Foreigners in India: Finance, Loans & Business Guide
If you're not an Indian citizen but want to do business or invest here, the rules can feel like a maze. The good news is most of them are clear once you break them down. In this guide we cover the basics you need to know right now.
Key finance rules for NRIs and foreign entrepreneurs
First, understand the difference between a resident and a non‑resident for tax purposes. NRIs are taxed only on income earned in India, while any worldwide income is taxed for residents. This means you won’t pay Indian tax on money you earn abroad, but you must file a return for any Indian earnings.
When it comes to moving money, the RBI caps how much an NRI can send out of the country each financial year. The current limit is US$250,000 under the Liberalised Remittance Scheme (LRS). Keep a record of all transfers – the bank will ask for proof of source and purpose.
Loans are also possible for non‑residents. Indian banks offer NRI home loans, personal loans, and business loans, but they require a stable overseas income, a good credit score in your residing country, and a valid passport. Documents you’ll typically need include your overseas salary slips, tax returns, and a passport‑size photo.
Practical steps to start or grow a venture in India
Want to set up a company as a US citizen or another foreign national? The first step is to decide on the legal structure. Most foreigners choose a Private Limited Company (PLC) because it limits personal liability and is easier to raise capital. You’ll need a Digital Signature Certificate (DSC) and a Director Identification Number (DIN) for each director.
Next, register for GST if your annual turnover exceeds ₹40 lakhs for services or ₹20 lakhs for goods. Even if you stay below the threshold, getting a GST number can help you claim input tax credits and appear credible to suppliers.
Don't forget compliance on the foreign investment front. The Reserve Bank of India (RBI) allows up to 100% foreign direct investment (FDI) in most sectors under the automatic route, meaning you don’t need prior approval. However, sectors like retail and real estate have caps, so check the latest FDI policy before you sign any agreements.
Once the company is set up, focus on cash flow. Small businesses often overlook write‑offs that can reduce taxable income. Common deductions include rent, employee salaries, software subscriptions, and interest on business loans. Keep receipts and maintain a simple spreadsheet – it’s easier than hiring an accountant for the first year.
Exports are a great way to earn foreign currency. If you plan to sell Indian products in the USA, you’ll need an Import Export Code (IEC) from the Directorate General of Foreign Trade. The IEC is a ten‑digit number that lets you legally ship goods abroad and claim rebates on customs duties.
Finally, think about funding. Angel investors, venture capital firms, and government schemes like Startup India are accessible to foreigners if you meet eligibility. Prepare a concise pitch deck covering your market, revenue model, and growth plan – investors care more about clarity than fancy slides.
By staying on top of tax rules, keeping documentation tidy, and using the right legal structure, you can turn the initial complexity into a manageable roadmap. India offers huge opportunities, and with these practical steps you’re ready to take the next move.
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