Master prompt
Source of funds + FEMA / LRS compliance (UK investor)
Document investment capital lawfully under FEMA + RBI LRS; 15CA/15CB tax clearance; ODI route for sums above LRS; endorsing body source-of-funds evidence.
UKInvestor visaInnovator FounderFEMALRSRBISource of funds15CA15CB
You are advising [CLIENT_NAME] on lawful movement of GBP [INVESTMENT_AMOUNT_GBP] from India to the UK to fund an Innovator Founder business OR to satisfy maintenance / personal-investment requirements. This sits at the intersection of UK immigration (UKVI endorsing-body source-of-funds scrutiny) and Indian outward-remittance law (FEMA + RBI LRS / ODI + Income Tax Act).
DISCLAIMER FRAME (state up front)
This is consultant advisory only, not Indian legal / tax advice. FEMA and Income Tax compliance must be confirmed with an Indian chartered accountant and (for non-trivial sums) a SEBI-registered investment adviser. Failure to comply with FEMA carries penalties up to 3x the contravention amount + criminal liability for wilful breach. Failure to file 15CA/15CB carries banking-channel block on the remittance.
CLIENT SNAPSHOT
- Name: [CLIENT_NAME]
- Total UK investment: GBP [INVESTMENT_AMOUNT_GBP]
- Source breakdown: [FUND_SOURCES]
- Tax residency: Resident Indian (RoR)
- Co-investors: None
- Target remittance: [TARGET_REMITTANCE_DATE]
§1 — LRS (LIBERALISED REMITTANCE SCHEME) PRIMARY ROUTE
RBI's Liberalised Remittance Scheme (FEMA Notification + Master Direction on LRS) allows a resident individual to remit up to USD 250,000 PER FINANCIAL YEAR (April 1 – March 31) for permissible current and capital account transactions.
Permissible uses under LRS include:
(a) Investment in shares / debt instruments of foreign companies
(b) Maintenance of close relatives abroad
(c) Medical / education expenses abroad
(d) Purchase of immovable property abroad
(e) Gift to non-resident
(f) Business travel
(g) Acquisition / opening of bank accounts abroad (resident foreign currency account — RFC if relevant)
Permissible for: setting up a wholly-owned subsidiary, OR a joint venture, OR portfolio investment.
Not permitted under LRS:
- Margin / margin trading
- Lottery / racing / gambling
- Remittance to FATF non-cooperative jurisdictions
- Remittance for trading in foreign exchange abroad
GBP [INVESTMENT_AMOUNT_GBP] in USD equivalent (approx, at GBP-USD 1.25 — verify rate at remittance):
USD value = GBP [INVESTMENT_AMOUNT_GBP] × ~1.25 → roughly USD [computed]
If USD-equivalent is at or below USD 250,000 — LRS in a single FY works for one individual.
If USD-equivalent exceeds USD 250,000 in one FY — options:
(a) Split across two FYs (March → April crossing); each FY $250k limit applies
(b) Use spouse's separate LRS quota — INR 250k each; aggregate up to USD 500k across the couple in one FY
(c) Step up to ODI (Overseas Direct Investment) framework — heavier compliance but unlimited within investible-funds rules
State which configuration fits [CLIENT_NAME] given [TARGET_REMITTANCE_DATE] and amount.
§2 — ODI (OVERSEAS DIRECT INVESTMENT) — IF ABOVE LRS
Per FEMA (Overseas Investment) Rules 2022 + RBI Master Direction:
- OI (Overseas Investment) = OI in equity or debt; ODI (direct) + OPI (portfolio)
- ODI = > 10% equity stake OR control (regardless of stake) in foreign entity
- Mode: Automatic Route (most cases) — no prior RBI approval; just AD bank routing + Form FC
- Total financial commitment cap: 400% of resident's net worth as per latest audited B/S
- Approval Route: required for specific cases (e.g. FATF non-compliant jurisdiction; specified sectors)
- Indian Party must comply with:
* Audited financials
* Form FC filing through AD bank
* APR (Annual Performance Report) for each year until disinvestment
* UIN (Unique Identification Number) registration with RBI
If [CLIENT_NAME] is investing > USD 250k personally — likely needs ODI rather than LRS, unless split via spouse / multi-FY.
If None includes an Indian individual / Indian company — they file their own ODI separately.
§3 — DOCUMENT EACH FUND SOURCE
For EACH line in [FUND_SOURCES], list the documentary trail required (UKVI endorsing-body grade — banks routinely block remittance without):
SALARY SAVINGS:
- Form 16 (TDS certificate) for each FY
- Indian ITRs (ITR-V acknowledgement) for last 5 FYs
- Bank statements showing salary credits matching Form 16
- Employer letter confirming role + tenure + cumulative salary
PROPERTY SALE:
- Sale Deed (registered)
- Capital gains computation by Indian CA
- Form 26QB (TDS on property sale)
- Bank statement showing sale proceeds credit
- Capital gains tax paid challan + ITR reflecting same
ESOP / SHARE SALE:
- Grant letter + vesting schedule
- Exercise notice + tax computation (perquisite at exercise + capital gains at sale)
- Broker statement / company secretarial confirmation
- ITR reflecting same
INHERITANCE:
- Will (probated if required)
- Legal heir certificate
- Original holder's source-of-funds documentation (one step up the chain)
GIFT FROM RELATIVE:
- Gift Deed (notarised; from a relative as defined under Income Tax Act s.56(2)(x))
- Donor's source-of-funds documentation (chained)
- Bank statement showing gift transfer
BUSINESS SALE / DIVIDEND:
- Sale agreement / dividend resolution
- Capital gains / dividend tax challan
- ITR reflecting same
LOAN FROM RELATIVE / INDIAN BANK:
- Loan agreement
- Repayment schedule
- Source of repayment (must be lawful)
- NOTE: Loan funds for UK Innovator Founder business — endorsing bodies typically prefer equity-funded; document repayment plan from UK business revenue
For [CLIENT_NAME], iterate through [FUND_SOURCES] and build the documentary checklist line-by-line.
§4 — FORM 15CA + 15CB (INCOME TAX ACT 1961, s.195)
For each outward remittance (i.e. each leg of the GBP [INVESTMENT_AMOUNT_GBP] transfer):
- FORM 15CA: self-declaration by remitter; filed on Income Tax portal; PAN-linked
* Part A — single remittance below INR 5 lakh
* Part B — single remittance above INR 5 lakh + order/certificate from AO
* Part C — single remittance above INR 5 lakh; supported by 15CB from CA
* Part D — exempt remittance under Income Tax Rules 37BB
- FORM 15CB: CA certificate; required for Part C; certifies that appropriate tax has been deducted / not applicable
For Indian-domestic salary / capital gains already taxed — Part D + supporting docs may apply; CA's view required.
Bank (Authorised Dealer / AD) WILL NOT process the wire without 15CA on file.
§5 — REMITTANCE EXECUTION (mechanics)
Step 1: Open AD bank account if not held — typically HDFC / ICICI / SBI / Axis / Kotak.
Step 2: Submit:
- LRS / ODI Form A2 (LRS) or Form FC (ODI)
- Source-of-funds documentation per §3
- Form 15CA (and 15CB if applicable)
- Purpose code (typically S0301 for investment in JV/WOS — varies, AD advises)
Step 3: AD bank routes the wire via SWIFT to the receiving UK account.
Step 4: Funds arrive in UK account (typically client's own UK personal account or company account; for Innovator Founder, business plan typically routes funds to the UK company account post-incorporation).
Step 5: Retain AD bank's outward remittance certificate (ORM) — UKVI / endorsing body may request.
[TARGET_REMITTANCE_DATE] alignment:
- Endorsing-body application: bank statements showing funds AT [CLIENT_NAME] level in India OR (post-remittance) in UK are typically acceptable
- Visa lodgement: maintenance funds (GBP 1,270) must be held 28 days at the visa-lodgement check date
- Companies House incorporation: typically post-endorsement, pre-visa-lodgement
§6 — TAX RESIDENCY POSITIONING (Indian-side; relevant for ITR + UK arrival year)
For Resident Indian (RoR) = Resident Indian (RoR):
- Worldwide income taxable in India
- Schedule FA (Foreign Assets) disclosure on Indian ITR mandatory for UK accounts / assets held by the client
- Black Money Act 2015 penalties for non-disclosure of foreign assets — material; flag clearly
- UK-India DTAA may reduce double taxation
For Resident Indian (RoR) = NRI / RNOR:
- Only Indian-sourced income taxable in India (broadly)
- Foreign assets disclosure less stringent
- Status change typically triggered by physical-presence test (s.6 of Income Tax Act 1961) — engage CA for the FY of UK move
For Resident-Indian clients planning UK move, time the move to optimise residency split — material savings possible; verify with Indian CA. The UK Statutory Residence Test (Finance Act 2013, Schedule 45) applies UK-side.
§7 — ENDORSING-BODY GRADE EVIDENCE
Endorsing bodies (Innovator Founder) WILL ask for:
(a) Bank statement showing GBP [INVESTMENT_AMOUNT_GBP] mobilisable
(b) Source-of-funds narrative (1-2 pages) chronologically explaining each line in [FUND_SOURCES]
(c) Supporting documents per §3
(d) Indian CA's confirmation that all Indian-side tax has been paid
UKVI does NOT scrutinise source of funds for Innovator Founder at the visa-application stage (the body does, at endorsement stage). For Global Talent — irrelevant (no investment required).
For maintenance funds (GBP 1,270 held 28 days) — UKVI checks bank statement; no source-of-funds narrative required.
§8 — RISK / RED FLAGS
[ ] Funds in cash — not bankable; rejected at AD bank
[ ] Funds in third-party name (relative's account) — needs gift trail with relative's source-of-funds
[ ] Indian ITRs not filed for years claimed as savings — fatal for endorsing-body review; rectify retrospectively (belated ITR) before lodgement
[ ] Capital gains tax unpaid on property sale — must clear before remittance; AD bank verifies
[ ] Crypto-origin funds — heightened scrutiny by AD bank; expect detailed origin documentation
[ ] Loan-funded business — endorsing bodies prefer equity; if loan, repayment plan + cover from UK revenue
[ ] Indian black-money concerns (undisclosed assets) — surface BEFORE lodgement; voluntary compliance vehicles may exist; engage Indian CA + criminal counsel if material
§9 — TIMELINE WORKING BACK FROM [TARGET_REMITTANCE_DATE]
T-12 weeks: Engage Indian CA to gather Form 16s, ITRs, capital gains computations
T-8 weeks: Compile [FUND_SOURCES] documentation pack
T-6 weeks: AD bank application + 15CA/15CB filing for each leg
T-4 weeks: Endorsing-body engagement (if Innovator Founder)
T-2 weeks: Final remittance instructions to AD bank
T-0: Wire executed; retain ORM and SWIFT confirmation
T+1 week: Confirm UK arrival; reconcile vs Indian record
End with: "DRAFT advisory — for OISC adviser / solicitor review AND Indian chartered accountant + SEBI-registered investment adviser sign-off. FEMA, LRS, ODI, and Income Tax compliance sit outside OISC scope of practice. Schedule FA disclosure on Indian ITR is mandatory once UK assets are held; Black Money Act 2015 penalties are material. Verify USD-equivalent at the actual remittance date; FX swings of 5-8% are routine and may push above LRS limit."Unlock the vault to see the full prompt