Apple, Microsoft, Google, Nvidia — the world's biggest companies are listed in the US, and Indian investors increasingly want a piece. The good news: it is fully legal and easier than ever. The catch: there are extra layers — currency, TCS, foreign-asset reporting, and US dividend tax — that you must understand first.
International exposure can genuinely diversify a rupee-heavy portfolio. But it adds complexity and currency risk, so go in informed.
This article explains the LRS scheme, the routes to invest, TCS on remittances, how foreign stocks and dividends are taxed, and the mandatory Schedule FA reporting.
The LRS — Your Legal Gateway
Resident Indians invest abroad under the RBI's Liberalised Remittance Scheme (LRS), which allows remitting up to USD 250,000 per individual per financial year for permitted purposes — including foreign investment, education, travel, and gifts combined.
The limit is per person, so a family can pool individual limits
USD 250,000 covers all your foreign remittances for the year, not just US investing
Most retail investors stay well below this ceiling
The Three Routes
Route
How it works
LRS / Schedule FA?
Direct platforms
Overseas brokerage account; remit under LRS; buy US shares/ETFs (incl. fractional)
Yes — both apply
Indian intl. funds/ETFs
Invest in rupees in a fund that holds US equities
No — simpler
Fund of Funds (FoF)
Indian FoF feeds into a foreign fund
No — simpler
Direct gives the most control and choice (specific US stocks, fractional shares). The Indian-fund routes are rupee-denominated and avoid LRS, TCS, and foreign reporting — simpler, at the cost of less control and sometimes higher expenses.
TCS on Remittances
When you remit money abroad under LRS, Tax Collected at Source (TCS) applies. For investment-purpose remittances, TCS of 20% applies on the amount above a Rs 7 lakh threshold per financial year (education and medical have different, lower treatment).
TCS is not an extra tax:
It is collected in advance and can be claimed back as a credit against your total income-tax liability, or refunded when you file your ITR. So it affects your cash flow (money is locked up until adjusted) rather than your final tax. Verify the current threshold and rate — they have been revised more than once.
How US Stocks Are Taxed for Indian Investors
Capital gains (taxed in India)
Foreign shares are not listed in India, so the long-term threshold is 24 months:
Held > 24 months → long-term, taxed at 12.5% (post-2024 Budget, no indexation)
Held ≤ 24 months → short-term, taxed at your income-tax slab rate
Dividends
US withholds 25% on dividends to Indian residents under the India-US tax treaty (DTAA)
The dividend is also taxable in India at your slab rate — but you can claim a foreign tax credit for the US tax paid, avoiding double taxation
Schedule FA — Mandatory Reporting
Disclose foreign holdings — this is serious:
Resident Indians holding foreign assets (US shares/ETFs held directly) must disclose them in Schedule FA of their ITR, whether or not they earned income from them. Non-disclosure is treated seriously under the black money law and can attract heavy penalties. Note: investing via Indian funds/ETFs that hold US equities does NOT trigger Schedule FA — you own an Indian fund, not a foreign asset — which is one reason many prefer the indirect route.
Should You Bother?
International exposure adds genuine diversification, but weigh the trade-offs:
Currency risk — a stronger rupee reduces your dollar returns (and vice versa)
Costs — forex conversion, platform charges, possibly higher fund expenses
For most investors wanting a modest global tilt, an Indian international fund/ETF is the simplest start. Direct US investing suits those who want specific stocks and are comfortable with the extra admin.
Not tax or investment advice:
Foreign-investment rules, TCS, and taxation are intricate and change often. This is educational only — verify the current rules and consult a qualified chartered accountant before investing abroad.
Next Step — Reading What Companies Disclose
Whether Indian or foreign, the smartest investors read the filings. Learn how to read SEBI filings and spot insider trading activity.
Yes. Resident Indians can legally invest in US (and other foreign) stocks under the RBI's Liberalised Remittance Scheme (LRS), which allows remitting up to USD 250,000 per individual per financial year for permitted purposes including investment. You can invest directly through dedicated platforms that give access to US markets, or indirectly through Indian mutual funds and ETFs that hold international equities. It is fully legal and increasingly common, but it comes with extra layers — currency conversion, TCS on remittances, foreign-asset tax reporting, and US dividend withholding — that you must understand before starting.
Under the RBI's Liberalised Remittance Scheme, a resident individual can remit up to USD 250,000 per financial year for all permitted current and capital account transactions combined — including investment in foreign stocks, real estate, education, travel, and gifts. This limit is per person, so a family can pool individual limits. Note that the USD 250,000 covers all your foreign remittances for the year together, not US investing alone. Most retail investors come nowhere near this ceiling, but high-net-worth investors and those funding overseas education need to plan within it.
Three broad routes. (1) Direct investing through platforms that offer access to US markets — you open an overseas brokerage account (often via a tie-up), remit funds under LRS, and buy US shares or ETFs, including fractional shares. (2) Indian mutual funds and ETFs that invest in international/US equities — you invest in rupees, no LRS or foreign account needed, and the fund handles overseas exposure. (3) Fund of Funds (FoFs) that feed into a foreign fund. Direct gives the most control and choice; the Indian-fund routes are simpler, rupee-denominated, and avoid the LRS, TCS, and foreign-reporting hassle.
Yes. Under LRS, Tax Collected at Source (TCS) applies on foreign remittances. For investment-purpose remittances, TCS of 20% applies on the amount above a Rs 7 lakh threshold per financial year (the threshold and lower rates apply differently for education and medical purposes). Importantly, TCS is not an extra tax — it is collected in advance and can be claimed back as a credit against your total income tax liability, or refunded when you file your ITR. So it affects your cash flow (money is locked up until you adjust or claim it) rather than your final tax. Verify the current threshold and rate, as these have been revised more than once.
Two layers. (1) Capital gains are taxed in India: foreign shares are not listed in India, so the long-term threshold is 24 months — gains on shares held over 24 months are long-term (taxed at 12.5% after the 2024 Budget, without indexation), and shares held 24 months or less are short-term, taxed at your income-tax slab rate. (2) Dividends from US stocks face a 25% US withholding tax for Indian residents under the India-US tax treaty (DTAA); the dividend is also taxable in India at your slab rate, but you can claim a foreign tax credit for the US tax paid to avoid double taxation. You must report foreign holdings in Schedule FA of your ITR. Rules are intricate — consult a CA.
Yes — this is mandatory and important. Resident Indians holding foreign assets, including US shares and ETFs held directly, must disclose them in Schedule FA (Foreign Assets) of their income tax return, regardless of whether they earned any income from them. This includes details of the holdings and any dividends or gains. Non-disclosure of foreign assets is treated seriously under the black money law and can attract heavy penalties. Note that investing through Indian mutual funds/ETFs that hold US equities does NOT trigger Schedule FA, because you own an Indian fund, not a foreign asset directly — one reason many prefer the indirect route for simplicity.
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