Track how much of your USD 250,000 annual Liberalised Remittance Scheme limit you have used, see your remaining headroom, and estimate the TCS on your foreign remittances. For Indian founders funding a Singapore company.
Under RBI's Liberalised Remittance Scheme, a resident individual can remit up to USD 250,000 per Indian financial year (April-March) for permissible transactions, including equity investment in a foreign company. Each co-founder has their own separate limit.
Tax Collected at Source applies to LRS remittances - generally 20% on the amount exceeding ₹10 lakh in a financial year (verify the current rate and threshold). TCS is not an extra tax; it is creditable against your income tax liability when you file your return.
Two co-founders can collectively remit USD 500,000 per year under their separate LRS limits without RBI approval. For larger investment, the ODI route (up to 400% of net worth for companies) applies instead.
LRS remittances must go through an authorised dealer bank with Form A2. Investment into a foreign company also requires the correct FEMA filings (e.g. FC-GPR for share allotment). Get the documentation right from the first remittance.
Under the Liberalised Remittance Scheme, an Indian resident individual can remit up to USD 250,000 per financial year (April to March) for permissible capital account transactions, including subscribing to shares in a Singapore company. This is a per-person limit, so two co-founders can collectively invest USD 500,000 per year. For larger amounts, companies can use the Overseas Direct Investment (ODI) route, which allows up to 400% of net worth.
Tax Collected at Source under LRS is generally 20% on the aggregate amount remitted in excess of ₹10 lakh in a financial year (confirm the current rate and threshold under the latest Finance Act, as these have changed). TCS is collected by your bank at the time of remittance. Importantly, TCS is creditable - you can claim it against your income tax liability when filing your return, so it is a cash-flow cost, not an additional permanent tax.
You cannot remit more than USD 250,000 under LRS in a single financial year. To invest more, you would use a different route - a co-founder's separate LRS limit, or the ODI route if investing through an Indian company. Exceeding the LRS limit without using a proper alternative route is a FEMA contravention. If you need to invest more than your LRS headroom allows, speak to a FEMA-qualified CA about the ODI route before remitting.