Repatriating profits and dividends from India by foreign companies involves compliance with several regulatory requirements set by the Foreign Exchange Management Act (FEMA). The profit repatriation in India process is relatively straightforward for dividends, which can be remitted without restrictions once applicable taxes are deducted. Dividends are taxed at 20% plus any applicable surcharge and cess, with potential reductions under tax treaties​​. The remittance must be conducted through an authorized dealer approved by the Reserve Bank of India (RBI).

Another method for repatriating profits includes the buyback of shares, which involves a 20% buyback tax on distributed profits. Additionally, payments for technical and consultancy services, as well as royalties, can be remitted, provided they adhere to transfer pricing norms to ensure fair market value and avoid profit shifting​​.

Wholly Owned Subsidiaries (WOS) offer flexibility in repatriation methods, including dividends, share buybacks and reduction of share capital. In these cases, necessary documentation such as tax clearance certificates and auditor’s certificates confirming compliance with Indian regulations must be provided. These documents ensure that all liabilities have been met and profits are legitimately earned in the normal course of business​​.

Overall, adhering to these regulatory requirements and maintaining thorough documentation is crucial for the smooth and legal repatriation of profits from India by foreign companies, ensuring compliance and minimizing potential delays or legal issues.