Funding EB-5 from India under RBI LRS: pooling, gifts, and steps

Indian families are turning to the Reserve Bank of India’s Liberalised Remittance Scheme (LRS) to lawfully assemble the minimum capital for the United States EB-5 immigrant investor program, using a mix of family pooling, gifts, and timing across financial years to reach USD 800,000 or USD 1,050,000.

Under LRS, a resident individual can remit up to USD 250,000 per financial year (April–March) for permitted current and capital account purposes, including overseas investments and subscription to foreign securities. The Reserve Bank of India confirms that this limit applies per person per year and extends to investments abroad made under India’s Foreign Exchange Management Act framework. For authoritative details on permitted uses, limits, and reporting under LRS, refer to the RBI’s official FAQ on the scheme here.

Why mechanics and documentation matter

An EB-5 investment must be lawfully sourced and clearly documented for both Indian and U.S. authorities. That dual compliance requirement shapes how Indian investors fund their EB-5 subscriptions. Common funding strategies include:

• Combining an individual’s LRS limit across two consecutive financial years (e.g., remitting in March and April).
• Pooling family members’ LRS allowances by naming them as co-owners or co-partners in the overseas investment.
• Using gifts from specified relatives (per Indian tax law) to a principal investor, with proper documentation accepted by USCIS if the funds are lawful and traceable.

According to analysis by VisaVerge.com, timing, family pooling with co-ownership, and properly documented gifts have become the practical toolkit for Indian EB-5 applicants who want to remain within RBI rules while satisfying USCIS source-of-funds scrutiny.

Who can remit and co-ownership rules under LRS

• Any resident individual, including minors (with guardian countersignature), may remit up to USD 250,000 per year for permitted purposes.
• Family pooling is allowed when each remitter is a co-owner or co-partner in the overseas investment or receiving bank account.
• For capital transactions, the RBI guidance disallows clubbing unless contributors are co-owners. Therefore, naming contributors as co-owners in the EB-5 subscription avoids clubbing issues.
• The RBI’s 2022 Overseas Investment Rules permit resident individuals to make overseas direct or portfolio investments within LRS limits, covering the equity-style funding common in EB-5 regional center projects.

Practical timing strategies to reach USD 800,000

Indian remitters commonly use two timing features:

1. Send USD 250,000 near the end of one financial year (e.g., March) and another USD 250,000 at the start of the next (e.g., April) — allowing a single individual to move USD 500,000 within weeks.
2. Consolidate remittances by including spouse, parents, and adult children as co-owners in the same EB-5 new commercial enterprise.

Example structures:
– One investor sends USD 250,000 in March, the same investor sends USD 250,000 in April, the spouse sends USD 250,000 in the same year, and a parent adds USD 50,000 across two years — all named as co-owners to reach USD 800,000.
– Alternatively, relatives gift funds to a single principal investor; in that case, prepare gift deeds, maintain bank trails, and keep source-of-funds records for RBI and EB-5 petition purposes.

Bank mechanics and required forms

Most transactions run through an Authorized Dealer Category-I (AD Cat-I) bank. Typical bank steps and documents:

• Complete KYC and provide PAN details.
• Select LRS purpose “investment abroad” for overseas investments.
• Submit Form A2 (application-cum-declaration capturing the RBI purpose code) and FEMA declarations.
• Banks may ask whether Form 15CA and Form 15CB are required. For many LRS remittances that are not taxable, these are typically not required under Rule 37BB carve-outs, but banks may still request them based on internal policy.
• Confirm whether the bank wants Form 15CA/15CB for your fact pattern; line up a Chartered Accountant if Form 15CB might be needed.

Reference links (preserve as provided):
– Form A2 (RBI application-cum-declaration): Form A2 – RBI
– Form 15CA (remitter’s information for payments to non-residents): Form 15CA – Income Tax Department
– Form 15CB (certificate by Chartered Accountant): Form 15CB – Income Tax Department

Once verified, funds are wired to the EB-5 new commercial enterprise or an escrow account named in the subscription documents. Keep the bank’s SWIFT confirmations, gift deeds (if applicable), and a thorough source-of-funds file.

Documentation priorities — what to keep

Maintain a comprehensive source-of-funds and transaction file for both RBI compliance and USCIS evidence. Essential items include:

• All bank SWIFT messages and remittance advice.
• Form A2, FEMA declarations, and any bank acknowledgements.
• Gift deeds and donor bank statement pages showing outflows (if applicable).
• Receiving investor’s bank statements showing inflows from donors and the outward remittance.
• Income-tax returns and supporting evidence of savings or asset sales funding the investment.
• Correspondence from the EB-5 project confirming receipt of funds and subscription allocation.

Important: Build the file while funding is ongoing. Reconstructing records later is harder and risky if deadlines or queries arise.

TCS changes from 1 April 2025 — cash-flow impact

From 1 April 2025, the Tax Collected at Source (TCS) grid applies as follows:

• Education (with education loan): Nil
• Education or medical (other): Nil up to ₹10 lakh, 5% above ₹10 lakh
• “Any other” LRS purpose (includes overseas investments, EB-5): Nil up to ₹10 lakh per PAN per FY, 20% above ₹10 lakh
• Overseas tour packages: 5% up to ₹10 lakh, 20% above ₹10 lakh

Notes:
– These thresholds apply per PAN across all AD banks.
– Investors can claim TCS as a credit in their Indian income tax return.
– For EB-5 planning, the 20% TCS above ₹10 lakh is a short-term liquidity consideration; families often spread remittances across multiple PANs or financial years to manage immediate TCS cash outflow.

Gifting rules and FEMA nuance

• Gifts from specified relatives (spouse, parents, siblings, lineal ascendants/descendants) are tax-exempt in the recipient’s hands, with no upper limit.
• Gifts from non-relatives are taxable if aggregate value exceeds ₹50,000 in a financial year.
• For capital transactions, RBI guidance warns clubbing is not permitted unless contributors are co-owners. Thus families commonly choose between:
  • Each contributor remits under their own LRS limit and is named a co-owner, or
  • Relatives gift funds to a principal investor and the principal remits under one PAN, with full documentation.

Ongoing responsibilities and reporting

• Income from overseas investments (returns on equity, distributions, etc.) can be retained or reinvested outside India. If not reinvested, certain sums may need to be repatriated or surrendered within 180 days, per applicable rules.
• While an individual is an Indian tax resident, foreign assets and foreign income must be reported in Schedule FA of the Indian Income Tax Return.
• When a person becomes a non-resident for Indian tax purposes, the Schedule FA disclosure requirement no longer applies — but the transition year needs careful handling to avoid errors.

Two illustrative family funding plans

Plan A — co-ownership across two financial years:
1. Investor sends USD 250,000 in March (FY end).
2. Same investor sends USD 250,000 in April (new FY).
3. Spouse sends USD 250,000 in the same year.
4. Parent contributes USD 50,000.
– All contributors are co-owners in the EB-5 subscription to respect FEMA clubbing rules. Total = USD 800,000.

Plan B — gifting to a single investor:
– Relatives gift tax-exempt funds to the principal investor (gifts from relatives).
– Principal remits under one PAN.
– Families must watch the 20% TCS above ₹10 lakh and keep gift deeds and bank trails for both bank and EB-5 source-of-funds files.

EB-5 project and subscription practicalities

• Confirm whether the EB-5 project accepts staged funding (multiple remittances over time).
• Ensure subscription documents reflect co-ownership if family members remit under their own LRS limits.
• If a project limits co-owners, families may rely on gifting and make the principal investor the sole subscriber — in which case LRS and TCS rules apply to the principal’s PAN.
• Get written confirmation from the project on how it records co-ownership and staged payments.

USCIS perspective on gifts and source-of-funds

USCIS focuses on documentation, not the specific Indian remittance channel. If capital comes from gifts:

• USCIS accepts gift-funded EB-5 capital provided the funds’ origin is lawful and the transfer path is traceable.
• Typical USCIS evidence includes gift deeds, donors’ tax returns and bank statements, and the receiving investor’s bank records with outward remittance SWIFT.
• The objective is an uninterrupted trail showing every rupee/dollar originated lawfully and moved through the banking system without gaps.

Cash-flow, family impact, and tax residency transition

• The ability to send USD 250,000 in March and another USD 250,000 in April can speed funding and secure a visa opportunity.
• The TCS at 20% above ₹10 lakh affects liquidity even though it is refundable as a tax credit; families often:
  • Spread remittances across family members (multiple PANs), or
  • Spread remittances across financial years.
• After obtaining a U.S. green card via EB-5, an individual becomes a U.S. tax resident and is taxed on worldwide income — requiring cross-border tax planning for double tax relief and foreign tax credits.
• During the year of change in residency, work with a cross-border tax professional to manage filings and reporting obligations in both countries.

Bank practice, policy monitoring, and a practical checklist

Banks may have conservative internal policies and sometimes require Form 15CA/15CB even when not strictly needed. Best practice: ask the AD bank branch for the document checklist before initiating the remittance and be prepared to obtain a Chartered Accountant’s certificate if requested.

Practical checklist for an EB-5-bound LRS remittance:
1. PAN, KYC, and Form A2 with correct RBI purpose code for “investment abroad.”
2. FEMA declarations as required by the bank.
3. Decide if Form 15CA/15CB will be required by the bank (obtain Chartered Accountant support if needed).
4. Wire instructions to the EB-5 new commercial enterprise or escrow account named in the subscription.
5. Comprehensive source-of-funds file: tax returns, bank statements, property sale deeds, gift deeds (as applicable).
6. Track the USD 250,000 per PAN per FY cap and the TCS threshold of ₹10 lakh per PAN per FY across AD banks.
7. Ensure co-ownership alignment in subscription documents if pooling LRS limits, or proper gift documentation if using a single principal.

Final notes and recommended actions

• The RBI’s LRS provides a clear, lawful path for Indian residents to send funds for overseas investments, including EB-5 subscriptions, within a USD 250,000 per person per financial year cap.
• Families can reach USD 800,000 or USD 1,050,000 by combining two financial years, adding spouse and relatives as co-owners, or using properly documented gifts.
• From 1 April 2025, plan for TCS at 20% above ₹10 lakh per PAN per year on “any other” LRS purposes (such as EB-5), which affects cash flow though it is claimable as a credit.
• Maintain robust documentation (SWIFTs, Form A2, gift deeds, tax returns, bank statements) and coordinate early with the AD Cat-I bank and EB-5 project.

With careful planning, timely bank coordination, and complete records, Indian families can legally fund their EB-5 journey while staying within India’s foreign exchange, tax, and reporting rules.