A S BANKA ADVISORS

Expanding abroad is exciting. But for most Indian startups, it also comes with a compliance minefield that nobody warns you about.

We put together a visual guide covering the 5 most common things that go wrong when Indian startups try to set up operations overseas. Each one comes from real cases we have seen in advisory practice.

The 5 Mistakes in Brief

• Forgetting to tell RBI about your foreign company: When you invest in a foreign entity, RBI requires you to register it under Overseas Direct Investment (ODI) rules. Most founders don’t know this exists until penalties show up. Penalty: up to 3x the amount sent abroad.
• Sending money abroad the wrong way: Personal transfers (LRS) and business investment (ODI) follow completely different rules. Using the personal route to fund your company abroad is a violation. Your bank won’t stop you, but the regulator will catch up.
• Missing the annual report RBI expects: Every Indian company with a foreign subsidiary must file a yearly report with RBI, due every December. Missing it leads to penalties and RBI blocks your future international transactions.
• Not setting transfer prices from Day 1: When your Indian and foreign companies do business with each other, the pricing must be at arm’s length. The tax department checks this even at seed stage. Average tax audit adjustment: Rs 4.2 crore.
• Using the wrong valuation method for the regulator: RBI has its own rules for valuing your company in cross-border transactions. This is different from how your investors value you. Using the wrong method can make your entire fundraise non-compliant.

Download the Full Visual Guide

We have compiled this into an easy-to-share carousel PDF with real examples and fixes for each mistake.

Download the full carousel PDF

The Fix: 3 Steps Before You Set Up Abroad

1. Get a compliance opinion before incorporating (not just entity advice)
2. Map every filing you will owe before you send any money
3. Build the compliance calendar the same day you set up the entity

Free Live Session: April 18 at 11 AM IST

CA Adityavikram Banka is covering all 5 of these mistakes, with real founder stories and practical fixes, in a free live session this Saturday.

Register for the free webinar

Need help with your specific cross-border situation? Talk to an expert at A S Banka Advisors Private Limited.