How to Invest in US Stocks from India in 2026 — LRS, TCS, Tax Explained

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In short: Indian residents can invest in US stocks (Apple, Microsoft, Google, Tesla, S&P 500 ETFs) up to $250,000 per financial year under the Liberalised Remittance Scheme (LRS). Three popular routes: INDmoney, Vested, Groww International (via tie-ups with US brokers). Above ₹7 lakh remittance per year, 20% TCS applies on the LRS amount. Tax treatment: dividends taxed at 25% in US + reclaimed via treaty in India; capital gains taxed only in India (no STCG slab benefit — taxed at slab rate for <24 months, 12.5% LTCG above 24 months). The math: a 30% slab Indian investor in a US S&P 500 ETF earns roughly 8-10% net after all costs and tax over a 10-year horizon.

Why invest in US stocks from India?

Three structural reasons US allocation is part of a sophisticated Indian portfolio:

• Currency diversification: The Indian rupee depreciates against the US dollar at roughly 3-4% per year long-term. A US-denominated investment partly hedges your INR-only portfolio.
• Access to global businesses: NVIDIA, Apple, Microsoft, Alphabet, Tesla, Meta, Amazon. These are world-leading companies you cannot buy on NSE/BSE. Innovation often happens outside India first.
• Asset class diversification: US and Indian markets have correlations around 0.4-0.6. A US allocation reduces overall portfolio volatility during periods of India-specific stress.

The downside: incremental complexity (KYC, LRS, TCS, dual tax filing) and slightly higher costs. For most Indian investors with under ₹10 lakh net worth, a 100% Indian portfolio is fine. Above that, a 10-20% US allocation adds meaningful diversification.

The LRS framework — what you can and cannot do

The Liberalised Remittance Scheme (LRS), introduced by RBI in 2004, allows Indian residents to remit money abroad for various purposes. For stock investing:

• Limit: $250,000 per individual per financial year (April 1 to March 31)
• Eligible recipients: Investments in foreign stocks, real estate, fixed deposits, debt instruments
• Family aggregation: Limit is per PAN. Spouse, adult children each get their own $250K limit if they have their own income/PAN
• Documents: Form A-2 (declaration of purpose), PAN, bank KYC
• Source of funds: Must be from your own bank account (cannot be from borrowed money or third-party transfer)

What you cannot do:

• Use LRS for leveraged margin trading on foreign exchanges
• Use LRS for crypto purchases (RBI specifically restricts)
• Trade in foreign currency F&O via LRS (different scheme applies)

The TCS twist — 20% from the first rupee above ₹7 lakh

The most important recent change. Effective October 1, 2023:

• Below ₹7 lakh per financial year: No TCS (Tax Collected at Source)
• Above ₹7 lakh per financial year: 20% TCS on the amount above ₹7 lakh

Example: You remit ₹10 lakh to your US broker account in a financial year.

• First ₹7 lakh — no TCS
• Remaining ₹3 lakh — TCS at 20% = ₹60,000 collected at source
• You actually transfer ₹10 lakh but pay an extra ₹60,000 as TCS (deducted from your bank account by the remitting bank)
• You claim the ₹60,000 TCS back as credit in your ITR — but it sits with the government for 6-12 months before refund

The TCS is recoverable but represents an interest-free loan to the government. For large remittances, this matters. For ₹2-3 lakh per year (small SIP-style), you stay under the ₹7 lakh threshold.

The three popular routes to invest

Route 1: INDmoney

• Partner US broker: Drivewealth (regulated by FINRA + SIPC-insured up to $500K)
• Minimum investment: $1 (fractional shares supported)
• Brokerage: Zero on most trades; 0.7-0.8% forex spread on the INR-to-USD conversion (this is the real cost)
• Fees: No account opening fee. Some account-maintenance fees may apply for inactive accounts.
• Features: US stocks, US ETFs, mutual funds. Tax statements provided.

Route 2: Vested Finance

• Partner US broker: DriveWealth (same as INDmoney)
• Minimum investment: $1, fractional shares
• Brokerage: Zero on stocks; 0.6-0.8% forex spread
• Differentiator: Curated “Vests” (pre-built thematic portfolios — AI, semiconductor, EV, etc.)
• Tax reports: Generated automatically each year

Route 3: Groww International

• Tie-up: via partner US broker (rotated based on terms)
• Minimum investment: $1, fractional shares
• Brokerage: Zero on stocks
• Differentiator: Integrated with main Groww app (single login for India + US)

Other options: ICICIdirect Global Investing, HDFC Sec Global Investing, Stockal, Winvesta. Discount brokers like Zerodha and Dhan do not currently offer direct US stocks but Zerodha has launched it indirectly via partnerships.

Account opening process

Roughly 7-14 working days for first-time US investment:

1. Sign up on INDmoney / Vested / Groww International
2. KYC: Aadhaar + PAN + bank account verification (similar to Indian demat)
3. W-8BEN form submission: Declares you are an Indian tax resident, eligible for lower US tax rates under treaty
4. Bank LRS authorisation: Submit Form A-2 to your bank, declaring LRS purpose
5. First remittance: Wire transfer or SWIFT from your bank to the US broker’s nostro account
6. USD credited to US trading account in 1-3 business days
7. Start trading: Browse US stocks/ETFs and place orders

Tax treatment in detail

US stock investing creates a two-country tax situation. Both have claims, with the India-US tax treaty preventing double taxation.

Dividends

US dividends are taxed by the US first:

• Default rate: 30% withholding by US
• Treaty rate: 25% withholding (if you file W-8BEN — Indian residents qualify)
• Indian tax: Added to your income, taxed at slab rate. You can claim FTC (Foreign Tax Credit) for the 25% paid in US.

Example: Apple pays you $100 dividend.

• US withholds $25 (treaty rate)
• You receive $75 in your US broker account
• $100 added to your Indian income at slab rate. If you’re at 30% slab, that’s ₹3,000 tax on ~₹10,000 income
• You claim the $25 (~₹2,000) US withholding as FTC against your ₹3,000 Indian tax. Net additional Indian tax: ~₹1,000
• Effective dividend tax: 30% (US 25% + India incremental 5%)

Capital gains

Capital gains on US stocks are taxed only by India (no US capital gains tax for non-residents on US-listed shares):

• STCG (held < 24 months): Slab rate (5-30%) — important: NOT the 20% STCG rate that applies to Indian listed stocks
• LTCG (held > 24 months): 12.5% (post Budget 2024 — indexation removed)

The 24-month long-term threshold for US stocks is different from the 12-month threshold for Indian listed stocks. Be aware.

Schedule FA — annual reporting obligation

If you hold foreign assets (US stocks, foreign bank accounts, foreign real estate) at any time during the financial year, you must file Schedule FA in your ITR. Penalty for non-disclosure: ₹10 lakh per year under the Black Money Act + potential criminal prosecution. This is one of the most serious tax-compliance asks in the Indian system. Always file Schedule FA correctly — INDmoney, Vested, etc., provide year-end statements specifically formatted for this.

The realistic cost stack

For a ₹10 lakh investment in a US S&P 500 ETF held 5 years:

Net of all costs, a ₹10 lakh investment in S&P 500 ETF held 5 years at 10% USD CAGR (plus 3% INR depreciation) delivers approximately 12-13% INR CAGR before tax, 10-11% after tax. Comparable to Nifty 50 over similar period but with global exposure as a bonus.

What US assets to hold

For most Indian investors, broad US ETFs are the right starting point:

• S&P 500 ETF: VOO (Vanguard), IVV (BlackRock), SPY (State Street) — exposure to top 500 US companies. Most popular choice.
• NASDAQ-100 ETF: QQQ — tech-heavy, includes Apple, Microsoft, Alphabet, Nvidia, Amazon, Meta, Tesla
• Total US Stock Market ETF: VTI — exposure to ~4,000 US stocks (broadest)
• Dividend-focused ETF: SCHD, VIG — for income-focused investors

For direct stocks, the obvious large-cap names — Apple, Microsoft, Alphabet, Amazon, Nvidia — make sense for thematic exposure but require active research.

Common mistakes

1. Missing Schedule FA in ITR. Most expensive mistake — ₹10 lakh penalty + criminal liability.
2. Treating US stocks like Indian stocks for tax. Different holding period (24 months for LTCG vs 12 months), different STCG rate (slab not 20%).
3. Ignoring TCS planning. Many Indians remit ₹15-20 lakh in one go, then complain about ₹2-3 lakh TCS lock-up. If splitting across spouses’ PANs is possible, do it.
4. Forex spread shock. The 0.6-0.8% forex spread on remittance is real cost. For frequent small transfers, it compounds. Better to remit larger amounts less frequently.
5. Failure to claim FTC for US dividend tax. Many investors forget the foreign tax credit on dividend withholding. Always claim it via Form 67 in your ITR.

Frequently Asked Questions

Is investing in US stocks safer than Indian stocks?

Different risks, not inherently safer. US equity market has roughly the same volatility as Indian equity market. The diversification benefit comes from the different driver mix (US tech leadership, Federal Reserve policy, global trade) — not from lower individual risk.

Can I do SIP into US stocks?

Yes. INDmoney, Vested, and Groww International all support monthly recurring purchases. For a ₹5,000 monthly USD-purchase SIP, you’re effectively averaging your forex rate over time, which is itself a form of diversification.

What happens if I become an NRI?

Once you become an NRI, your existing US stocks held under LRS continue, but new LRS deposits stop (LRS is only for residents). You can continue trading and selling. NRIs invest via separate routes (foreign brokerage account directly, not via LRS).

Can I transfer my US stocks from one platform to another?

Yes, ACATS (Automated Customer Account Transfer Service) allows transfer between US-registered brokers. INDmoney to Vested transfer would go via the underlying US brokers. Costs ~$30-75 per stock per transfer.

What about US estate tax for Indian holders?

This is the most under-discussed risk. US estate tax applies to foreign nationals holding US stocks above $60,000 at the time of death. Tax rate up to 40%. India-US tax treaty does NOT cover estate tax. Mitigation: hold via Indian-domiciled mutual funds investing in US stocks (avoids direct US asset exposure for estate purposes) or split holdings across multiple family members.

Are US stock dividends paid in USD or INR?

USD, into your US trading account. To bring back to India, you sell the USD and remit (subject to forex spread and any FEMA reporting).

Can I trade US options or futures from India?

Currently, RBI restricts LRS funds from being used for leveraged derivatives. So no options or futures via LRS. Some brokers offer this via separate FEMA-compliant routes, but generally not retail-accessible.

Sources & Further Reading