US Stocks From India 2026: LRS Limits, TCS, and the Tax Rules Most Investors Get Wrong

By Nitish Bharadwaj · Published Aug 25, 2026 · 7 min

Investing in US stocks from India runs through the RBI's Liberalised Remittance Scheme, capped at $250,000 per person a year across travel, gifts, and investing combined. Investment remittances above ₹10 lakh attract 20% TCS, refundable at ITR filing. Because US shares aren't Indian-listed, they're taxed as unlisted equity: gains held over 24 months are LTCG at 12.5% with no indexation; shorter holds are taxed at your slab rate. Dividends face 25% US withholding, reclaimable via Form 67 and the DTAA.

Buying a share of Apple, Nvidia, or Microsoft from India isn't a special cross-border transaction with its own rulebook — it runs through the same Liberalised Remittance Scheme that covers your foreign travel spending, your child's overseas tuition, and gifts to relatives abroad. That shared ceiling, a source-deducted tax on the way out, and an unfamiliar capital gains regime on the way back are the three things that trip up most first-time US stock investors from India.

The $250,000 Ceiling Is Shared, Not Dedicated

Under RBI's Liberalised Remittance Scheme (LRS), a resident individual can remit up to $250,000 in a financial year across all permitted current and capital account purposes combined — travel, education, gifts, medical treatment, and investing all draw from the same pool, not separate allowances. If you've already sent $150,000 abroad this year for a child's tuition, you have $100,000 of LRS headroom left for stock purchases, not a fresh $250,000. The limit is per person, so a married couple filing separately can each remit up to $250,000, giving a household up to $500,000 of combined annual headroom if both spouses have independent income and PAN-linked accounts.

TCS: A Deduction Up Front, Not an Extra Tax

Budget 2025 raised the TCS-free threshold on LRS remittances from ₹7 lakh to ₹10 lakh, effective April 1, 2025. Once your cumulative remittance for investment purposes in a financial year crosses ₹10 lakh, the remitting bank deducts 20% Tax Collected at Source on the amount above that threshold, before the money even leaves the country. This threshold is PAN-based and cumulative across all your remittances and banks in that financial year — it isn't a per-transaction or per-bank allowance. TCS is not a final cost: it shows up in your Form 26AS and AIS, and you claim it back in full against your income tax liability at ITR filing, with any excess refunded. It's a cash-flow drag in the year you remit, not a permanent charge.

Why the Holding Period Is Longer Than You Might Expect

A common mistake is applying the same 12-month long-term threshold used for Indian-listed shares. US stocks trade on a US exchange, not an Indian one, so for Indian tax purposes they're treated as unlisted equity shares — the long-term holding period is more than 24 months, not 12. Sell before crossing that line and the gain is short-term, taxed at your income tax slab rate. Long-term gains (held over 24 months) are also taxed at your slab rate — the 12.5% Section 112A flat rate applies only to equity shares listed on Indian exchanges with STT paid, not to foreign shares. Indexation, which once softened the tax bill on unlisted and foreign equity by adjusting the purchase cost for inflation, was withdrawn for any transfer on or after July 23, 2024. Unlike Indian-listed shares (which have a 12.5% flat LTCG rate under Section 112A), US stocks are foreign equity not listed on an Indian exchange — long-term gains are taxed at your applicable income tax slab rate, with no inflation adjustment available.

Dividends Get Taxed Twice, Then Credited Back Once

US dividends face a 25% withholding tax deducted by the US broker before the payout reaches you, and the same dividend is also taxable in India at your income tax slab rate as it's foreign-sourced income. To avoid paying tax twice on the same rupee, India's DTAA with the US lets you claim the US withholding as a Foreign Tax Credit — filed via Form 67 and reported under Schedule TR of your ITR, before your filing deadline. Missing the Form 67 filing window is one of the more common reasons investors end up unable to claim a credit they were otherwise entitled to, so this isn't something to leave until the last week of ITR season.

Reporting Obligations Beyond the Tax Itself

Owning US stocks brings a disclosure requirement independent of whether you made any gain: foreign assets, including brokerage holdings abroad, must be reported in Schedule FA of your income tax return, regardless of value or profitability. Our Schedule FA foreign asset disclosure guide covers the specifics of what counts, the reporting thresholds, and the penalty for omission, which is treated far more seriously than a routine ITR error given the Black Money Act's involvement. If your foreign equity exposure comes through employer RSUs rather than direct LRS investing, our RSU taxation guide covers how the vesting and sale-stage tax treatment differs from a stock you bought yourself through a brokerage. And if you're an NRI rather than a resident investing from India, the LRS route described here doesn't apply to you at all — see our NRI mutual fund investment guide for the FEMA and TDS framework that governs NRI investing instead.