How to start a US LLC from India: RBI, tax and banking rules (2026)

Can a resident Indian own a US LLC?

Yes. Investing in a company outside India is governed by the Foreign Exchange Management (Overseas Investment) Rules and Regulations, 2022, and RBI's Master Direction on Overseas Investment, last updated on April 1, 2026. Putting money into an unlisted foreign company, such as your own US LLC, is overseas direct investment (ODI), and RBI's directions name a limited liability company as a qualifying limited-liability structure.

You don't need prior RBI approval if you meet the conditions. Overseas investment runs under the automatic route through your AD bank (an authorised dealer bank, one RBI allows to handle foreign exchange). The UIN the bank obtains records your investment with RBI; RBI says it isn't an approval.

The conditions for resident individuals

• An operating business. Schedule III of the Rules allows individuals to make ODI only in an operating foreign entity, and all overseas investment must be in a bona fide business activity.
• No financial services. The LLC can't do anything that would need registration with, or regulation by, a financial sector regulator such as RBI or SEBI if it were done in India.
• No subsidiaries you control. An individual can't make ODI in a foreign entity that has a subsidiary or step-down subsidiary where the individual has control. Control includes rights to 10% or more of the votes, so a founder-owned LLC can't own other companies under this route.
• Not a prohibited sector. No real estate activity, gambling in any form, or financial products linked to the Indian rupee.
• Your own money, within LRS. The investment counts toward the LRS limit of USD 250,000 per financial year (April to March), you must give your PAN, and ODI in a start-up can't be made with borrowed funds.

Step by step: forming and funding a US LLC from India

1. 1

   Check eligibility with a CA and choose your AD bank

   Confirm your business meets the conditions above, then pick one bank branch that handles overseas investment. Every transaction for the LLC's UIN must go through that designated AD bank, and your LRS remittances also run through one designated branch.

2. 2

   Form the LLC and get its EIN

   Choose a state (best states for non-residents), form the LLC and get an EIN, the IRS's tax ID for businesses. Our step-by-step formation guide covers the US side, and getting an EIN without an SSN explains the IRS process. Ask your CA how to treat fees you pay from India before the LLC has its own account.

3. 3

   Open the LLC's US bank account

   Your capital has to land in the LLC's own account. See opening a US business bank account as a non-resident for what banks and fintechs ask for.

4. 4

   Submit Form FC and get a UIN

   Give Form FC and the supporting documents to your AD bank on or before your first investment. The bank reports it to RBI to obtain a Unique Identification Number (UIN) for the LLC, and it can send money to the LLC only after the UIN is issued.

5. 5

   Send your capital

   The bank will ask for Form A2, the application for buying foreign exchange under LRS. Each contribution is reported through the bank when you send it, counts toward USD 250,000 for the year and attracts TCS above ₹10 lakh. Cash isn't allowed.

6. 6

   Submit evidence of investment within 6 months

   Within six months of the remittance, give the bank share certificates or other documents that evidence your investment under US law. LLCs usually don't issue share certificates, so ask your bank early which document it accepts. If you miss the deadline, the money has to come back to India.

7. 7

   Every year: APR, US filings and your Indian return

   File the APR by December 31, keep the LLC's US filings current (a foreign-owned single-member LLC files Form 5472 every year), and report the LLC in your income tax return.

The Annual Performance Report: due date, audit and late fees

Every resident holding ODI submits an APR for each foreign entity by December 31 every year, for as long as the investment is held. If the LLC's accounting year ends on December 31, the APR for that year is due by December 31 of the following year. The only exemptions are a stake under 10% without control and no other financial commitment, or an entity under liquidation, so a founder who owns the LLC files every year, revenue or not.

The APR must be based on the LLC's audited financial statements. Unaudited accounts certified by a CA are allowed only when you don't control the entity and the host country doesn't require an audit, so a founder who controls the LLC should plan for an audit each year. For individuals, a Chartered Accountant certifies the APR and confirms that money due from the LLC was brought to India, checked against the Foreign Inward Remittance Certificates (FIRCs) from your bank. If several residents own the LLC, the one with the largest stake files.

In the formula, the years of delay are rounded up to the nearest month, the result is rounded up to the nearest ₹100 and the fee is capped at the amount involved. Reporting ₹5 lakh of investment 18 months late costs ₹7,500 + (0.025% × ₹5,00,000 × 1.5), or ₹7,700. The late fee route is open only for three years from the due date; after that you're liable for penal action under FEMA. Until a delay is regularised, your bank won't process further remittances to the LLC.

Selling or closing the LLC is reported too: disinvestment within 30 days of receiving the proceeds. If you're winding down, read how to close a US LLC and involve your CA before the state filing.

How much TCS do you pay when you fund your LLC?

Your bank collects tax collected at source (TCS) when you send money abroad under LRS. Budget 2025-26 raised the threshold to ₹10 lakh a financial year. The Income-tax Act, 2025 replaced the 1961 Act in April 2026, and the Finance Act, 2026 cut some rates from April 1, 2026, but not the rate for investment.

So if you send ₹15 lakh to your LLC in one financial year, the bank collects 20% on the ₹5 lakh above the threshold, which is ₹1 lakh, on top of the transfer. TCS isn't a final cost: the bank issues a TCS certificate and you claim the credit when you file your income tax return. Banks don't refund TCS if a transfer comes back, and a higher rate applies if your PAN is inoperative because it isn't linked to Aadhaar.

Indian income tax: Schedule FA, foreign income and tax credit

If you're resident and ordinarily resident in India, your return covers income from outside India too. The Income Tax Department's guide says residents report all income that accrues or arises outside India in Schedule FSI and include it in the computation of total income. How and when your LLC's profits are taxed in India depends on your facts, so agree the treatment with your CA before the first year-end.

Disclose the LLC in Schedule FA

• Schedule FA covers every foreign asset you own or benefit from at any time in the calendar year (January to December), not the Indian financial year.
• Your ownership of the LLC goes in Table B, financial interest in an entity outside India. A US account you can sign on goes in Table E if it isn't reported in another table.
• ITR-1 and ITR-4 don't have Schedule FA and can't be used by anyone with a financial interest in an entity outside India, so use a form that includes it, such as ITR-2 or ITR-3.
• Only residents who are ordinarily resident fill in Schedule FA; not-ordinarily-residents and non-residents don't.

Leaving out foreign assets can lead to penalties and prosecution under the Black Money Act, 2015. There's currently no penalty for non-disclosure where non-immovable foreign assets total less than ₹20 lakh, and Budget 2026 proposed immunity from prosecution for those cases, but the duty to disclose stays. If you missed it, the department allows a revised return within the time limit.

Claim credit for US tax: Form 67 and the India–US treaty

Whether your LLC owes US income tax depends on how and where it does business; see US taxes for non-resident LLC owners. The US treats a single-member LLC as disregarded for federal income tax unless it elects to be a corporation, and a foreign-owned one still files Form 5472 every year.

If you pay US tax on income that's also taxed in India, the India–US tax treaty (signed in 1989) requires India to allow a deduction for the US income tax, capped at the Indian tax on that income. Report the income and tax in Schedules FSI and TR, and file Form 67 online before your return. The new Act applies from tax year 2026-27 with new rules and forms, so check the current form with your CA.

Bringing money from your LLC back to India

• Profit distributions. FEMA requires you to bring money due to you from the LLC into India within 90 days of it falling due. The APR records dividends and other amounts repatriated.
• Invoicing the LLC for your services. If you or your Indian firm bill the LLC for work done in India, that's an export of services. RBI's export rules require export proceeds to be realised and repatriated within nine months from the date of export.
• GST on those invoices. Export of services is a zero-rated supply when the supplier is in India, the recipient and place of supply are outside India, payment arrives in convertible foreign exchange, and the two aren't merely establishments of one person. CBIC has clarified that a company incorporated in India and one incorporated abroad are separate persons. GST-registered exporters can supply under a Letter of Undertaking without paying IGST.

Your India checklist, and where we fit

Work with a Chartered Accountant and your AD bank from the start: a missed filing can block future remittances until it's regularised. Take this list to your first meeting:

1. A description of the business, showing it's an operating business and not financial services
2. The LLC's formation documents, operating agreement and EIN letter
3. Your PAN and how much capital you plan to send this financial year
4. Form FC, Form A2 and your bank's own ODI checklist
5. Who will audit the LLC's accounts for the APR
6. Dates: evidence of investment at 6 months, the APR every December 31 and Schedule FA in each return

We handle the US side: formation in any state, the EIN, the registered agent and the annual report, plus Form 5472 and bank and Stripe application support on Pro. We aren't a CA firm and don't file RBI or income tax forms. Pro includes an RBI overseas-investment checklist so you and your CA can track each step, and Chartered Accountant firms can partner with us to offer both sides to their clients.

Frequently asked questions