What is specific to US companies
A US corporate parent with at least 10% can usually deduct the foreign-source dividend under Section 245A but cannot credit the Indian withholding on it, so that tax is a final cost. Royalties and service fees are taxable in the US, with Indian tax generally creditable, which can make them more efficient where substance supports them.
Routes compared
| Route | Indian tax | What it needs |
|---|---|---|
| Dividend | 15% (10%+ voting power), 25% otherwise | Distributable profits; board or shareholder approval |
| Royalty | 15% (10% for equipment) | A real licence; arm's-length price |
| Service fee | Fees for included services: 15%, but only where they make technical knowledge available; other fees are business profits. | Agreement, evidence of services, benchmark |
| Interest | 10% (banks) to 15% | Registered ECB loan |
| Buyback | Domestic rules | Company-law limits; FEMA pricing |
Our services
How SU and Company helps
We plan and document how money moves back to the parent, at the right treaty rate.
- Dividend, royalty, fee and interest planning
- Treaty withholding and remittance paperwork
- Board and FEMA steps for dividends and buybacks
- Indian figures and certificates for the parent's tax relief
Questions
Which route is cheapest?
It depends on the parent's home-country position and the substance behind each charge; dividends are simplest, fees and royalties need contracts and transfer pricing support.
General information as at 5 November 2026, not advice for a particular case. Indian and US rules change often; confirm the current position before acting. US law points should be confirmed with a US adviser.