By Manu Rao | Updated March 2026
The Scenario
A software architect based in San Jose, California, with 12 years at a Fortune 500 tech company, wants to launch a product engineering firm in India. The plan is straightforward: build a team of developers in Bengaluru, serve US clients remotely, and eventually take on Indian enterprise contracts too. She holds an active US Green Card and retains her Indian passport — making her a Non-Resident Indian under FEMA definitions.
Her savings sit in a US bank. She wants to invest roughly $50,000 as initial capital. She needs an entity that lets her hire employees in India, sign contracts in both countries, and keep clean books that satisfy both the IRS and Indian income tax authorities.
Why India?
India's IT services market crossed $250 billion in FY2025, with mid-size firms growing faster than the top-tier players. The talent arbitrage is still real — a senior full-stack developer in Bengaluru costs about 30-40% of the equivalent role in the Bay Area. But the real draw is the domestic market. Indian enterprises are spending more on digital transformation, and a company with US operational standards has a trust advantage with Indian CTOs who've worked abroad.
The NRI angle matters too. Over 4.4 million Indian-origin people live in the United States, and many are exploring reverse entrepreneurship — building businesses that straddle both economies.
Entity Choice
A Private Limited Company is the right fit here. It gives her limited liability protection, allows foreign direct investment through the automatic route, and is the standard structure that Indian enterprise clients expect to see on a vendor empanelment form.
She considered a Limited Liability Partnership (LLP), which has lighter compliance. But LLPs cannot easily raise equity funding later, and if she ever wants to bring on a co-founder or angel investor, the Private Limited structure is already set up for it. A sole proprietorship was ruled out immediately — it offers zero liability protection and cannot receive FDI.
An alternative she explored was setting up a US LLC that simply contracts Indian freelancers. This works for a one-person operation but falls apart once you need to hire employees, lease office space, or sign multi-year contracts with Indian companies. The Indian entity gives her legal standing in the domestic market.
FDI Route and Sector Rules
IT services fall under 100% automatic route FDI as per DPIIT Consolidated FDI Policy (Section 5.2.9). No government approval is needed. She can invest through inward remittance, and the company must file Form FC-GPR with the RBI within 30 days of share allotment.
Since she is an NRI (Indian passport holder), she can invest on a repatriable or non-repatriable basis under FEMA (Non-Debt Instruments) Rules, 2019. Most NRIs choose repatriable, which preserves the right to take profits and capital back to the US.
Key regulation: the company's total foreign investment must be reported on the Annual Return on Foreign Liabilities and Assets (FLA) filed with the RBI by July 15 each year.
Registration Process
Here is what the process looks like from California:
- Digital Signature Certificate (DSC) — She applies online. As a US-based applicant, she needs her documents attested by an Indian consulate in San Francisco, or she can use apostille through the US Secretary of State's office (the US is a Hague Apostille Convention member).
- Director Identification Number (DIN) — Applied for through the SPICe+ form alongside incorporation.
- Name Reservation — Part 1 of the SPICe+ form. She picks a unique name that includes "Private Limited" at the end.
- SPICe+ Filing (Part 2) — This single form handles incorporation, PAN, TAN, EPFO, ESIC, GST registration, and bank account opening mandate. Filed with the Ministry of Corporate Affairs (MCA).
- Bank Account — The SPICe+ form includes a bank account opening request (AGILE-PRO-S). She can select from listed banks.
Typical timeline: 10-15 business days from document submission to Certificate of Incorporation, assuming no MCA queries. The time zone gap actually helps — she submits documents in the evening (US Pacific Time), and Beacon Filing's team picks them up first thing in the morning (IST).
Tax Structure
India and the United States have a Double Taxation Avoidance Agreement (DTAA) that has been in force since 1991. Key rates under the India-US DTAA:
| Income Type | DTAA Rate | Domestic Rate (without DTAA) |
|---|---|---|
| Dividends | 15% (25% if holding <10%) | 20% |
| Interest | 15% | 20% |
| Royalties/FTS | 15% | 20% |
Her Indian company will pay corporate tax at 25% (plus surcharge and cess) under Section 115BAA of the Income Tax Act if she opts for the new tax regime. If the company qualifies as a startup under Section 80-IAC, she can claim a 3-year tax holiday out of the first 10 years — but this requires DPIIT startup recognition.
On the US side, she must report her ownership of the Indian company on Form 5471 (Information Return of US Persons With Respect to Certain Foreign Corporations) with her annual IRS filing. She can claim a Foreign Tax Credit (Form 1116) for taxes paid in India to avoid double taxation.
FATCA adds another layer. The Indian company's bank will report her NRI-held account to the IRS through FATCA information exchange. She needs to ensure her US tax returns match what the Indian bank reports.
Ongoing Compliance
Once the company is running, here is what the annual compliance calendar looks like:
- Board meetings — Minimum 4 per year, with no gap exceeding 120 days (Section 173, Companies Act 2013)
- Annual General Meeting (AGM) — Within 6 months of financial year end (September 30 for a March 31 year-end)
- Annual Return (Form MGT-7A) — Filed within 60 days of AGM
- Financial Statements (Form AOC-4) — Filed within 30 days of AGM
- Income Tax Return — Due October 31 (if tax audit applies) or July 31
- GST Returns — Monthly GSTR-1 and GSTR-3B if turnover exceeds threshold; quarterly under QRMP scheme if below Rs 5 crore
- RBI FLA Return — By July 15 each year
- Transfer Pricing Report — If she invoices her own Indian company from the US, transactions between related parties need a transfer pricing study (Section 92, Income Tax Act)
Common Pitfalls
- Ignoring transfer pricing — If she routes US client payments through a personal US account and then pays the Indian company, the IRS and Indian tax authorities will both flag the arrangement. Set up proper inter-company agreements from day one.
- Mixing NRO and NRE accounts — Many NRIs accidentally use their old NRO account for business. The company needs its own current account. Her personal NRI accounts (NRE/NRO) are separate from the company's bank account.
- Forgetting US reporting obligations — Form 5471 penalties start at $10,000 per year for non-filing. This is not optional. Many NRIs discover this only during an IRS audit.
- Not appointing a resident director — Under Section 149(3) of the Companies Act 2013, at least one director must have stayed in India for 182+ days in the previous calendar year. She cannot be the sole director if she lives in the US full-time.
- Skipping the registered office requirement — The company needs a physical registered office in India from day one. A co-working space works, but she needs a valid address with a utility bill or rent agreement.
How Beacon Filing Helps
Beacon Filing handles end-to-end company registration for NRIs in the US, including document attestation coordination, SPICe+ filing, and bank account setup. We work across the US-India time zone gap so nothing stalls overnight.
After incorporation, our compliance packages cover annual filings, GST returns, and RBI reporting — so she can focus on building the product team instead of chasing due dates.
Full guide: Register a Company in India from the United States