The route: LRS
- Resident individuals invest through the Liberalised Remittance Scheme — up to USD 250,000 per financial year across all purposes.
- Buying listed US shares is overseas portfolio investment; holding 10% or more of a listed company, or any unlisted foreign company, is overseas direct investment with its own rules.
- Apps and platforms (US brokers or GIFT City-based brokers) all fund through LRS; fractional shares usually can’t be moved between platforms.
TCS when you send money
Banks collect 20% TCS on investment remittances above ₹10 lakh in a financial year (section 394). It’s credited against your income tax — but plan around the cash it ties up. TCS calculator.
How returns are taxed
| Income | US side | India side |
|---|---|---|
| Dividends | 25% withholding for individuals under the treaty (with a W-8BEN; 30% without) | Taxed at your slab rate, with credit for the US tax |
| Capital gains | Generally not taxed for non-US persons | Held over 24 months: 12.5%; otherwise slab rate. No ₹1.25 lakh exemption — US shares aren’t listed in India |
- Claim credit for US tax in Form 44 (Form 67 for income up to 2025-26) — see India–US DTAA.
Schedule FA: don’t skip it
- Residents (ordinarily resident) must report foreign shares in Schedule FA for the calendar year — including shares sold during the year — whatever the amount.
- Non-disclosure can attract a ₹10 lakh penalty under the Black Money Act; there’s relief from penalty where non-immovable foreign assets total ₹20 lakh or less, but disclosure is still required.
- You can’t use ITR-1 or ITR-4 once you have foreign assets.
The US estate tax trap
For non-US persons, US shares are US-situs assets. If they exceed USD 60,000 at death, a US estate tax return is required, with rates up to 40% and no India–US estate tax treaty. Larger portfolios often use funds or structures that avoid direct US-situs holdings — get advice.
Frequently asked questions
Is there a limit on investing in US stocks from India?
Resident individuals can remit up to USD 250,000 per financial year under the Liberalised Remittance Scheme, which covers investment in US shares along with other permitted purposes.
How are US stock dividends taxed for Indians?
The US withholds 25% for Indian-resident individuals under the treaty (with a W-8BEN); the dividend is then taxed in India at slab rates with credit for the US tax.
How are gains on US shares taxed in India?
US shares are not listed in India, so gains on shares held over 24 months are taxed at 12.5% without the ₹1.25 lakh exemption, and shorter-term gains at slab rates.
Do I need to report US shares in my Indian tax return?
Yes. Residents must disclose foreign shares in Schedule FA for the calendar year, including shares sold during the year.
Please note: this guide is general information based on the rules as they stood on the review date above. Regulations and RBI/CBDT procedures change often — please get advice on your specific facts before acting.