Archive · 13 Aug 2025
Indian Investors: What to Know Before Buying US Stocks
Investing in US stocks is possible for Indians, but it involves rules to follow.
You can send up to $250,000 abroad annually.
If you send over a certain amount, a tax is collected upfront.
US dividends are taxed 25%, but you can offset this in India.
When you sell stocks, India taxes the profit, not the US.
You must declare all your US stock holdings on your Indian tax return to avoid penalties and legal trouble.
Indian residents can invest in US stocks through the Liberalised Remittance Scheme (LRS), with a $250,000 annual limit.
A 20% Tax Collected at Source (TCS) applies to remittances exceeding Rs 10 lakh per year for investments.
US dividends are subject to a 25% withholding tax, offset-able against Indian tax liability via the India-US tax treaty.
Capital gains on US shares are taxed in India, with long-term gains taxed at 12.5% after 24 months; US does not tax gains for Indian residents.
All US stock holdings must be declared in Schedule FA of Indian tax returns, with penalties for non-disclosure.
- Who
- Indian investors interested in investing in US stocks.
- What
- Key regulations and tax considerations for Indian investors purchasing US stocks.
- When
- Information is based on current regulations and tax laws.
- Where
- The US stock market and investment activities of Indian residents.
- Why
- To help Indian investors understand and navigate the rules to make informed decisions and avoid penalties.
Investors
GIFT City Investors
Investment Approaches
Investors
Direct investing offers easier access to global stocks, ETFs, and mutual funds.
GIFT City Investors
Investing via the GIFT City route offers advantages for larger investors.
- LRS Limit
- $250,000 per year
- TCS Threshold
- Rs 10 lakh per year
- TCS Rate
- 20%
- US Dividend Tax
- 25%
- Long-term Capital Gains Tax (India)
- 12.5% (after 24 months)
- Schedule FA Requirement
- All US stock holdings must be declared