You have decided Dubai is happening, the money is sitting in your Indian account, and one question has you stuck: how do you legally move it? Every bank blog explains the Liberalised Remittance Scheme in the abstract, every setup consultant waves at FEMA in a single line, and nobody tells an Indian founder which route actually funds a Dubai company. This guide gives you the route out under RBI rules, the filings the law expects, and the route home for your profits.
The short answer
Funding your Dubai company from India is an Overseas Direct Investment (ODI) under FEMA. As an individual, you make that ODI within your Liberalised Remittance Scheme limit of USD 250,000 per financial year, routed through your Authorised Dealer bank and recorded under a UIN. You then report it to the RBI every year by 31 December.
Funding the company is one piece of the wider decision to move from India to Dubai, and it is the piece nobody sequences properly. Treat what follows as the money map that sits under that move.
All figures in this article are approximate and were accurate at the time of writing. Government fees, service charges, advisory fees, document preparation, attestation and translation costs are quoted separately and vary by case.
LRS or ODI – which route funds your Dubai company
Funding your Dubai company is an Overseas Direct Investment, and as an individual you make that ODI within your Liberalised Remittance Scheme limit. ODI classifies what you are doing; LRS is the gateway the money passes through. Two gates, one remittance.
People treat this as a choice between two schemes. It is not. The RBI classifies a resident who buys equity in a foreign company as making an ODI under the FEM (Overseas Investment) Rules, 2022. Because you are a resident individual and not a company, that ODI has to fit inside your LRS ceiling. So both apply to the same transfer at the same time.
India opened the individual ODI route in its current form with the FEM (Overseas Investment) Rules, 2022, effective 22 August 2022, which pulled the earlier scattered guidance into one framework. The framework treats your equity subscription as a reportable investment, not a simple money transfer, and that single classification is what pulls in every filing that follows.
The comparison below sets the two side by side so you can see how they interact rather than compete.
LRS vs ODI, side by side
| Route | Who uses it | Annual limit | When it applies to a Dubai company | TCS position | What you file | Reporting owed |
|---|---|---|---|---|---|---|
| LRS | Any resident individual | USD 250,000 per financial year | Every rupee you personally remit counts against it | TCS above 10 lakh per year, creditable | Form A2 at your AD bank | Captured in your bank’s LRS reporting to the RBI |
| ODI | Individuals and entities buying a foreign business | Rides on the USD 250,000 LRS limit for individuals; 400 percent of net worth for companies | Applies the moment you subscribe to your Dubai company’s equity | For individuals, follows the LRS TCS position | Form ODI Part I and Part II | UIN, plus an Annual Performance Report by 31 December |
This guide stops at the money. The steps of actually forming your company as an Indian founder, the free-zone choice, the licence and the paid-up capital, sit on a separate page and are not repeated here.
What is the LRS limit, and does USD 250,000 cover your remittance
The Liberalised Remittance Scheme lets you, as a resident individual, remit up to USD 250,000 per financial year, April to March, for permitted transactions. Your Dubai equity investment counts against that same ceiling, alongside any travel, education or other overseas spending in the year.
The RBI sets the figure and it resets on 1 April. Everything you send abroad in a year draws from the same USD 250,000 pool, so a founder who has already spent on foreign tuition or property has less room left for the company than the headline number suggests. Check your year-to-date total before you assume the full amount is available.
What draws on the pool is broad: your company investment, foreign tuition, overseas property, gifts abroad and travel all share the same USD 250,000. Spending a foreign employer bills directly, or genuine current-account items your bank treats separately, sits outside it. If your investment is large and your year is nearly spent, splitting the remittance across two financial years, one before 31 March and one after, is a legitimate way to stay inside the limit, provided the structure and timing support it in substance.
There is a lever most founders miss. Each resident individual has a separate USD 250,000 limit, so a family of four can each remit toward the same Dubai entity and pool close to USD 1 million in a single financial year. Each family member has to be a genuine shareholder in their own name, holding real equity, not a name used to move someone else’s money.
When does the ODI route take over, and what does control trigger
The ODI route applies the moment your Dubai investment is in unlisted equity, or gives you 10 percent or more of a listed company, or gives you control. Below that, a listed stake under 10 percent with no control, it is Overseas Portfolio Investment, not ODI.
Most founders subscribe to unlisted shares in a new company, which lands squarely in ODI territory from the first rupee. Overseas Portfolio Investment (OPI) is the contrast case: a small, passive, listed holding with no control. If you are starting or taking a stake in your own operating company, you are almost always in ODI.
The limit changes with who invests. Your individual ODI rides on the USD 250,000 LRS ceiling. A company investing abroad works under a different rule, up to 400 percent of its net worth under the automatic route, which is why some advisers frame ODI as if there were no personal cap. For you as an individual, the LRS cap is the one that binds.
Control is the trigger people underestimate. It is not only a majority stake. The right to appoint a director, a veto over important decisions, or a shareholders’ agreement that hands you effective say can each count as control, which pushes even a minority holding into ODI. If your Dubai company is one you run, assume ODI and file accordingly.
The classification follows the structure, which is why getting your entity structure right before you remit a single rupee matters more than the remittance mechanics. Fix the structure first, and the routing falls into place behind it.
Before you remit a single rupee – the checklist
Run these checks before any money leaves your account. Each one closes a gap that turns into a FEMA problem later, and together they take you from a decision to a compliant remittance without a scramble halfway through.
- Confirm your total overseas remittances this financial year, so you know how much of your USD 250,000 LRS room is left.
- Establish which route applies: ODI for unlisted equity or a controlling stake, OPI for a small listed holding.
- Check the Dubai entity is a bona fide operating business, not a financial-services company.
- Fix the entity structure before the money moves, not after.
- Open the UAE corporate bank account that will receive the remittance.
- Line up your AD Category-I bank in India for Form A2 and Form ODI.
- Note the dates: Form ODI Part II within 30 days of allotment, evidence of investment within 6 months, APR by 31 December.
- Plan the profit route home before you send anything out.
How do you actually send the money – Form A2, your AD bank, and Form ODI
You send the money through an Authorised Dealer Category-I bank, the only channel the RBI permits for this. You sign a Form A2 declaration for the outward remittance and file Form ODI Part I before the investment goes out. The bank routes the funds and records the transaction.
The sequence matters more than any single form. First comes your decision to invest and the shape of the deal. Then Form ODI Part I is filed with your AD bank before the money moves, because the RBI wants the investment reported ahead of the remittance, not after. The Form A2 declaration accompanies the outward transfer itself. Only then do the funds leave and the equity get allotted to you.
Keep the paperwork the bank will ask for ready before you start. That usually means your PAN, the Dubai entity’s incorporation or subscription documents, a valuation or the agreed share price, the record of your investment decision, and the Form A2 and Form ODI Part I drafts. A file that arrives complete clears the bank’s checks in one pass; a file missing the valuation basis or the entity documents goes into a back-and-forth that adds weeks nobody budgeted for.
Your AD bank is the gatekeeper for all of it. The bank charges for processing the remittance and lodging the filings, and those charges vary by bank and are quoted separately from any advisory fee. The realistic view is that timing depends on your paperwork being clean, so a complete Form ODI Part I and a matching Form A2 move faster than a file the bank has to send back for corrections.
What do you owe the RBI after you invest – UIN, evidence in 6 months, APR by 31 December
After the investment, you file Form ODI Part II within 30 days of the equity allotment, and the RBI issues a Unique Identification Number for your Dubai entity. You then submit evidence of investment within 6 months, and an Annual Performance Report by 31 December every year.
The obligation does not end when the money lands. Form ODI Part II reports the allotment and earns you a UIN, which is the reference the RBI ties every future filing to. Miss the UIN step and your later filings have nowhere to attach.
Two deadlines then run in parallel. Evidence of the investment, usually the share certificate, has to reach your AD bank within 6 months of the remittance, or the funds are expected back in India. The Annual Performance Report is due by 31 December each year for as long as you hold the entity, and it is built from the entity’s audited accounts.
The APR is not a formality. It reports the Dubai entity’s financial position each year from its audited accounts, and it is the RBI’s window into whether your overseas investment is performing as declared. Your UIN is the thread that ties your Form ODI, your APR and any later remittance to the same investment, so treat it as the reference number you quote on everything from that point on.
The FEMA filing calendar
| Form / obligation | What it is | When it is due | Filed with | If you miss it |
|---|---|---|---|---|
| Form A2 | Outward remittance declaration | Before the money leaves | Your AD Category-I bank | The remittance is blocked until it is filed |
| Form ODI Part I | Pre-investment reporting of the ODI | Before you remit | AD bank, to the RBI | The investment cannot proceed compliantly |
| Form ODI Part II | Post-allotment reporting | Within 30 days of equity allotment | AD bank, to the RBI | Late Submission Fee from 7,500 |
| UIN | Unique Identification Number for the entity | Issued by the RBI after Part II | RBI, via your AD bank | No UIN means no compliant further remittance |
| Evidence of investment | Share certificate or equivalent proof | Within 6 months of remitting | AD bank, to the RBI | Funds must be repatriated within that 6 months |
| APR | Annual Performance Report on the entity | By 31 December each year | AD bank, to the RBI | Late Submission Fee, flat 7,500 per default |
| Dividend repatriation | Bringing dues home | Within 60 days of falling due | Through your AD bank | FEMA section 13 contravention, up to three times the amount |
The filing calendar is where most founders slip. A missed Form ODI Part II or a skipped APR turns a clean investment into a FEMA contravention, and the penalty is not small. If you would rather not track this alone, this is the point to bring in a partner who runs the India-to-UAE routing end to end.
Does TCS apply to what you send, and how much
TCS applies to your LRS remittance once you cross 10 lakh in a financial year, a threshold the CBDT raised from 7 lakh in Budget 2025. Your bank collects it at source, and it is creditable against your income tax. It is a timing cost, not a lost one.
Note the currency here. The threshold is stated in rupees because that is how the CBDT sets it: below 10 lakh in a financial year, no TCS on the LRS remittance; above it, TCS is collected and later set off against your income-tax liability. You do not lose the money, you carry it until you file.
The credit works like any tax collected at source. Your bank deposits the TCS against your PAN, it shows in your Form 26AS, and you set it off against your advance tax or your final liability when you file your return. So the real effect is on cash flow in the year you remit, not on the total tax you pay. A founder sending a large sum should plan for the outflow and the reclaim, rather than count the TCS as a cost of the investment.
One point causes real confusion. Some sources headline that there is no TCS on ODI. That framing describes entity ODI, where a company invests under its own net-worth limit outside LRS. Your ODI as an individual rides on LRS, so the LRS TCS rule applies to you above the 10 lakh threshold. Read any blanket no-TCS claim with the individual-versus-entity distinction in mind.
How do you bring profits back from Dubai to India
You bring profits back mainly as dividends from your Dubai company. Under FEMA, dues from your overseas entity, including dividends, must be repatriated to India within 60 days of falling due. The transfer itself is a FEMA obligation; the tax on it is a separate question.
The dividend is the clean route home. Your Dubai company declares a dividend, and the FEMA framework expects the money to reach India within 60 days of it becoming due. That 60-day clock is the part founders forget, because they assume profit can sit offshore indefinitely, and under FEMA it cannot once it has formally fallen due to you.
Dividends are the common route, but they are not the only dues that come home. Repayment of a loan you extended to the entity, and fees or salary the entity owes you, are dues that FEMA expects back within the same 60-day window once they fall due. The proof your AD bank wants is the board resolution declaring the dividend or the invoice raising the fee, matched to the inward remittance, so the trail from declaration to deposit is clean.
Money landing in your account is not automatically taxed on arrival. What matters is whether that money is taxable in your hands as a resident, RNOR or NRI, and that turns on your residency status in the year you receive it. That status question is answered separately, and it changes the whole tax picture, so settle it before you plan large repatriations.
What does the India-UAE DTAA change about the money you send home
The India-UAE Double Taxation Avoidance Agreement decides how many times the dividend you repatriate is taxed. It lets the UAE-side treatment be set against your India-side liability, so the same income is not taxed in full in both countries. The relief depends on your status and proof of it.
On the money coming home, the DTAA does one job that matters to you: it stops the same dividend being taxed fully on both sides of the border. The treaty allocates taxing rights and provides relief, so profit that has already borne UAE treatment is not simply taxed again at full rate in India.
Relief usually takes the form of a credit for tax borne in the UAE against what India would charge, or an exemption where the treaty assigns taxing rights to one side. For your planning the point is plain: the treaty is what stops the round trip being taxed twice, so factor it in before you decide how much profit to bring home in a year.
Claiming that relief usually means proving where you are tax-resident, and a UAE tax residency certificate is the document that does it. The deeper status mechanics, resident versus RNOR versus NRI and the tie-breaker tests, sit outside this guide, because they decide your position rather than the movement of the money.
Where Indian founders get FEMA wrong, and what it costs
The costliest FEMA mistakes are missing a filing and misclassifying the investment. A late Form ODI or APR draws a Late Submission Fee from 7,500, and a genuine contravention under FEMA section 13 can cost up to three times the amount involved. Structure errors compound both.
The mistakes cluster in predictable places.
- Missing Form ODI Part II or the annual APR. The Late Submission Fee starts at 7,500 and stacks with the length of the delay.
- Round-tripping. Using your Dubai entity to invest back into India through layers is prohibited under the overseas-investment rules.
- Crossing the financial-services line. An individual’s ODI has to be a bona fide operating entity, not a financial-services business.
- Breaching the two-layer cap. Your overseas structure cannot run beyond two layers of subsidiaries.
- Remitting before you classify. Sending money before you know if it is ODI or OPI, or before the structure is set, is the error that causes the rest.
- Blowing past USD 250,000 without checking the family-clubbing option that could have carried the excess legally.
None of these are exotic. They are the everyday slips of a founder doing this once, under time pressure, without someone tracking the calendar and the classification at the same time.
How Consultycs helps Indian founders get the routing right
The trap is not the remittance form. It is remitting before the structure underneath it is right. A founder who sends money before the entity is properly set can trip the FEMA classification, the control test that separates ODI from OPI, or the operating-entity requirement, and can leave the India-side tax position exposed at the same time. Consultycs sets the UAE structure so the India-side routing is clean from the first rupee.
We do not sell packages. We fix the structure first and design it for tax efficiency, because the way your Dubai entity is built decides how cleanly your LRS remittance classifies and how your profits come home later. Doing it in that order is the whole point.
The routing also needs somewhere to land. Your Dubai company needs a UAE corporate bank account to receive your remittance and, later, to pay the dividend back to India, and Consultycs runs that path from structure to licensing to banking to ongoing compliance.
You work with one contact from the strategy side and one from operations, not a ticket queue. That is how the routing stays owned by people who understand both sides of the border.
Frequently Asked Questions
What is the maximum LRS limit for funding a Dubai company?
USD 250,000 per financial year, per resident individual, running April to March. Your Dubai equity investment counts against that ceiling alongside any other overseas remittance you make in the same year, so track your total outward spending before you commit the full amount to the company.
What is the difference between LRS and ODI when I invest in Dubai?
LRS is the individual remittance gateway; ODI is how your investment is classified. Funding equity in your Dubai company is an ODI, made by you as an individual within the LRS limit. One describes the money leaving the country, the other describes what the money buys.
Can an individual make an ODI, or is that only for companies?
Yes, an individual can. Under the FEM (Overseas Investment) Rules, 2022, a resident individual may make an ODI, subject to the LRS cap and to the target being a bona fide operating business rather than a financial-services entity. Companies invest under a separate net-worth limit.
Does TCS apply when I send money to fund my Dubai company?
TCS applies on LRS remittances above 10 lakh in a financial year, a threshold raised from 7 lakh in Budget 2025. Your bank collects it at source, and it is creditable against your income tax, so it affects your cash-flow timing rather than your final cost.
What do I file with the RBI, and when?
Form A2 for the remittance and Form ODI Part I before you invest, then Form ODI Part II within 30 days of allotment, all through your AD bank. You submit evidence of investment within 6 months and an Annual Performance Report by 31 December each year.
How do I bring profits back from Dubai to India?
Usually as dividends. Under FEMA, dues from your overseas entity must be repatriated to India within 60 days of falling due. Moving the money is a FEMA obligation; whether it is taxed in your hands depends on your residency status in the year you receive it.
Is money I transfer from Dubai to India taxable?
Transferring the money is not itself the taxable event. Tax attaches to the underlying income and depends on your residency status, resident, RNOR or NRI, and on the India-UAE DTAA. The same profit is generally not taxed in full in both countries once treaty relief applies.
What happens if I miss a FEMA filing?
A late filing draws a Late Submission Fee, starting at 7,500, and it can grow with the delay. A genuine contravention under FEMA section 13 can cost up to three times the amount involved. Filing Form ODI and the annual APR on time is your core obligation as a founder.
What to do next
The move has an order to it. Map your remittance against your USD 250,000 LRS room, fix the entity structure before the money leaves, file Form ODI and the APR on time, and plan the dividend route home before you need it. Do those four in sequence and the money side of relocating to Dubai stops being the thing that keeps you up at night.
Get the sequence wrong and the fixes are slow and expensive. Get it right and moving your capital becomes an administrative task, not a risk.
If you want the structure set so the routing is clean from day one, that is the conversation to have before you remit, not after.
Consultycs is a Dubai-based business setup and regulatory advisory firm in JLT, structuring UAE entities for tax efficiency, banking readiness, and long-term compliance.
