India
Saudi Arabia
India and Saudi Arabia traded USD 41.07 billion in the Indian financial year 2025-26. About 2.74 million Indians live in the Kingdom, and roughly 6,300 Indian companies are registered there.
The Saudi rules are the same for an Indian founder as for anyone else. What is specific to this route sits in India: who is allowed to send the money, under which regime, and with what reporting.
The two rulebooks happen to point the same way. Both are easier for an operating Indian company than for an individual.
The corridor in figures
The trade is large and lopsided. India buys crude oil, LPG and fertilisers, and sells engineering goods, rice, vehicles, chemicals and pharmaceuticals.
| Indian financial year | Indian exports | Indian imports | Total |
|---|---|---|---|
| 2023-24 | USD 11.56bn | USD 31.42bn | USD 42.97bn |
| 2024-25 | USD 11.76bn | USD 30.12bn | USD 41.88bn |
| 2025-26 | USD 10.28bn | USD 30.79bn | USD 41.07bn |
- Total trade slipped 1.92% in 2025-26, and Indian exports fell 12.55%. The corridor is established, not accelerating.
- Indian investment leans to services: consultancy, construction, telecoms, IT and pharmaceuticals.
- The people are already there. Many readers of this page live in the Kingdom and want to move from employee to owner.
What Saudi Arabia asks, in brief
Full foreign ownership is the default, and three questions decide whether it holds for you. They are set out in 100% foreign ownership in Saudi Arabia.
- What the company does. Services, consulting and software carry no published capital figure. Trading at 100% foreign ownership requires SAR 30,000,000 of capital.
- Who files the application. The ministry says it registers legal entities, foreign companies and individuals who hold Premium Residency.
- Who runs the company. The shareholder can stay in India. The general manager is expected in practice to hold an iqama.
The second question is where Indian law comes in. The filing sequence is in how to register a company in Saudi Arabia.
Three Indian starting points
India's foreign exchange law, FEMA, treats an Indian company, a resident individual and a non-resident Indian differently. So does the Saudi ministry.
| Who invests | Indian regime | Published Saudi path |
|---|---|---|
| An Indian company, LLP or registered partnership | Overseas direct investment (ODI), automatic route | Regular registration, on the company's commercial register and last year's accounts |
| A resident individual | Liberalised Remittance Scheme (LRS), with conditions | None for a bare individual. Entrepreneur track or Premium Residency |
| An Indian living in the Kingdom | Outside the LRS and ODI rules | Entrepreneur track with employer's letter, or Premium Residency |
- 1Are you resident in India under FEMA?A person who left India for employment or business abroad is not. The LRS and ODI rules then do not apply.
- 2Resident, with an operating Indian companyThe company invests as ODI through its bank. Saudi Arabia registers it as a foreign company.
- 3Resident individual, no companyIndia allows up to USD 250,000 a year into an operating entity. Saudi Arabia publishes no regular path for you.
- 4Thinking of a holding company in between?A resident individual may not control a foreign entity that has a subsidiary. That closes the usual workaround.
Route one: an Indian company invests under ODI
This is the route the Saudi process is written for. Under the Reserve Bank's Overseas Investment Directions of August 2022, an Indian entity may invest abroad without prior approval if a few conditions hold.
- The investor is an "Indian entity". That means a company, an LLP or a registered partnership firm.
- The Saudi company has limited liability. A Saudi LLC meets the test.
- The activity is a bona fide business. A short list of prohibited activities applies, including financial products linked to the rupee.
- The filing goes through your bank. Form FC is submitted to the authorised dealer bank before the remittance.
- Reporting continues every year. An Annual Performance Report is due by 31 December, and late filings carry a Late Submission Fee.
- A sole proprietor is not an Indian entity. The owner invests personally, under route two.
The amount is capped by reference to net worth. The cap is widely stated as 400% of net worth on the last audited balance sheet. We could not open the Rules to confirm that figure.
The two files overlap. Saudi Arabia asks a foreign company for its commercial register and last year's financial statements. India measures its limit on the last audited balance sheet. A company with a year of audited accounts satisfies both.
Route two: a resident individual under the LRS
A resident individual may remit up to USD 250,000 per financial year, April to March, for current and capital purposes combined. Investing in a foreign company is on the list of permitted capital transactions.
The Reserve Bank attaches conditions, and one of them matters a great deal here.
| India allows | India does not allow |
|---|---|
| Up to USD 250,000 a year per individual, all purposes together | Using the scheme through a company, a firm, an HUF or a trust |
| Shares in an operating foreign entity | A foreign entity engaged in financial services |
| Control of that operating entity | Control of a foreign entity that has a subsidiary or step down subsidiary |
| Investing with other resident individuals or an Indian entity | Remitting without a PAN |
Indian law lets you own a Saudi operating company directly. The Saudi ministry publishes no regular path for an individual abroad with no company behind them.
The usual answer elsewhere is a holding company in a third country. For an Indian resident it fails on the third line of the table.
- A holding you control, which owns the Saudi company, is a foreign entity with a subsidiary. A resident individual may not make that investment.
- "Control" starts low. The Directions define it to include 10% or more of the voting rights.
That leaves three options: invest through an Indian company you already run, qualify on the Saudi entrepreneur track, or hold Saudi Premium Residency.
The tax collected before the money leaves India
Remittances under the LRS carry tax collected at source (TCS). The bank collects it at the moment of transfer, under section 394(1) of the Income-tax Act 2025.
| LRS remittance in a financial year | TCS |
|---|---|
| Up to ten lakh rupees in aggregate | Nil |
| Above ten lakh, for education or medical treatment | 2% since 1 April 2026, previously 5% |
| Above ten lakh, for any other purpose, investment included | 20% |
- The doubled rate for non-filers is gone, omitted from 1 April 2025. Pages quoting 40% are out of date.
- It is a collection on account, claimed as a credit in your Indian return. Confirm the mechanics with your adviser.
- It does not touch the company route. The LRS is closed to companies, so an ODI remittance is outside this charge.
Already in the Kingdom on an iqama
If you left India to work in Saudi Arabia, FEMA most likely no longer treats you as resident in India. Its definition excludes a person who has gone abroad for employment or to carry on a business.
- The LRS and the ODI rules bind persons resident in India. Savings earned and held in the Kingdom are not an Indian remittance, and no TCS arises.
- Tax residence is a separate test, under the Income-tax Act. Do not assume one follows the other.
The obstacle is on the Saudi side. An iqama tied to an employer does not make you an investor.
| Path | What the ministry asks for |
|---|---|
| Entrepreneur registration | A support letter from a Saudi university or accredited incubator, a no-objection letter from your employer and a copy of your residence permit |
| Premium Residency | The paid residence status, which exempts you from the foreign company documents |
The employer's letter is the practical test. Raise it before you spend on anything else.
The India and Saudi Arabia tax treaty
A tax treaty is in force between the two countries. We could not open its text, so the treaty figures below are those reported by PwC.
| Payment from the Saudi company | Saudi domestic rate | Treaty ceiling | What you pay |
|---|---|---|---|
| Dividends | 5% | 5% | 5% |
| Interest on a shareholder loan | 5% | 10% | 5% |
| Royalties | 15% | 10% | 10% |
| Technical and consulting fees | 5% | Not read | 5%, unless treaty relief applies |
- A treaty sets a ceiling, not a rate. Where the treaty figure is above the Saudi rate, the lower Saudi rate applies. The 10% on interest never bites.
- Only royalties improve, from 15% to 10%, and only if the Saudi payer files your Indian tax residency certificate.
- The dividend is taxed twice in the Kingdom. The company pays 20% on profit, then 5% on distribution, a combined 24% for a fully foreign owned company.
The claim procedure and the 24% calculation are in Saudi Arabia withholding tax for non-residents. How India taxes the receipt is decided in India.
One Indian rule to check: place of effective management. A company incorporated abroad can be treated as Indian resident when it is effectively managed from India. We describe that rule as generally stated, not from a fresh reading of the Act.
- The risk is the founder who decides everything from India.
- The Saudi circuit pushes the other way. A resident general manager and a local signatory on the bank account put real management in the Kingdom.
Indian documents: apostille or embassy
Both countries are parties to the Apostille Convention, India since 14 July 2005 and Saudi Arabia since 7 December 2022. The Saudi ministry's guide still asks for documents "certified by the Saudi Embassy".
| Source | What it says |
|---|---|
| Ministry of Investment Investor Guide 2026 | Company documents certified by the Saudi Embassy |
| Apostille Convention status table | In force between India and Saudi Arabia |
| Saudi tax authority circular, January 2025 | Embassy authentication or an apostille, for treaty files |
- Ask the ministry in writing which form it accepts for an Indian company before you legalise anything.
- If you sign in the Kingdom, the Embassy of India in Riyadh attests documents for commercial purposes for SAR 185, plus small service fees.
The bottom line
From India, the question is less whether Saudi Arabia lets you in than which Indian door you leave by. An operating Indian company with audited accounts fits both rulebooks. An individual fits the Indian one and has to find a Saudi path.
Settle three things in order: your FEMA status, the investing vehicle, and the Saudi activity code. What the profit then bears is in Saudi corporate tax and zakat.
If you want the Saudi side checked against your Indian structure before you remit, start with the Saudi Arabia company formation service.
Frequently asked questions
Can an Indian citizen own 100% of a company in Saudi Arabia?
Yes, in activities open to foreign investment. Services and consulting carry no published capital figure, while trading at full foreign ownership requires SAR 30,000,000. Nationality is not the test, the activity and the applicant are.
Can I use the LRS to set up a Saudi company?
Indian rules allow a resident individual to invest up to USD 250,000 a year in an operating foreign entity. The Saudi ministry, however, publishes a regular path for companies, not for an individual abroad, so you also need a Saudi route.
Can I hold the Saudi company through a holding I fund under the LRS?
Not if you control the holding. The Reserve Bank's Directions do not allow a resident individual to control a foreign entity that has a subsidiary, and control includes 10% or more of the voting rights.
How much TCS applies when I remit capital from India?
Tax collected at source is 20% on LRS remittances above ten lakh rupees in a financial year when the purpose is investment. It does not apply to an overseas direct investment made by an Indian company.
I work in Saudi Arabia on an iqama. Do the RBI rules apply to me?
Probably not. FEMA's definition of a person resident in India excludes someone who has gone abroad for employment. On the Saudi side you still need the entrepreneur track, with your employer's no-objection letter, or Premium Residency.
What does the India and Saudi Arabia tax treaty change?
As reported by PwC, the treaty caps dividends at 5%, interest at 10% and royalties at 10%. Saudi domestic rates are already 5% on dividends and interest, so only royalties improve. Check the treaty text before relying on it.
Do Indian company documents need an apostille or Saudi embassy legalisation?
Both countries are parties to the Apostille Convention, yet the investment ministry's guide still says "certified by the Saudi Embassy". Ask the ministry which it accepts before starting the Indian chain.
Sources
- Reserve Bank of India, Overseas Investment Directions 2022: who counts as an Indian entity, the Form FC filing through the bank, and the limits on a resident individual (operating entity only, no subsidiary under the individual's control)
- Reserve Bank of India, Master Direction on the Liberalised Remittance Scheme: USD 250,000 per financial year for resident individuals, not available to companies, PAN mandatory
- Indian Ministry of Finance, memorandum to the Finance Bill 2026: section 394(1) of the Income-tax Act 2025, tax collected at source of 20% on LRS remittances above ten lakh rupees for purposes other than education or medical treatment
- Embassy of India in Riyadh, bilateral relations page updated 4 October 2026: USD 41.07 billion of trade in FY 2025-26 and an Indian community of about 2.74 million
- HCCH status table for the Apostille Convention: in force for India since 14 July 2005 and for Saudi Arabia since 7 December 2022
Official and read on 5 October 2026: the Reserve Bank of India's Overseas Investment Directions and Regulations of 2022, its Master Direction and FAQ on the Liberalised Remittance Scheme, the memoranda to the Finance Bills of 2025 and 2026 for tax collected at source, the Embassy of India in Riyadh for trade, community and company figures, and the HCCH status table. The Overseas Investment Rules themselves could not be opened and are read through the Reserve Bank's Directions, so the corporate limit of 400% of net worth is reported as widely stated, not as read. Not read on the primary text: the India and Saudi Arabia tax treaty, whose rates here come from PwC Worldwide Tax Summaries as used in our withholding guide; the residence and place of effective management rules of the Income-tax Act 2025; and the credit of tax collected at source against income tax. The Saudi rules are those of the cluster guides, drawn from the Investment Law, the Ministry of Investment Investor Guide and FAQ, and the ZATCA circular of January 2025. Visa rules for Indian nationals were not reconfirmed and are left out. To reconfirm before acting: every treaty rate, your FEMA and tax residence, and whether the investment ministry accepts an apostille. This is not legal or tax advice.