Indian companies made fresh overseas direct investment commitments of USD 4.34 billion in September 2026, according to RBI data reported on 27 October 2026, and USD 383.70 million of it went to the US. It is also drawing questions. In May the Economic Times reported that the RBI had sent questionnaires to companies about the purpose of past investments abroad. Banks were also asking why some overseas balance sheets held real estate. Advisors meet the same question in a smaller form, when a client who runs a company asks whether it can hold a US property allocation.
The usual answer is no, or not in the way the client imagines. The Liberalised Remittance Scheme is open only to resident individuals. A company, firm, HUF or trust falls under the overseas investment rules of 2022 instead, and those rules bar direct investment in a foreign entity engaged in real estate activity. Portfolio investment by unlisted companies is narrow too. The advisor should test the structure before anyone proposes it, because the conversation usually moves to family members investing in their own names, each with their own limit and their own TCS, as the guide to TCS on foreign remittance explains.
Why LRS is closed to a client's company, firm, HUF or trust
The RBI's LRS FAQ is direct on the point. "The Scheme is not available to corporates, partnership firms, HUF, Trusts etc.," it says. The USD 250,000 limit belongs to each resident individual, including minors, and to no one else.
Entities fall instead under the Foreign Exchange Management (Overseas Investment) Rules, 2022, notified by the Ministry of Finance on 22 August 2022, and the RBI's Master Direction on overseas investment, updated as on 1 April 2026. Under the rules, an "Indian entity" means a company, a body corporate, an LLP or a registered partnership firm.
Trusts and HUFs fare worse. Schedule IV of the rules lets a registered trust or society make direct investment only in narrow cases, such as a trust in the educational sector, and only with the RBI's prior approval. HUFs are not named in the rules at all, and the LRS FAQ excludes them. A family trust or HUF therefore has no ready route to US property.
How the ODI rules separate direct and portfolio investment
Overseas direct investment, or ODI, covers any acquisition of unlisted equity in a foreign entity. It also covers a holding of 10 per cent or more in a listed foreign entity, or a smaller listed holding that comes with control. Overseas portfolio investment, or OPI, is everything else in foreign securities.
A private US property deal is held in an unlisted vehicle, so any equity a company takes in it is ODI, whatever the size of the stake. The client cannot keep it small and call it portfolio investment.
Portfolio investment by companies has its own limits. A listed Indian company may make OPI of up to 50 per cent of its net worth. An unlisted company, which is what most family businesses are, may make OPI only through specified routes such as rights issues, bonus shares, swaps and mergers. It cannot simply buy shares of listed US property companies. The master direction does allow unlisted companies to invest in funds set up in an IFSC, one of the options covered in the guide to GIFT City funds and other global routes.
Where overseas direct investment meets the real estate bar
Rule 19(1) is the centre of the question. No person resident in India may make ODI in a foreign entity engaged in real estate activity, gambling or financial products linked to the rupee, unless the rules provide otherwise. The master direction adds that an AD bank, meaning the bank licensed to handle foreign exchange, "shall not facilitate" any transaction with such an entity.
Real estate activity means buying and selling real estate or trading in transferable development rights. It excludes developing townships and building residential or commercial premises, roads or bridges for sale or lease. A separate rule, Rule 21, bars any resident from acquiring property abroad without RBI permission, except by listed routes. For a company, the master direction provides one such route, property for the business and residential use of staff at an overseas office.
The boundary between an excluded construction business and barred real estate activity is a question of facts. The rules give no worked examples, and a vehicle that buys finished buildings to lease them fits neither phrase neatly. Rule 9(1) also requires every overseas investment to be in a "bona fide business activity". A structure that looks like a business while holding US buildings invites the questions banks are now asking about property on overseas balance sheets.
Moving the money to individuals does not end the question, because Rule 19 applies to every person resident in India. Under Schedule III, an individual may make ODI only in an operating foreign entity outside financial services, with no subsidiary below it that the individual controls. An individual's investment is still tested against the same rules, but within a limit and a route the rules expressly provide. The live explainer on overseas portfolio investment under LRS covers the individual's side of the ODI and OPI line.
When the money comes from family members instead
If the company route closes, the conversation moves to whose money it is. Each resident adult, and each minor, has a separate LRS limit and a separate ₹10 lakh TCS threshold. For tax year 2026-27, TCS on remittances for overseas investment is 20 per cent of the amount above that threshold.
For example, suppose three family members each remit ₹50 lakh for a US investment in tax year 2026-27, with no other LRS remittances that year. Each pays TCS of 20 per cent on ₹40 lakh, which is ₹8 lakh, or ₹24 lakh across the family. Each person claims that amount as a credit against their own tax.
If one family member funds another's remittance, clubbing of income and gift tax questions arise. Money taken out of the company to fund a remittance, whether as salary, dividend or a loan, has its own tax and company law treatment for the client's CA to settle.
What advisors should check before a structure is proposed
The advisor's first note should show whose money is being invested, who will hold the investment and in what capacity. If the answer is an entity, the advisor should note which kind, because a company, an LLP, a registered firm, an HUF and a trust each meet the rules differently.
The advisor should then ask what the US vehicle actually does. It may buy and hold, develop, or buy and sell, and the answer decides how Rule 19 reads. It should also ask whether the client would have control and whether there is a subsidiary below the vehicle. The designated AD bank must refuse anything it treats as real estate activity, so its reading of the vehicle is worth having early.
The investment's own risks stay the same whatever the structure. Capital can be lost, property values can fall, tenants can leave and distributions may not be paid. Borrowing magnifies losses, the interest is illiquid, currency movements change its rupee value and one deal concentrates all of this in one property. A structure later found to breach FEMA adds a separate exposure on top.
Raveum offers eligible clients US real estate. Indian clients remit in their own names under LRS and invest through a US corporation, a blocker, that holds the property interest, and they typically receive Form 1042-S. Advisors can see how introductions work on Raveum's partner page.
The RBI's questions to companies were about purpose, and purpose is where an advisor should start with a client's company. For US property, the company is usually the wrong vehicle, and the rules say so before any tax planning begins. The first question is whose money this is and in whose name it should sit. The guide to TCS on foreign remittance covers what follows once that answer points to individuals.
Frequently Asked Questions
Can an Indian company invest in US real estate?
An Indian company cannot use LRS, which is open only to resident individuals. It falls under the Overseas Investment Rules, 2022, which bar direct investment in a foreign entity engaged in real estate activity. A company with an overseas office may buy property there for its staff's business and residential use, which is not investing.
Is ODI in real estate allowed under the 2022 rules?
Rule 19(1) bars overseas direct investment in a foreign entity engaged in real estate activity. That means buying and selling real estate or trading development rights. Developing townships and building premises, roads or bridges for sale or lease are excluded. Where a particular US vehicle falls depends on what it actually does.
Can an HUF or trust remit money abroad under LRS?
No. The RBI's LRS FAQ says the scheme is not available to corporates, partnership firms, HUFs or trusts. The overseas investment rules let registered trusts invest abroad only in narrow cases, such as education, with the RBI's prior approval. HUFs are not named in the rules, so family members usually invest individually.
What is the ODI limit for an Indian company?
Under Schedule I of the Overseas Investment Rules, 2022, an Indian entity's total financial commitment abroad may not exceed 400 per cent of its net worth on its last audited balance sheet. The limit does not override Rule 19, so it cannot be used for direct investment in a foreign entity engaged in real estate activity.
Can a resident individual make overseas direct investment under LRS?
Yes, within the LRS limit of USD 250,000 per financial year. Schedule III of the 2022 rules allows an individual's ODI only in an operating foreign entity outside financial services, with no subsidiary below it that the individual controls. Rule 19's bar on real estate activity applies to individuals as well.
What risks come with routing US property through a company?
The first risk is regulatory. A structure that breaches the overseas investment rules creates a FEMA problem on top of the investment's own risks. Those remain loss of capital, illiquidity, falling property values, tenants leaving, unpaid distributions, borrowing, currency movements and concentration in a single property or deal.
This article is for general education and is not tax, legal or investment advice. Rules change and depend on individual circumstances. All investing involves risk, including loss of capital, illiquidity and currency movements. Offerings on Raveum are available to eligible investors only and are not open to the general public.
