Master prompt
Source-of-funds documentation + RBI LRS / FEMA compliance (Canada business immigration)
Build the source-of-funds evidence chain for an Indian-resident business-immigration applicant: RBI Liberalised Remittance Scheme caps, Form A2 + 15CA/15CB tax certifications, business sale + inheritance + property documentation, and the FEMA s.4 prohibition on out-of-LRS capital export.
CanadaInvestor visaSource of fundsRBILRSFEMAForm 15CAForm 15CBForm A2India
You are documenting the source-of-funds evidence chain for [CLIENT_NAME], an Indian-resident business-immigration applicant moving CAD [TOTAL_FUNDS_TO_REMIT_CAD] to Canada over 18 months. IRCC officers and Canadian banks (FINTRAC reporting) scrutinise source-of-funds harder than any other element of the file. India-side, the remittance must comply with FEMA + the RBI Liberalised Remittance Scheme. This walkthrough must be airtight on both sides.
CLIENT POSITION
- Total funds (CAD): [TOTAL_FUNDS_TO_REMIT_CAD]
- Timeline: 18 months
- Stated sources: [FUND_SOURCES]
- Indian tax status: [INDIAN_TAX_STATUS]
- Co-remitting family: No
- Corporate route: No
- Target Canadian pathway: [TARGET_PATHWAY]
§1 — LRS PRIMER (RBI Master Direction on LRS)
Liberalised Remittance Scheme caps and rules:
(a) Cap: USD 250,000 per resident individual per FINANCIAL YEAR (01-Apr to 31-Mar)
(b) That cap is the SUM of all permitted current + capital account remittances combined (gift, maintenance, investment, donation, immovable property abroad, education, medical, employment, etc.)
(c) Resident individuals only — Indian residents under FEMA s.2(v). NRIs use different routes (NRE / FCNR / repatriation rules).
(d) Operates through an Authorised Dealer (AD) bank — Form A2 + LRS declaration filed with the AD on every remittance
(e) PAN mandatory; the AD must collect and report the PAN on every LRS transaction
(f) Tax Collected at Source (TCS) under Income Tax Act s.206C(1G): 20% on LRS remittances above INR 7 lakh per FY (with carve-outs for education funded by loan etc.) — TCS is creditable against final income tax liability
Implication for [CLIENT_NAME]:
- CAD 450,000 ≈ USD 330,000 (at ~ CAD 1.36 / USD; verify spot rate when remitting) // 2026-05 — verify
- This EXCEEDS the USD 250,000 individual annual cap
- The remittance must either be:
• SPLIT across two Indian FYs (e.g. half in FY 25-26, half in FY 26-27), OR
• Combined with another family member's LRS (per No), OR
• A combination of the above
- DO NOT attempt to overshoot the cap in a single FY — that's a FEMA s.4 / s.6 violation and exposes the client to penalty under FEMA s.13 (up to 3x the amount involved)
§2 — INDIAN COMPLIANCE BUILD
For each LRS remittance the client makes from India:
Step 1: PAN-linked KYC at AD bank — already complete if [CLIENT_NAME] has banked in India.
Step 2: Form A2 declaration to the AD bank — Purpose code:
- "S0023" — Investment in unlisted shares of a JV / WOS abroad
- "S1101" — Maintenance of close relatives abroad
- "S0305" — Travel for business / immigration
- "S0001" — for emigration including immigration deposit
// RBI changes purpose codes periodically — verify current Master Direction Annex
Step 3: LRS Declaration cum Application (RBI prescribed format) — applicant declares:
- Total LRS utilisation in current FY (so far)
- Source of funds
- Confirmation of FEMA + Income Tax compliance
Step 4: TCS payment (20% if cumulative LRS > INR 7 lakh in FY) — bank collects this at time of remittance
Step 5: Form 15CA + Form 15CB (under Income Tax Rule 37BB)
- Form 15CB: certificate from a Chartered Accountant — required for remittances above INR 5 lakh that are chargeable to tax
- Form 15CA: applicant's self-declaration filed electronically on the Income Tax portal
- For pure LRS remittances of permitted nature (e.g. gift, investment), 15CA Part D applies; for taxable income (e.g. salary), 15CA Part C + 15CB
- Authorised Dealer bank requires copies before processing the wire
Step 6: Wire transfer through AD bank (SWIFT) to a Canadian bank account in [CLIENT_NAME]'s name
- Best target: a Canadian bank account opened on a prior exploratory visit (TD, RBC, BMO offer pre-arrival or "newcomer" accounts that some Indian residents can open remotely)
- If no Canadian account exists yet: a Canadian lawyer's trust account is a common interim destination
§3 — SOURCE-OF-FUNDS NARRATIVES (one per [FUND_SOURCES] line)
For each source listed in [FUND_SOURCES], build a documentary chain. Required artefacts per common source:
A. SALE OF INDIAN REAL ESTATE
- Original sale deed (registered, stamp-duty paid)
- Capital gains computation by CA
- Form 26QB (TDS by purchaser on property sale, if applicable)
- Bank statement showing sale consideration received in Indian bank account
- Income tax return (year of sale) declaring the capital gain
- If "agricultural land": confirm it's outside FEMA's restricted definition (it can be; the LRS doesn't bar use of proceeds, but ag-land sale to non-residents has separate rules)
B. INHERITANCE
- Probated will OR succession certificate from Indian civil court
- Death certificate of the deceased
- Heirship affidavit (notarised)
- Bank statement showing inheritance credit
- Indian tax position: inheritance is NOT taxable under Income Tax Act s.56 (gifts from relatives exception)
- If inherited assets (not cash): valuation + sale deed if monetised
C. BUSINESS INCOME / DIVIDENDS
- Last 5 years of ITRs (filed and assessed)
- Form 26AS (TDS summary) for each year
- Business audit reports / financial statements (if proprietor / partner / director)
- Bank statements of business account showing dividends or owner draws transferred to personal account
- For private limited companies: Board resolutions for dividend declaration, MGT-7 + AOC-4 filings, DIN-attested director draws
D. SAVINGS / FIXED DEPOSITS / MUTUAL FUNDS
- Bank passbooks or e-statements covering accumulation period (typically 3-5 years)
- Source of original deposits (salary credits / business income / liquidated assets — traced upstream)
- Mutual fund redemption statements + capital gain computation
- Demat account statements for equity-derived funds
E. GIFT FROM RELATIVE (under Income Tax Act s.56 exempted relatives)
- Gift Deed (notarised; ideally stamped)
- Donor's source-of-funds chain (the IRCC officer will trace upstream)
- Donor's last 3 years' ITRs
- Bank statements showing gift movement
- Relationship proof (birth certificates, marriage certificate)
F. LOAN FROM INDIAN BANK / NBFC
- Sanction letter + executed loan agreement
- Mortgage / collateral documentation
- EMI history showing servicing
- End-use certificate (if applicable)
- NOTE: loans against secured Indian assets generally OK; unsecured personal loans being routed offshore are scrutinised
§4 — CORPORATE / ODI ROUTE (if No is yes)
If part of the funds will move via an Indian company under the Overseas Direct Investment (ODI) framework rather than personal LRS:
Regulatory basis: Foreign Exchange Management (Overseas Investment) Rules + Directions, 2022; RBI Master Direction on ODI.
Key rules:
(a) Indian company can make ODI in a foreign entity up to 400% of its net worth (paid-up capital + free reserves) under automatic route
(b) Above 400%: prior RBI approval required
(c) Foreign entity must be engaged in BONA FIDE business activity — pure-investment / pass-through SPVs scrutinised
(d) Annual Performance Report (APR) — Form OPI / APR filed with RBI every year for the foreign entity, by 31-Dec each year
(e) Indian company files Form FC (in advance) with the AD bank, then Form ODI with RBI within prescribed time
(f) Foreign entity must repatriate dividends / royalties / fees as per India-Canada DTAA — typically 15% withholding tax in Canada on dividends paid to Indian parent
Stress-test No:
- Is the Indian company a holding entity that the applicant controls and will continue to control post-emigration?
- Will [CLIENT_NAME] become a non-resident under Income Tax Act s.6 after landing in Canada? If yes, the Indian company's RESIDENT status (and therefore ODI eligibility) doesn't change — but the applicant's PERSONAL Indian tax status changes, with capital-gains and ESOP-mark-to-market implications
- DTAA (India-Canada double tax treaty 1996, amended 2011) — review tax residence tie-breaker
§5 — IRCC OFFICER PERSPECTIVE — WHAT TO DELIVER
For [TARGET_PATHWAY], the IRCC officer wants to see, in the source-of-funds appendix:
(a) A single Source of Funds Narrative — 2-3 page memo by the consultant + applicant explaining EACH source, dates, amounts, and how the funds flowed to the remittance accounts
(b) An Asset Schedule — table of net worth as at application date, supported by appraisals / bank statements / share certificates
(c) Original-language documents in source language + certified English translation (per ca-document-checklist-translation-certification)
(d) Apostille / authentication for Indian public documents that need verification abroad (post-11-Jan-2024 Canada is Hague apostille party — see ca-document-checklist-apostille-authentication)
(e) For SUV / SP / Fed Self-Employed: settlement-funds proof, currency-converted to CAD at remittance date, traceable to source
(f) For PNP Entrepreneur: same as above PLUS proof of available investment capital (often via bank-issued letters of attestation)
§6 — REMITTANCE TIMING SEQUENCE FOR [CLIENT_NAME]
Build a phased remittance plan based on 18 months and the LRS-cap arithmetic.
Example shape (adapt to applicant):
Month 1: Open Canadian newcomer account (TD First / RBC NewCo / BMO NewStart)
Month 1: Settle source-of-funds documentation chain in India — engage CA for 15CB; pull all bank statements + ITRs
Month 2: First LRS tranche (USD 250,000 if applicant's FY allows; less if part-year)
Month 3-4: Continue documentation for second tranche; coordinate spouse LRS if No indicates
Month 5-6: Second LRS tranche (next Indian FY if first cap exhausted, OR family-member LRS in same FY)
Month 6-9: ODI Form filings (if No); RBI approval timeline if non-automatic route
Month 9-12: Final settlement transfers + Canadian deployment
§7 — RED FLAGS
- Cash deposits in source bank accounts immediately before remittance — IRCC officers flag aggressively. Unexplained large cash credits in the 6 months before remittance are the #1 source-of-funds refusal trigger.
- "Round-tripping" suspicion — funds going India -> Mauritius/Dubai -> Canada looks like layering. Direct India -> Canada under LRS is cleanest.
- Co-remitting strangers / hawala-style splits — multiple unrelated individuals each remitting LRS to the applicant's Canadian account triggers Canadian FINTRAC alerts under Proceeds of Crime (Money Laundering) and Terrorist Financing Act
- Hundi / parallel-market currency exchange — never. Use AD-bank LRS only.
- Misrepresentation under IRPA s.40 — failing to disclose a source, or backdating documentation, results in 5-year inadmissibility + 5-year bar
- Tax-residency change risk — once [CLIENT_NAME] lands in Canada and becomes a Canadian tax resident, world-wide income becomes taxable in Canada under the India-Canada DTAA tie-breaker; deferring residency change vs. accelerating it has tax implications
§8 — DELIVERABLES CHECKLIST
□ Source of Funds Narrative (memo) — 2-3 pages, signed by [CLIENT_NAME]
□ Asset Schedule with valuations (CAD-equivalent)
□ 5 years of Indian ITRs + Form 26AS
□ Sale deeds / inheritance probate / business audit reports (per [FUND_SOURCES])
□ All bank statements covering the 12 months preceding each remittance
□ Form A2 + LRS declarations (post-remittance, kept on file)
□ Form 15CA + 15CB (per remittance)
□ TCS payment evidence (per remittance, if applicable)
□ ODI filings (if No)
□ Canadian bank statements showing receipt of funds
□ CA's attestation / cover letter
End with: "DRAFT source-of-funds plan + FEMA / LRS compliance memo — for RCIC + Indian Chartered Accountant joint review. FEMA / RBI / Income Tax compliance is outside RCIC scope of practice — Indian tax counsel and an Authorised Dealer bank relationship manager must sign off before each remittance. Verify current LRS cap, current TCS rate, and current RBI Master Direction position before relying on any figure stated here. Not legal or tax advice."Unlock the vault to see the full prompt