Checked against the sources on 14 November 2026.
The choice is usually described as LRS or ODI, but the two terms overlap. An individual who takes shares in an unlisted company abroad is also making an overseas direct investment, and the same reporting follows.1 The real choice is who invests: you in your own name, or your Indian company.
Investing in your own name
A resident individual invests under the Liberalised Remittance Scheme (LRS). The limit is USD 250,000 in a financial year. It covers everything the person sends abroad that year, whatever the purpose.2
The overseas investment rules add three conditions for an individual.
- The company abroad must be an operating company, and it must not be in financial services.1
- If you control it, it cannot have a subsidiary of its own. A holding company with other companies under it is closed to this route.1
- You can take shares. You cannot lend to the company.3
Each member of a family has a separate limit. The limits can be combined for an investment only if every one of those members becomes an owner of it. PAN is mandatory for every remittance under the scheme.2
The bank also collects income tax at source on LRS remittances once they pass a yearly limit. For purposes other than education and medical treatment, the rate has been 20% since 1 October 2023.4 The limit was ₹7 lakh then, and the Budget of February 2025 raised it to ₹10 lakh.5 Confirm the current figures with your bank, because the cash has to be found on the day of the remittance.
Investing through your Indian company
An Indian company invests under the same rules with different limits. Its total commitment to all its companies abroad can reach 400% of its net worth, measured on the last audited balance sheet.1
A company that has invested in the overseas company and controls it can also lend to it. The loan needs a written agreement, with interest at an arm’s-length rate.6
The bar on subsidiaries applies to individuals and is not a condition for a company. Other limits on group structures still apply, so show the bank the whole chart.
The weak point of this route is net worth. A young company with accumulated losses may have very little, and the limit is a multiple of it. Money raised after the balance sheet date does not count until a later balance sheet has been audited.1
The two routes side by side
| Point | In your own name | Through your Indian company |
|---|---|---|
| Limit | USD 250,000 a person in a financial year, shared with all other remittances2 | 400% of the company’s net worth on its last audited balance sheet1 |
| What can be invested | Shares only3 | Shares, and loans once the company controls the company abroad6 |
| The company abroad | An operating company outside financial services, with no subsidiary if you control it1 | Those conditions do not apply1 |
| Tax collected by the bank | Yes, above the yearly limit4 | No. It is collected on LRS remittances, and a company cannot use the LRS2 |
| Form FC and the UIN | Before the remittance6 | Before the remittance6 |
| Annual Performance Report | By 31 December6 | By 31 December6 |
| FLA return | Individuals are not on the RBI’s list of filers7 | By 15 July7 |
Real estate activity and gambling are closed to both routes.1
Which route fits
Your own name fits a plain structure: one operating company, funded with share capital, for an amount inside the yearly limit.
Your Indian company fits when the amount is larger, when you expect to lend as well as take shares, or when the company abroad will have subsidiaries. It needs the net worth to support the amount.
The route also decides who owns the shares, and so who receives dividends and sale proceeds later. That has tax consequences in both countries. Take advice on your own facts before the first remittance.
Changing route afterwards means transferring the shares, which has to be priced at arm’s length and reported.1, 6 It is easier to choose before the company is incorporated.
The steps at the bank are the same on both routes and are set out in ODI step by step. Our page for Indian businesses with a company abroad compares eight countries.
Sources
- Ministry of Finance, Foreign Exchange Management (Overseas Investment) Rules, 2022. Notification G.S.R. 646(E), 22 August 2022, as published by the Reserve Bank of India.
- Reserve Bank of India, FAQs on the Liberalised Remittance Scheme. Updated 6 April 2023.
- Reserve Bank of India, Foreign Exchange Management (Overseas Investment) Directions, 2022. A.P. (DIR Series) Circular No. 12, 22 August 2022.
- Ministry of Finance, Important changes w.r.t Liberalised Remittance Scheme (LRS) and Tax Collected at Source (TCS). Press release, 28 June 2023.
- Ministry of Finance, Slew of direct tax reforms proposed in Union Budget 2025-26. Press release, 1 February 2025.
- Reserve Bank of India, Foreign Exchange Management (Overseas Investment) Regulations, 2022. Notification No. FEMA 400/2022-RB, 22 August 2022.
- Reserve Bank of India, FAQs on the Annual Return on Foreign Liabilities and Assets. Updated 1 July 2026.