How to repatriate foreign funds to India

Companies in today’s era of greater globalisation frequently set up abroad subsidiaries or affiliates to better penetrate foreign markets or raise their attractiveness to foreign venture investors. The company’s ability to tap into such global markets, along with a savvy approach to business, bodes well for its financial success. The owners of the businesses subsequently repatriate these gains to their home countries, where they are put to use in the enterprises’ ongoing activities. Thus, one of the usual operating procedures in the ecosystem of multinational companies is the repatriation of funds back to the countries in which the entrepreneurs reside.


Consider India, which in 2017–18 received USD 61.96 billion in FDI and sent out USD 11.33 billion. Each and every one of these transactions involved countries from all around the world. It is crucial to have a firm grasp on, and thoroughly plan for, the plethora of possibilities available for the repatriation of funds when dealing with transactions of this nature.


However, due to the complex web of international regulations, repatriation is no picnic. There are a number of prerequisites that must be met before money can be transferred from one country to another. To prevent potential tax and regulatory complications in the long run, businesses should have a strategy in place for repatriating overseas earnings to their home country.


How to get money sent to you by a foreign organisation into your Indian bank account


Now, let’s go over the numerous ways that you can send money back home:


Reinvestment of Dividends (A)


Investors should remember that dividends are taxable income and should report them as such. Typically, dividends are subject to taxation only in the country where they are actually received. Thus, several countries have evolved distinct dividend-related legal frameworks.


It is impossible to ignore the existence of Double Taxation Avoidance Agreements (DTAA), which have been negotiated between a large number of countries, when discussing dividends as a means of remitting monies to one’s home country. For instance, the DTAA between India and Singapore specifies that dividends should be taxed in the home state of the beneficiary. Therefore, stockholders in both countries no longer have to pay tax when bringing profits back home; instead, they pay tax only once.


Indian shareholders of foreign corporations must wait sixty days after receiving dividends before remitting such funds back to India, or such longer length of time as the Reserve Bank may permit.


Remittance B) Remittance by Salary or Other Remuneration


Directors’ salaries are another form of repatriation, whereby foreign earnings are sent back to the nation of origin. When a holding company establishes a foreign subsidiary, it will normally appoint a resident of the home country to serve on the board of directors. As a result, the directors’ wages can be sent to their home countries more easily. Payments received by overseas directors in their professional positions can potentially be used to repatriate cash. It is common practise for a corporation to provide a director with a portion or all of their salary in the form of stock in the company. A timely announcement to the proper authorities about the allotment of shares is also crucial.




Interest income has become one of the most common ways of sending money back to the homeland. To finance day-to-day operations, many companies are turning to their foreign parent or subsidiary companies for loans rather than traditional lending institutions like banks. Borrowers can get these loans at lower rates of interest. Therefore, there is less financial stress on the borrowing company. However, transfer pricing rules and regulations must be followed in these types of deals. This is to ensure that no issues or unpaid tax bills arise.




One effective means of getting money back to investors is through the payment of management fees. Companies receive management fees when one company pays another to handle administrative tasks for it. All applicable charges and taxes will be added to the total of any expenses for administrative services or technical support, for example. If a foreign company is providing management services in Singapore, and that service is regulated, Singapore may withhold an amount equal to a withholding tax from any payments made to that company.


Many corporations also use the delegation of project work to companies located in other countries by the original (or head) company. With this cutting-edge strategy, firms can lessen the burden on the parent company (the head company) that would otherwise result from not delegating project duties. It is important to exercise due diligence in this endeavour so that the deal is completed at a fair market value.




Because of the widespread use of this strategy, many countries now impose taxes on royalties received. Royalties and fees paid for technical services by non-residents are subject to taxation at a rate of twenty-five percent in India, as per the Income Tax Act of India. The total amount of royalties paid out in India in 2017–18 was Rs 27,000 crore (about $4 billion), a considerable increase over the previous financial year’s value of Rs 22,728 crore. In other words, the government’s own data.


Another method for bringing back earnings is through royalties, which are payments received for the use of intellectual properties including trademarks, patents, copyrights, and proprietary technology. One kind of compensation for the use of someone else’s intellectual property is the royalty payment. It is common practise for a parent company to grant its overseas subsidiaries access to its intellectual property in exchange for a royalty payment.


Signing double taxation agreements with various countries might help you save money by lowering the total amount of tax you owe. Royalty payments in China are subject to value-added tax, surcharges, and income tax withholding, all per the country’s rigorous legal framework. Additionally, royalty payments given to individuals who are not Singapore residents are subject to a withholding tax.




Businesses today routinely reinvest a portion of their earnings in the acquisition of their own shares. Investors have a crucial role when it comes to persuading a firm to buy back its own shares as a means of returning funds. The market for buying back shares has picked up steam again after Apple said in May 2018 that it would buy back shares worth a total of USD 100 billion around the world. The reduction in the corporation tax rate will result in significant tax savings for Apple. Apple was able to repatriate billions of dollars in cash that had been stashed abroad as a result of the decline in interest rates. For this method of repatriation to go smoothly, a thorough familiarity with the laws governing capital gains taxes is essential.


The firm’s objectives, the market conditions in which it operates, the number and location of its subsidiaries, the nature of the business, and other factors all play a role in determining which of these approaches to choose. Therefore, it is typical practise to adopt a mix of these approaches to ensure that foreign cash flows are optimised in a way that supports the fulfilment of long-term company goals.

Open chat
WhatsApp Now