Buying a South African business from India: RBI rules, the tax treaty, visas and time zones

What is different for a buyer in India

The South African rules are the same for every foreign buyer, and our guides cover them: buying a business in South Africa as a foreigner, exchange control for foreign investors and the business visa. At home, investment abroad from India is governed by the Foreign Exchange Management (Overseas Investment) Rules and Regulations, 2022 and the RBI's Master Direction on overseas investment, updated on 1 April 2026 (RBI Master Direction). Your Indian bank applies them, so settle with it how the deal fits before you sign or bid. Use a chartered accountant in India, a tax adviser in South Africa and a South African attorney: this page is general information, not advice.

Sending the money out of India: LRS and ODI

Buying unlisted shares in a foreign company, or setting one up, is overseas direct investment (ODI) (OI Rules, rule 2(1)(q)), made in a "foreign entity" with limited liability (rule 2(1)(h)), such as a South African private company.

Buying as an individual

• Equity, within the LRS ceiling. A resident individual may make ODI only in equity capital, within the ceiling of the Liberalised Remittance Scheme (OI Rules, Schedule III, paragraph 1(1)): USD 250,000 per financial year (April to March) since 26 May 2015, including what you spend on travel and gifts that year (RBI Master Direction: LRS, paragraphs 1, 2 and 7, updated 6 September 2024). Beyond it, the RBI may permit an investment "for sufficient reasons" (rule 9(2)(ii)), at its discretion.
• Larger prices. Family members may combine limits only as co-owners of the investment, and banks may not lend you the money (LRS, paragraphs 4 and 12), so plan a larger price with your bank.
• No shareholder loans. A resident individual may not lend to the foreign company (Master Direction, paragraph 21(3)), so fund the purchase as share capital.
• Which companies. Only an operating company outside financial services, and one with no subsidiary if you have control (Schedule III, paragraph 1(2)(i)); rights to 10% of the votes can amount to control (rule 2(1)(c)).
• A business rather than shares. Under the LRS an individual may hold a foreign bank account, property abroad, ODI or portfolio investment, and lend to non-resident Indian relatives (LRS, paragraph 6). If the business is sold as a going concern, not as shares, agree with your bank and attorney how you will hold it before you bid, for example through a South African company.
• Tax collected at source. Your bank collects 20% on LRS remittances above ten lakh rupees, unless they are for education or medical treatment (Income-tax Act, 2025, section 394(1), Table, item 7, page updated 28 September 2026). It counts as tax paid on your behalf (section 390(5)), but the cash leaves your account when you remit, so budget for it.

Buying through an Indian company

An Indian entity may make ODI for bona fide business activity, up to 400% of its last audited net worth across all foreign entities (Schedule I, paragraphs 1(1) and 3(1)); more than USD 1 billion in a financial year needs RBI approval (Master Direction, paragraph 5). With ODI and control, it may also lend to the South African company (OI Regulations, regulation 4; Master Direction, paragraph 1(viii)).

Rules for every Indian investor

• Excluded activities. No ODI in "real estate activity" (trading real estate or development rights, not building for sale or lease), gambling, or rupee-linked financial products without RBI approval (rule 19(1)).
• Price. At arm's length, considering a valuation by an internationally accepted method (rule 16). Ask what valuation your bank's board-approved policy accepts before you commission one (Master Direction, paragraph 12(1)), and see how to value a business in South Africa.

What India asks you to report

For ODI, the OI Regulations set this sequence:

1. Before any money leaves: you submit Form FC and your bank obtains a Unique Identification Number (UIN) from the RBI for the company; no remittance goes before it, and every later one runs through that designated bank (regulation 9(2) and (3); Master Direction, paragraph 16(3)). Start before auction day. To bid for a company, ask your bank about the earnest money deposit route (regulation 9(5); paragraph 8).
2. Within six months: evidence of the investment, such as the share certificates, or the money must come back (regulation 9(1); paragraph 16(2)).
3. Every year: an Annual Performance Report (APR) by 31 December, or by 31 December of the next year for a 31 December year end, unless you hold under 10% without control and have no other commitment. It must rest on audited statements unless you lack control and South African law requires no audit, so a controlling owner budgets for an audit. An Indian company also files a return on foreign liabilities and assets (regulation 10(4) and (5)).
4. Within 90 days: dividends, other dues and sale proceeds must be repatriated to India (regulation 9(4)).

Filing late. Within three years you can still file with a late submission fee: INR 7,500 per APR or evidence of investment; for Form FC, INR 7,500 plus 0.025% of the amount per year of delay (regulation 11; Master Direction, paragraph 18(2)). Until a delay is regularised you may not invest further or sell (regulation 12).

Your tax return. In the forms covered by the Income Tax Department's guide (assessment year 2025-26, 1961 Act), foreign income goes in Schedule FSI, naming the treaty article, and foreign assets, including a financial interest in an entity, in Schedule FA; ITR-1 and ITR-4 cannot be used (guide to Schedules FSI and FA). Check the 2026-27 forms with your chartered accountant. Leaving a foreign asset out can draw a penalty of ten lakh rupees, unless your foreign assets other than immovable property total twenty lakh rupees or less (Black Money Act, 2015, section 43, page updated 28 September 2026).

The South Africa-India tax treaty

The agreement was signed in New Delhi on 4 December 1996, entered into force on 28 November 1997 (Government Gazette 18545) and applies in South Africa to years of assessment from 1 January 1998 (agreement, Article 28; SARS treaty list). Its caps, against South African rates from SARS, Taxation in South Africa 2026, sections 4, 5 and 7 (30 September 2026):

• No minimum holding. The 10% dividend rate applies to every beneficial owner resident in India (SARS treaty rates table), if the company has your declaration before it pays (SARS: dividends tax).
• Interest only on a permitted loan. From India, only an Indian company that has invested in and controls the South African company may lend (above). South Africa needs exchange control approval before the money moves: the company's bank can approve a loan within the SARB's criteria, recording it on the Loan Reporting System, and refers anything else to the SARB's Financial Surveillance Department (SARB manual, section I.3(B), version of 5 October 2026; exchange control guide).
• Arrangements built for the rate. Since the Multilateral Instrument (MLI) took effect (for South African taxes, withholding from 1 January 2023 and other taxes for periods from 1 July 2023), a benefit can be refused where obtaining it was a principal purpose of an arrangement (SARS synthesised text, MLI Article 7(1)).

Selling later: the treaty and India's exit rules

The treaty lets South Africa tax your gain on its immovable property (Article 13(1)), on shares that drew more than 50% of their value from it at any time in the 365 days before the sale (Article 13(4), as replaced by MLI Article 9(4)), and on other shares in a South African company (Article 13(5)). How far South Africa uses that right is set by its own law (SARS capital gains tax guide, chapter 4; see the foreign buyer's guide). India taxes the gain too, with credit (Article 22).

India's own exit rules: you must have held the ODI for at least a year before selling any of it, and on a full exit, other than by liquidation, no dues from the company may be outstanding (OI Rules, rule 17(4)). The price must be at arm's length (rule 16), and the proceeds must reach India within 90 days (regulation 9(4)).

How India taxes the income

The Income-tax Act, 2025 has applied since 1 April 2026 (CBDT, 1 April 2026). A resident is taxed on income arising outside India; a person "not ordinarily resident" only on income from a business controlled in, or a profession set up in, India (section 5(1)(c)). The treaty's 1996 protocol keeps India's right to tax income that South Africa may tax, subject to Article 22 (paragraph 1).

India deducts the South African tax from the Indian tax on that income, up to the Indian tax attributable to it (Article 22(a)). You claim the credit on Form 44 under Rule 76 of the Income-tax Rules, 2026, which replaced Form 67, generally within 12 months of the end of the tax year in which the income is taxed (Income Tax Department: Form 44 FAQs).

Visiting on an Indian passport, and moving to run it

Only Indian diplomatic, official and service passports are on Home Affairs' visa exemption list (90 days), so on an ordinary passport you need a visa before you travel (DHA visa exemption list, issued 9 December 2025). For a short trip there are three routes:

• Online: the Electronic Travel Authorisation (ETA). India was one of four countries, with China, Indonesia and Mexico, whose travellers piloted the ETA before its launch on 12 August 2026. It covers arrivals at OR Tambo, Cape Town, King Shaka and Lanseria airports, and the Minister said it will progressively become compulsory for short stays from countries whose citizens need visas (Minister of Home Affairs, 12 August 2026). Its FAQ allows stays of up to 90 days, says an ETA alone does not permit work and does not name business meetings, so check at eta.dha.gov.za before you book (DHA ETA questions, read 9 October 2026).
• Through VFS: the "Business Meeting" visitor's visa. For meetings, conferences and trade fairs, with no visa fee for Indian nationals (VFS charges its own), through VFS Global centres for the High Commission in New Delhi and the Consulate General in Mumbai (High Commission). You need your host's invitation letter, an Indian employer's letter, the last three months' original bank statements, signed and stamped by the bank and showing at least R3,000 or the rupee equivalent, and a flight ticket or reservation; the Mumbai, Ahmedabad, Pune, Goa and Bengaluru centres also want your previous passport. Allow at least 5 working days in New Delhi, 7 elsewhere (VFS Global: South Africa visas in India, read 9 October 2026).
• For frequent visits. A port of entry visa for Indian business executives, valid for up to 10 years with stays of up to 30 days, against a letter from an Indian chamber of commerce (same VFS page).

To live here and run the business, see the business visa guide. Its usual R5 million investment (GN 560 of 2014) may exceed one person's USD 250,000 LRS limit, depending on the exchange rate, so plan the funding with your bank.

Rupees into rand

• From India: through the Indian branch of an Authorised Dealer Category-I bank (OI Rules, rule 2(1)(b)), from your own or your company's account. Banks are told that an individual should have banked with them for a year before a capital account remittance, and to check new customers more closely; a PAN is mandatory (LRS Master Direction, section 2, paragraph 7; section 1, paragraph 16).
• Into South Africa: through a bank on the Reserve Bank's list of Authorised Dealers, which includes State Bank of India (SARB manual, section A.2(A), version of 5 October 2026). Our auctions run in rand, so agree with both banks before auction day when you will convert. The share certificate, endorsed "non-resident", is also the evidence of investment your Indian bank needs.

Working with Dynamic from India

India Standard Time is UTC +5:30 (Department of Consumer Affairs, 27 January 2025) and South Africa keeps South African Standard Time, UTC+2; neither uses daylight saving (IANA: India, South Africa). India is therefore three and a half hours ahead all year.

Email info@dynamicauctioneers.co.za or WhatsApp +27 84 702 3766. Our only office is in Centurion, Gauteng. You can open an account in our online auction room with your Indian passport number: see how to register and bid online. Start with our page for international buyers or browse the businesses for sale.