NRI founder as sole working director
Need a resident co-director under Section 149(3).
NRI Founders · Governance
NRI as Director or Shareholder — Eligibility, Tax and Governance
Director eligibility, shareholder rights, sitting fees, dividend treatment and the Section 6(1A) deemed-resident exposure for high-income NRIs.
Director eligibility, shareholder rights, sitting fees, dividend treatment and the Section 6(1A) deemed-resident exposure for high-income NRIs.
Last reviewed: June 2026 · Updated for AY 2026-27
Why this matters
The stakes, plainly.
An NRI director with Indian-source income above ₹15L can trigger Section 6(1A) deemed RNOR. Cabinet decisions made remotely can create PE exposure for the company. Both are avoidable with the right governance design.
Common situations
Where this usually comes up.
NRI investor on the board
Sitting fees, dividend declarations and FEMA reporting.
NRI majority shareholder, professional board
Cleanest structure — separates capital from governance.
What goes wrong
Expensive mistakes we keep cleaning up.
All board meetings outside India
Place of effective management (POEM) exposure for the company.
Sitting fees routed to wrong account
Indian-source income must land in NRO.
Section 6(1A) ignored
Deemed RNOR catches Indian-source income above ₹15L.
What we cover
The engagement, in writing.
- 01Board composition for Section 149(3) compliance
- 02POEM risk assessment for cross-border boards
- 03Director remuneration and Indian tax position
- 04Dividend declarations and DTAA treatment
- 05Section 6(1A) modelling for high-income NRIs
In depth
Becoming a director as an NRI
An NRI or OCI needs a Director Identification Number, applied for on the MCA portal with passport and address proof; documents executed abroad must be notarised or apostilled as required. A digital signature certificate is needed to sign filings. Your residency affects the company: Section 149(3) of the Companies Act requires at least one director who has stayed in India for 182 days or more in the financial year.
Dividends and sitting fees
Dividends paid to an NRI shareholder are taxable in India; the company deducts tax at 20% plus surcharge and cess, or at the treaty rate if you provide a tax residency certificate and Form 10F. Sitting fees and remuneration for acting as a director of an Indian company are Indian-source income, and treaties generally let India tax directors' fees. They should be credited to an NRO account.
Repatriable and non-repatriable shareholdings
Shares acquired as FDI with foreign remittance or NRE funds are held on a repatriation basis, so dividends and sale proceeds can be sent abroad. Shares bought from NRO funds, or as a non-repatriable investment, are treated like a domestic investment: proceeds go to NRO and fall within the USD 1 million annual remittance limit. Transfers of shares between a resident and a non-resident are reported on Form FC-TRS within 60 days.
Common questions
Answered, candidly.
- Can NRIs be company directors?
- Yes, with DIN. At least one director must be Indian-resident.
- Are sitting fees taxable in India?
- Yes, as Indian-source income.
- Does directorship affect Indian residency?
- Not directly — physical presence still governs. But Section 6(1A) can deem RNOR for high Indian-source income.
Authored authority
The frameworks on this page are drawn from NRI Tax Blueprint 2025 — written by Regi Tom Antony, FCA, the practicing CA who advises on the same problems every week.
On the record
What clients say after the plan ships.
“Regi mapped out the RNOR window before I moved and saved us nearly two years of needless India tax on our US brokerage. The plan was written, dated, and exactly what I needed.”
Recovered USD 38k in pre-empted tax via RNOR sequencing.
Figures reflect aggregate RTA & Associates client engagements, 1997–2025; individual outcomes vary.
Anand R.
Tech founder, returning from California
USA → India
“We sold our Bengaluru flat from Dubai. The Section 197 lower-deduction certificate alone freed up ₹42 lakh of working capital while the sale closed. No other CA we spoke to even raised it.”
TDS reduced from 14.95% to 4.1% via Form 13.
Figures reflect aggregate RTA & Associates client engagements, 1997–2025; individual outcomes vary.
Farah K.
Investment banker, Dubai
UAE → India
“Clear, direct, on the record. Regi told us what would and wouldn't work — and exactly what the next filing was. No upsell, no fog.”
Priya & Mahesh S.
Doctors, NHS, planning return
UK → India
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- RTA & Associates· Chartered Accountants
- NRI Tax Blueprint· Authored playbooks
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