Profit & Dividend Repatriation from India

Last reviewed: July 2026 · Reviewed by CA Regi Tom Antony, Regi Tom Antony & Associates.

What is profit repatriation from India?

Profit repatriation from India is the lawful transfer of an Indian subsidiary's earnings to its foreign shareholder through routes permitted by the Foreign Exchange Management Act, 1999. The principal route is a dividend under Section 123 of the Companies Act, 2013; royalty, technical fees and interest are contractual alternatives, each with its own withholding-tax and reporting obligation.

As of 2026 there is no FEMA cap on dividend repatriation to a non-resident shareholder on the automatic route. The constraints are corporate-law ones — a company can only distribute profits it has actually earned and audited — and tax ones, since nothing leaves India until section 393 tax has been deducted and deposited.

Which routes can a foreign parent use to get money out of India?

A foreign parent can extract value from India through five routes: dividend, royalty and fees for technical services, interest on shareholder debt or ECB, buyback of shares, and sale or capital proceeds on exit. The first three are current-account transactions cleared by the AD bank; buyback and exit proceeds are capital-account transactions reported to the RBI through FC-TRS.

Rates stated are as of 2026 and are indicative; the applicable treaty rate depends on the payee's country of residence and the specific DTAA article. See our detailed guide to withholding tax on foreign remittances.

How is a dividend to a foreign parent taxed?

A dividend paid to a foreign parent is taxed in the shareholder's hands, not the company's. Dividend Distribution Tax was abolished by the Finance Act 2020 with effect from FY 2020-21. The Indian payer must withhold under section 393 at 20% plus surcharge and cess, or at the beneficial DTAA rate — commonly 5% to 15% — where the parent furnishes a valid Tax Residency Certificate, Form 41 (formerly Form 10F) and a no-permanent-establishment declaration.

Treaty relief is now claimed under section 159 of the Income-tax Act, 2025 with Form 41 (formerly Form 10F); see how DTAA relief works under the new Act and whether a tax residency certificate is still enough after the Tiger Global ruling.

How we handle a repatriation

What is the process to remit a dividend abroad?

1. 1

   Audit and compute distributable profits

   Finalise accounts under the Companies Act, 2013 and compute profits available for distribution under Section 123, after depreciation and any transfer to reserves.

2. 2

   Board and shareholder approval

   Pass a board resolution recommending the dividend (or declaring an interim dividend) and, for a final dividend, obtain shareholder approval at the AGM.

3. 3

   Deposit section 393 withholding tax

   Deduct tax at the Act or treaty rate, deposit it by the seventh of the following month and report it in the quarterly Form 27Q TDS return.

4. 4

   Obtain Form 146 and file Form 145

   A Chartered Accountant certifies the taxability, treaty article and rate in Form 146; the remitter files the corresponding Part of Form 145 under the remittance provisions of the Income-tax Act, 2025 (formerly rule 37BB of the Income-tax Rules, 1962).

5. 5

   Remit through the AD Category-I bank

   Submit the A2 form, board resolution, audited accounts, TRC, Form 41, no-PE declaration and TDS challan; the bank releases the SWIFT transfer.

6. 6

   Report and close the loop

   Capture the transaction in the annual FLA return by 15 July and, on capital transactions, file FC-TRS on the FIRMS portal within 60 days.

Where repatriation planning starts

Repatriation is decided at entry, not at exit. The share capital versus debt mix in your wholly owned subsidiary, the treaty position of the holding jurisdiction chosen during foreign company formation in India, and the quality of monthly books maintained under a virtual CFO arrangement determine how much of the profit actually reaches the parent. NRIs remitting personal income should also review NRI investment and FEMA compliance and NRI taxation.

Reviewed by CA Regi Tom Antony, Regi Tom Antony & Associates. Last reviewed: July 2026. This page is general guidance as of 2026 and is not a substitute for engagement-specific advice.