Repatriating Profits from India: Dividends, Royalty & Fees — A Full Guide
Earning profit in India is one thing; moving it to the parent company is another. India permits repatriation through several channels under FEMA, each with its own tax treatment and paperwork.
Main channels
- Dividends: distributing post-tax profit to shareholders — the most common route
- Royalty / technical fees: payment for brand, IP or technology usage
- Service fees: for management or technical support from the parent
- Interest: on parent loans (ECBs), within FEMA limits
Dividends
Dividends are taxed in the shareholder's hands, and paying a non-resident shareholder triggers TDS. The India–home-country DTAA can reduce that rate.
Royalty & service fees
These are deductible business expenses that reduce Indian taxable income — but they must satisfy transfer-pricing (arm's length) rules and attract withholding under Section 195. The commercial substance and contracts must support them.
Tax & documentation
- Correct TDS by nature of payment
- DTAA relief needs a Tax Residency Certificate (TRC) and Form 10F
- Foreign remittances need Form 15CA/15CB
- Transfer-pricing documentation where applicable
Designing the optimal mix
The blend of dividend, royalty, fees and interest changes the group's total tax cost. A well-designed structure — respecting transfer pricing and withholding — legitimately minimises leakage.
Statura designs your repatriation structure and handles TDS, DTAA and 15CA/15CB filings.