requires Government/RBI approval;

• FEMA contraventions remain unresolved; or

• the transaction is not an ordinary dividend or permitted branch-profit remittance.

Assume an Indian subsidiary has legally distributable profits and proposes a ₹4 crore dividend to its foreign parent.

Under the ordinary domestic Section 207 rate:

₹4 crore × 20% = ₹80 lakh

That ₹80 lakh is a useful base tax illustration, not automatically the final withholding calculation.

Before remitting, the company should test whether:

• the applicable DTAA provides a lower rate;

• the foreign parent qualifies for that treaty;

• the required TRC and Form 41 documentation exists;

• beneficial-ownership conditions are met;

• surcharge/cess or other tax components apply;

• the correct withholding provision/rate in force has been applied; and

• Form 145/Form 146 compliance has been completed.

If a valid treaty rate produces a lower legally applicable result, Section 159 permits the more beneficial treaty treatment, subject to its conditions.

This illustrates why “India dividend tax = 20%” is not a complete remittance analysis.

Before transferring money from India, the finance and legal teams should answer the following:

Corporate

• What is the legal nature of the payment?

• Is it a dividend, royalty, service fee, interest or capital return?

• Does the company have distributable profits?

• Have the required corporate approvals been obtained?

FEMA

• Was the original foreign investment made on a repatriable basis?

• Is the payment permitted under the relevant FEMA framework?

• Does the AD bank require any additional approval or declaration?

Tax

• Is the income taxable in India?

• What is the domestic tax rate?

• Is a DTAA available?

• Does the foreign recipient satisfy treaty eligibility?

• Has the correct withholding been calculated?

• Is a TRC available?

• Is Form 41 required/completed?

• Does Form 145 apply?

• Is a Form 146 CA certificate required?

Transfer pricing

For royalties, services or related-party financing:

• Is the transaction genuine?

• Is there a written agreement?

• Is there evidence of actual performance?

• Is the charge arm's length?

• Is transfer-pricing documentation required?

Banking

• Has the company's AD bank reviewed the documentation?

• Are beneficiary and SWIFT details correct?

• Is proof of tax payment available?

• Does the bank need financial statements, CA certification or FEMA declarations?

1. Treating excess cash as freely distributable profit

Cash availability does not override Section 123 of the Companies Act.

2. Applying a DTAA rate without proving treaty eligibility

A lower treaty percentage is not enough. The recipient must satisfy the statutory and treaty conditions.

3. Still preparing only Form 15CA and Form 15CB in 2026

For remittances from 1 April 2026, the current forms are Form 145 and Form 146.

4. Paying arbitrary “management fees” to the parent company

Related-party service charges require genuine commercial substance and arm's-length support.

5. Confusing branch profits with dividends

A branch and a subsidiary have different legal and remittance procedures.

6. Assuming every treaty MFN clause automatically produces a lower rate

The Supreme Court's Nestle SA decision shows why India's notification requirements must be checked.

7. Using an outdated buyback tax article

The Finance Act, 2026 changed the current Section 69 regime from 1 April 2026.

8. Contacting the bank only after everything has been approved

AD-bank documentary requirements can affect timing. Obtain the bank checklist before fixing the remittance date.

1. Can a foreign company take profits out of India?

Yes. An Indian subsidiary can generally remit legally declared dividends to its foreign shareholder, while an Indian branch can remit qualifying net-of-tax branch profits subject to RBI documentation requirements.

2. Is dividend repatriation from India restricted?

DPIIT's FDI framework states that dividends are freely repatriable, net of applicable tax, subject to FEMA's current-account framework.

3. What is the tax rate on dividends paid to a foreign shareholder in 2026?

Section 207 of the Income-tax Act, 2025 prescribes a 20% domestic special rate for ordinary dividends of non-residents/foreign companies, subject to a more beneficial DTAA and applicable tax conditions.

4. Can a DTAA reduce dividend tax in India?

Yes. Section 159 allows an applicable notified treaty to prevail to the extent it is more beneficial, provided the non-resident satisfies treaty and documentary requirements.

5. Is a Tax Residency Certificate mandatory for claiming DTAA benefits?

Section 159(8) requires a non-resident claiming treaty relief to obtain a residence certificate from the relevant foreign government and provide prescribed additional documentation.

6. What is Form 41?

Form 41 is the Income-tax Rules, 2026 form for prescribed information when a non-resident claims DTAA benefits. It is the current successor to the former Form 10F.

7. Are Form 15CA and Form 15CB still applicable?

For remittances made on or after 1 April 2026, the current forms are Form 145 and Form 146, respectively.

8. Can an Indian branch office send all its profits to its foreign head office?

A branch can remit eligible profits net of Indian taxes after providing the audited accounts and prescribed CA certification to its authorised dealer bank.

9. Can a foreign parent charge its Indian subsidiary management fees instead of taking a dividend?

Only where genuine services are actually provided and the payment satisfies tax, FEMA and transfer-pricing rules. Section 161 requires relevant related-party international transactions to be determined at arm's length.

10. Is a share buyback a way to repatriate profits?

A buyback can return value to a foreign shareholder, but it is a capital transaction rather than an ordinary dividend. From 1 April 2026, Section 69 generally treats the shareholder's buyback gain as capital gains, with additional rules for promoters.