I have a LLC based out of MD. I got a contract for a US based company, but a portion of it is outsourced to India. Can I pay them with funds in India, or should I transfer from a US based bank, once they Invoice me?
I assume that the funds in India are not LLC funds but your personal, right? In this case, you can use them for payment, but you need to account for them (as a contribution of funds) on your LLC books.
Note, that you still need to withhold 30% (or per treaty), and remit that to the IRS, and they expect US dollars. (and if you're trying to work around that, then don't. Don't mess with IRS).