On 19 October 2026, Zerodha began offering US stock investing on its Kite platform, according to Indian Startup News, and Angel One started rolling out a similar service on its app the same day, as the Free Press Journal reported. Buying a share of a US company now takes a few taps inside an app many clients already use. The tax on US stocks in India has not changed with it, and the questions are reaching CAs and advisors. The app handles the purchase, while the client's Liberalised Remittance Scheme (LRS) limit, TCS, US withholding, Indian capital gains, foreign asset reporting and US estate tax exposure all remain for the advisor to explain.
A broker that makes US shares easy to buy does not make them simple to own, because ownership leaves a tax and reporting trail in two countries. That trail is the same whichever app a client uses. Our guide to GIFT City mutual funds and other global investment routes compares direct US shares with the other routes, and this article follows the trail for a client who buys them directly.
How the new US stock services work
Zerodha's route to US stocks through GIFT City runs via India INX Global Access, a BSE-owned entity in the International Financial Services Centre, with the shares held by an overseas broker rather than in an Indian demat account, according to Indian Startup News. The report says the facility is open to resident individuals but not to NRIs, joint account holders or non-individual entities. Both reports place the investments under the RBI's Liberalised Remittance Scheme.
The scheme sets the outer limit. According to the RBI's frequently asked questions on the scheme, a resident individual may remit up to USD 250,000 per financial year, and every dollar sent to a US brokerage account counts against it, alongside any education remittance or other investment abroad that year. The RBI also says unspent foreign exchange must generally come back within 180 days unless it is reinvested, which matters for clients who leave cash idle in a dollar wallet.
TCS on US stocks and the cash it ties up
Money sent to buy US shares is a remittance for a purpose other than education or medical treatment, so it falls under row 7(b) of Section 394 of the Income-tax Act, 2025, which carries TCS of 20 per cent on the amount above ₹10 lakh in a tax year. Education and medical remittances carry 2 per cent from 1 April 2026, and the ₹10 lakh threshold applies to the client's LRS remittances in the year taken together. The bank collects the tax when the money leaves India.
For example, a client who sends ₹40 lakh to a US brokerage account in tax year 2026-27, with no other LRS remittance that year, would have TCS of 20 per cent collected on the ₹30 lakh above the threshold, or ₹6 lakh. That ₹6 lakh is not a final tax. It is credited against the client's income tax and refunded if it exceeds the liability, but the money is out of the client's hands until the return is processed. The CA will need the bank's TCS certificate, now Form 133, which our explainer on Form 133 and TCS certificates covers, while the guide to TCS on foreign remittance sets out the full rate structure.
US withholding on dividends and the foreign tax credit
A resident of India who holds US shares is a foreign person for US tax purposes. Brokers ask for Form W-8BEN, the IRS certificate a foreign individual gives to the payer to confirm that status. Under Article 10 of the India-US tax treaty, US tax on dividends paid to an individual resident in India is limited to 25 per cent of the gross amount, and it is deducted before the dividend reaches the client's account.
In India, the gross dividend is taxed at the client's slab rate as income from other sources, according to Motilal Oswal's guide to US stock taxation. The US tax already withheld can then be claimed as a foreign tax credit. For tax year 2026-27, Rule 76 of the Income-tax Rules, 2026 requires that claim to be made in Form No. 44, which replaced Form 67, and the form must be furnished within twelve months from the end of the tax year. Because the credit depends on that form, it belongs on the CA's checklist from the first dividend.
How tax on US stocks in India works when shares are sold
Indian tax on a sale depends on how long the client held the shares. Shares of a US company are not listed on an Indian exchange, so they become long-term only after more than 24 months, according to Zerodha Varsity. Long-term gains are taxed at 12.5 per cent under Section 197 of the Income-tax Act, 2025, plus surcharge and cess, while short-term gains are taxed at slab rates. A client used to the 12-month rule for Indian listed shares may assume it applies here, and that assumption changes the tax on an early sale.
The US side of a sale is usually quieter. The IRS explains that a nonresident's US-source capital gains that are not tied to a US business are taxed at a flat 30 per cent only when the person is in the US for 183 days or more in the tax year. For most resident Indian clients the gain is therefore taxed in India alone, although a client who spends long periods in the US should have that checked before selling.
Schedule FA and the US estate tax question
Holding US shares also brings a reporting duty that does not depend on any sale. A resident client must disclose foreign assets in Schedule FA of the income tax return for each year the shares are held. The first purchase is therefore the start of an annual disclosure rather than a one-time event.
The estate tax question is easier to miss. The IRS lists stock of US corporations as US-situated property, and the executor of a nonresident's estate must file Form 706-NA when the US-situated assets exceed USD 60,000. India is not on the IRS list of countries with an estate and gift tax treaty with the US, so a resident Indian holding has no treaty relief to fall back on. Our guide to US estate tax for global investors explains the rules, and the planning belongs with the client's CA and estate lawyer.
What advisors should check before a client starts
Clients should hear the risks plainly before the first purchase. US shares can fall in value and capital can be lost, and a rupee investor carries currency movements on top of share price moves, in either direction. A portfolio built from a handful of large US technology names also carries concentration risk. The shares are held by an overseas broker rather than in an Indian demat account, and the checks below are easier done before the first remittance than at filing time.
- Confirm the client is a resident individual eligible for the broker's service, and record every planned LRS remittance for the financial year against the USD 250,000 limit.
- Estimate the TCS on remittances above ₹10 lakh and plan for the cash that will sit with the tax department until the return is processed.
- Check that a Form W-8BEN is on file with the broker, and keep each year's dividend and US tax records for the Form No. 44 claim.
- Record purchase dates, because the 24-month line decides the Indian tax rate on a sale.
- Add every US holding to Schedule FA each year, and review US-situated assets against the USD 60,000 estate tax filing level.
Direct US shares are one route among several, each with its own forms, liquidity and risks. Advisors who introduce eligible clients through Raveum's partner page will see a different structure again, in which clients invest in diversified US commercial real estate such as net lease, self-storage and multifamily property, each deal reviewed by Raveum and held in its own legal entity. Offshore investors hold that interest through a US corporation and typically receive Form 1042-S, while the LRS, TCS and Schedule FA questions on the Indian side stay the same.
This week's broker launches removed most of the friction from buying US shares. The paperwork has moved to later in the year, when the TCS credit, the foreign tax credit, the capital gains rate and the Schedule FA entry all come due together. Advisors who set up that trail at the first purchase will spend the filing season checking figures rather than rebuilding them. Our guide to GIFT City mutual funds and global investment routes is the place to compare the routes before a client chooses one.
Frequently asked questions
Is investing in US stocks from India legal?
Yes. Resident individuals can invest in US-listed shares under the RBI's Liberalised Remittance Scheme, which allows remittances of up to USD 250,000 per financial year for permitted purposes. The investment must follow the Overseas Investment Rules and Regulations, 2022. Remittances above ₹10 lakh in a tax year attract TCS, and the holding must be reported in the income tax return.
Is TCS charged on money sent to buy US stocks?
Yes, above the threshold. Under Section 394 of the Income-tax Act, 2025, remittances for purposes other than education or medical treatment attract TCS of 20 per cent on the amount above ₹10 lakh in a tax year. The TCS is not a final tax. It is credited against the client's income tax and refunded if it exceeds the liability.
How are profits on US stocks taxed in India?
It depends on the holding period. US shares held for more than 24 months give long-term gains, taxed at 12.5 per cent plus surcharge and cess under Section 197 of the Income-tax Act, 2025. Shares held for 24 months or less give short-term gains, which are added to the client's income and taxed at the applicable slab rate.
Does a resident Indian pay US tax on US stocks?
On dividends, usually yes. The India-US tax treaty limits US tax on dividends paid to an individual resident in India to 25 per cent of the gross amount, claimable in India as a foreign tax credit through Form No. 44. Capital gains are not usually taxed in the US unless the client spends 183 days or more there.
How should US stocks be shown in the income tax return?
US holdings go in Schedule FA, the foreign assets schedule, for every year they are held, even when nothing is sold. Dividends are reported as income from other sources and sales under capital gains. The foreign tax credit for US tax withheld needs Form No. 44, furnished within twelve months from the end of the tax year.
What happens to a client's US stocks if the client dies?
Shares of US companies are US-situated property for US estate tax. When a nonresident's US-situated assets exceed USD 60,000, the executor must file Form 706-NA with the IRS, and India has no estate tax treaty with the US. Families should plan for this with a CA and an estate lawyer, alongside the market and currency risks of the holding.
This article is for general education and is not tax, legal or investment advice. Rules change and depend on individual circumstances. All investing involves risk, including loss of capital, illiquidity and currency movements. Offerings on Raveum are available to eligible investors only and are not open to the general public.
