US LLC for Indian Residents: Is It Legal & What You Must Report (2027)
"Is it even legal for me to own a US company while living in India?"
It's the first question almost every Indian founder asks, usually after a friend has warned them about "RBI problems" or "tax trouble."
The short answer is yes. Indian residents can legally form and own a US LLC. But there's an important condition: you must follow two sets of rules, one in the US and one in India. Most problems happen when founders handle the American side perfectly and forget the Indian side entirely.
This guide explains how a US LLC for Indian residents works in 2027, and how to stay fully compliant in both countries.
Can Indian Residents Open a US LLC?
Yes. Under India's foreign exchange rules, a resident individual can invest in a foreign business through the Liberalised Remittance Scheme (LRS), which allows up to $250,000 per financial year.
Because you'll own and control your LLC, the investment usually falls under Overseas Direct Investment (ODI) rules. For most founders, that's straightforward, provided your LLC is:
- An operating business, such as a SaaS company, agency, e-commerce store or consulting firm
- Not in financial services, such as lending, investment management or insurance
- Not used to route money back into India through layered structures
Who a US LLC Suits
A US LLC is especially useful if you:
- Sell software, digital products or services to US and global customers
- Need Stripe US, US business banking or US payment platforms
- Want to build trust with American clients
- Plan to expand into the US later
Freelancers have their own set of considerations, covered in our guide on whether Indian freelancers can open a US LLC.
The Two Rulebooks
The US Side
- Form the LLC in a US state
- Get an EIN from the IRS
- Keep a registered agent and file state annual reports
- File Form 5472 with a pro forma Form 1120 every year, even with zero income
Our guide to foreign-owned LLC taxes explains the US filings in detail.
The India Side
- FEMA / ODI reporting through your Indian bank
- Income tax on your LLC's income in your Indian return
- Foreign asset disclosure in Schedule FA of your ITR
Most compliance problems we see come from this second list.
How to Set Up a US LLC Legally from India: Step by Step
- Choose your state. Wyoming, Delaware and New Mexico are popular for different reasons. Our guide to the best state to form an LLC from India compares them.
- Form your LLC online with a registered agent in that state.
- Get your EIN. You don't need an SSN.
- Prepare your operating agreement, which proves your ownership. See our guide to the single-member LLC operating agreement.
- Complete ODI reporting before funding the LLC. Your Indian bank reports the investment and issues a Unique Identification Number. Our guide to ODI compliance for a US LLC from India walks through it.
- Open a US business bank account, such as Mercury. See our guide to opening a Mercury bank account as a non-resident.
- Set up yearly compliance in both countries.
Pro tip: Start the ODI paperwork before you send money to your LLC. Banks often hold remittances until the ODI documents are in order.
How India Taxes Your US LLC Income
As an Indian tax resident, you're taxed on your worldwide income. For a single-member US LLC owned by an Indian resident, the LLC's income is generally taxed as your own income in India.
If you pay any US federal tax on the same income, the India–US tax treaty generally lets you claim a foreign tax credit in India, so you aren't taxed twice. For many founders running services from India, US federal tax is often zero, so the main tax is in India.
One more term to know: POEM (Place of Effective Management). If a foreign company is effectively managed from India, Indian tax rules can treat it as an Indian resident company. How these rules apply depends on your structure, so get advice from a CA. Our US LLC tax guide for Indian founders covers the basics.
Schedule FA: The Disclosure Most Founders Miss
If you're a Resident and Ordinarily Resident (ROR) in India, you must disclose your US LLC ownership and US bank accounts in Schedule FA of your income tax return (ITR-2 or ITR-3).
Key points:
- It applies even if your LLC is dormant or earned nothing
- It applies even if you never brought money to India
- Missing it can trigger a ₹10 lakh penalty per year under the Black Money Act
Since October 1, 2024, that penalty doesn't apply if your total foreign movable assets are ₹20 lakh or less. But disclosure is still mandatory, and the relief only covers the penalty, not the duty to report.
Common mistake: Filing ITR-1 or ITR-4. These forms don't include Schedule FA, so founders with a US LLC usually need ITR-2 or ITR-3.
What You Can't Do
- Use the LLC for financial services like lending or investment management under the individual ODI route
- Route money back into Indian companies through layered structures
- Hide income from Indian tax authorities; foreign banks share information with India under international reporting agreements
- Skip filings because "the LLC is in the US"; both countries expect their reports
Set Up Your US LLC the Right Way, in Both Countries
A US LLC can open doors to global customers, Stripe and US banking, as long as both rulebooks are followed from day one. FormLLC handles your US LLC formation from India, EIN, registered agent and yearly US compliance, and we always recommend a Chartered Accountant for India-side filings.
Planning your US company for 2027? Book a free consultation and talk to our team.
Related Services from FormLLC
Frequently Asked Questions
Yes. Indian residents can form and own a US LLC, investing through the Liberalised Remittance Scheme and following FEMA’s Overseas Direct Investment rules.
Resident individuals can remit up to $250,000 per financial year under LRS, including ODI investments.
Generally, yes. Indian residents are taxed on worldwide income, and a single-member LLC’s income is generally taxed as the owner’s income. Credit may be available for any US tax paid.
Yes. Residents and ordinarily residents must disclose it in Schedule FA of ITR-2 or ITR-3, even if the LLC had no income.
Up to ₹10 lakh per year under the Black Money Act. Since October 2024, the penalty doesn’t apply if total foreign movable assets are ₹20 lakh or less, but disclosure is still required.
Generally not under the individual ODI route. Resident individuals can invest only in operating businesses that aren’t engaged in financial services.
Need Help Getting Started?
FormLLC handles U.S. company formation, EIN, compliance, and banking guidance for Indian founders.
FormLLC Team
Practical guides for Indian founders navigating U.S. company formation, compliance, and cross-border business.