More Indian clients are using their overseas allowance to buy foreign shares and bonds, and the latest Reserve Bank of India data puts a number on it. Resident individuals sent USD 321.5 million abroad for investment in equity and debt in August 2026, more than double the USD 152.2 million sent a year earlier, according to RBI data released on 23 October and reported by Business Standard. Money sent to buy small holdings in listed foreign shares and bonds is usually classed as overseas portfolio investment, a category with its own rules under foreign exchange law. Total remittances under the Liberalised Remittance Scheme rose only 3.6 per cent, to USD 2.74 billion, so investment is taking a larger share of a slowly growing pool.
Investment now makes up about 11.7 per cent of the scheme's outflows, up from 5.8 per cent a year ago, according to an IANS report on the same data. The question an advisor faces has therefore moved from how much a client can send to what the money buys once it lands, because that answer decides which rules, forms and tax steps follow. Raveum's guide to TCS on foreign remittance sets out the TCS side in full. The less visible part is the line between portfolio and direct investment, which is where clients are least likely to look.
What the RBI data shows for August
The RBI publishes these figures each month in Table 36 of its bulletin, which records outward remittances by resident individuals by purpose. In August 2026, travel still dominated at USD 1.63 billion, about 59 per cent of the total. Gifts rose to USD 215.7 million and money sent to buy property abroad rose to USD 39.6 million, according to Business Standard. Studies abroad fell 39.9 per cent to USD 191.8 million.
The investment line is the one that has changed character. Remittances for equity and debt reached USD 1.73 billion between April and August, double the figure for the same months last year, according to Business Standard. They peaked at USD 456.7 million in June, according to the RBI's August bulletin. The August figure was about 7 per cent lower than July, so the trend is not a straight line. Even so, the data describes clients moving from occasional transfers towards regular overseas investing, and that pattern brings foreign exchange rules into routine advisory work.
What overseas portfolio investment means under the OI Rules
The Foreign Exchange Management (Overseas Investment) Rules, 2022 split a resident's foreign investments into two groups. Overseas direct investment, or ODI, covers any purchase of unlisted equity in a foreign entity, a holding of 10 per cent or more in a listed foreign entity, and any investment that comes with control. Overseas portfolio investment, or OPI, is defined as investment in foreign securities other than ODI, and it excludes unlisted debt instruments. A client who buys a few hundred shares of a company listed in New York is making OPI, while a client who buys shares in a private foreign company is making ODI.
Schedule III of the rules lets a resident individual make OPI, including by reinvestment, within the overall ceiling of the Liberalised Remittance Scheme. The RBI sets that ceiling at USD 250,000 per person per financial year, and the rules set no separate OPI cap for individuals beyond it. ODI by an individual is narrower. It is allowed only in an operating foreign entity that is not engaged in financial services and has no subsidiary or step-down subsidiary in which the individual has control, with limited exceptions such as shares received by inheritance, as sweat equity or under an employee stock scheme.
Why unlisted shares need a second look
The distinction matters most when a client is offered something that is not listed. A stake in a start-up, a pre-IPO share or units of an offshore vehicle can each fall under different parts of the rules, and the classification decides what the client and the bank must report. In September, StartupFeed reported that some Indian residents who bought SpaceX shares through offshore funds before its June 2026 listing had reported those holdings as OPI, and that advisors quoted in the report warned they may face questions from the RBI. The case shows how a choice made at the time of remittance can return years later.
The RBI's own LRS guidance places the burden on the client. It says the remitter declares the purpose of each transfer in Form A2, that the bank relies on that declaration, and that the ultimate responsibility for complying with foreign exchange rules lies with the remitter. An advisor who helps a client describe a remittance correctly at the start therefore spares the client a harder conversation later.
The tax trail that follows an investment remittance
Once the money leaves, Indian tax steps in at three points. The first is tax collected at source under Section 394 of the Income-tax Act, 2025. For tax year 2026-27, the bank collects TCS of 20 per cent on the amount above ₹10 lakh remitted for purposes other than education or medical treatment, and investment falls in that group. For example, a client who remits ₹40 lakh for overseas shares in a single tax year, with no other remittances, would see TCS of 20 per cent on ₹30 lakh, or ₹6 lakh. That amount is credited against the client's tax for the year and appears on Form 133, the TCS certificate, so it is a cash-flow cost rather than an extra tax.
The second point is Form 145, which replaced Form 15CA from 1 April 2026. An individual's remittance that does not need the RBI's prior approval is generally exempt from it, so most LRS investment transfers within the annual limit fall outside it, as Raveum's note on Form 145 for LRS remittances explains. The third point is the client's income tax return. Foreign shares, bonds and fund units must be reported in Schedule FA, which follows the calendar year ending 31 December rather than the Indian financial year. A client who buys US shares in November 2026 will therefore report them in the return for tax year 2026-27, even though the holding is only weeks old, and the Black Money Act attaches penalties to missing or wrong entries.
What advisors should check before the next remittance
None of this makes overseas investing safer, and clients should hear the risks plainly. Foreign shares and bonds can fall in value, and a client can lose part or all of the capital invested. Movements between the rupee and the dollar can deepen a loss or shrink a gain when money comes home. Unlisted holdings, including private real estate, can be hard to sell before the investment ends, distributions from private investments may not be paid, and putting too much into one market or company adds concentration risk. Private US property carries its own mix of these risks, which Raveum's guide to US commercial real estate for advisors covers in detail. Beyond the risks, four practical checks cover most cases.
- Ask what the client is buying and whether it is listed before the remittance is booked, and confirm the OPI or ODI classification with the authorised dealer bank.
- Add up every LRS remittance the client plans for the tax year, so the ₹10 lakh TCS threshold and the USD 250,000 ceiling are tracked together.
- Collect Form 133 each quarter and match it with the TCS shown in the client's annual tax statement.
- Keep a record of every foreign holding during the calendar year so Schedule FA can be completed accurately.
Clients who compare routes will also weigh funds based in GIFT City against direct overseas holdings, and Raveum's guide to GIFT City mutual funds and other global routes compares them fairly. Advisors who introduce eligible clients through Raveum's partner page will meet the same questions, because a remittance into a private US real estate offering is still an LRS remittance that must be described, taxed and reported correctly. Raveum offers diversified US commercial real estate, including net lease, self-storage and multifamily property, with each deal reviewed by Raveum and held in its own legal entity.
The August numbers will move from month to month, but the direction of the past year is clear enough to plan around. Clients are sending more money abroad to invest, and each transfer carries a classification that decides what follows. An advisor who settles that classification first, and then lets the TCS, Form 145 and Schedule FA steps follow from it, turns a growing flow of remittances into routine work. Raveum's TCS guide for advisors and CAs remains the reference for the tax side of that work.
Frequently asked questions
What is overseas portfolio investment for a resident individual?
Overseas portfolio investment is investment in foreign securities that does not count as direct investment, such as a small holding in a listed foreign company. Under the Overseas Investment Rules, 2022, a resident individual can make it within the Liberalised Remittance Scheme ceiling of USD 250,000 per financial year, with no separate cap beyond that.
What is the difference between ODI and OPI?
ODI covers unlisted foreign equity, a holding of 10 per cent or more in a listed foreign company, or any investment that comes with control. OPI covers other investments in foreign securities, mainly small listed holdings, but excludes unlisted debt. The classification decides the reporting steps, so it should be settled before money is sent.
Can a resident individual buy unlisted foreign shares under LRS?
Yes, but buying unlisted foreign shares counts as ODI, which carries stricter conditions for individuals. The foreign company must be an operating business outside financial services, with no controlled subsidiary below it, apart from limited exceptions such as inheritance or employee stock schemes. Clients should confirm the treatment with their authorised dealer bank first.
Is TCS charged on money sent abroad for investment?
Yes. For tax year 2026-27, banks collect TCS of 20 per cent on the part of a client's LRS remittances above ₹10 lakh when the purpose is investment. The threshold counts all LRS remittances in the year. The amount collected is credited against the client's income tax and can be refunded if it exceeds the tax due.
Does an LRS investment remittance need Form 15CA?
Usually not. Form 15CA became Form 145 from 1 April 2026, and an individual's remittance that does not need the RBI's prior approval is generally exempt from it. Most LRS investment transfers within USD 250,000 a year fall in that group. Payments made by a company, firm or trust are treated differently.
What risks should a client weigh before investing overseas under LRS?
The main risks are loss of capital, currency movements between the rupee and the dollar, and difficulty selling unlisted or private holdings before an investment ends. Concentration in one market or company adds to these risks. Overseas investing suits clients who can leave money invested for years and accept that its value may fall.
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.
