How to invest in US stocks from India: funds, LRS, tax and costs

Can you invest in US stocks from India?

Yes, and it is allowed. A resident can buy US shares directly by sending money abroad under the RBI's Liberalised Remittance Scheme (LRS), which permits overseas portfolio investment in listed foreign shares. That is the RBI's term for investing in foreign securities, such as shares listed on a recognised stock exchange outside India. You can also get US exposure without sending money anywhere, through an Indian international mutual fund or ETF.

An ETF, or exchange traded fund, is a mutual fund that tracks an index or a metal and trades on a stock exchange. To buy one you need a demat and trading account.

The routes differ on who regulates them, whether they use your LRS limit, and how they are taxed. Here they are side by side.

Slab rate means the rate for your income band. TCS is tax collected at source, which your bank collects when you send the money. A capital gain is the profit when you sell. Whether it is short-term or long-term depends on the holding period, how long you owned the shares or units before selling.

Can an Indian mutual fund give you US shares?

Yes. Indian international funds invest abroad while you pay in rupees, so you make no LRS remittance. Buying one uses none of your US$2,50,000 limit, and no TCS is collected on it.

SEBI has no international category. Some are overseas funds of funds, which put at least 95% of their money into one underlying foreign fund. Others are index funds and ETFs that track an overseas index, with at least 95% invested in it. An index is a list of companies picked by fixed rules, whose combined value is tracked every day. SEBI requires that index to be standardised and broad based, with at least 10 securities.

SEBI also sets limits. Overseas securities are capped at US$1 billion per mutual fund and US$7 billion across the industry. For overseas ETFs the caps are US$300 million per fund and US$1 billion industry-wide. Scheme documents must warn about the risk of those limits running out.

Risk is high. Every listed international fund read Very High on the riskometer on 29 September 2026. The riskometer is the label SEBI makes every fund show, on six levels from Low to Very High.

Tax is different from Indian equity funds. An international fund is not equity-oriented, so an unlisted unit is long-term only after 24 months, taxed at 12.5% under section 197 of the Income-tax Act, 2025. Sell earlier and the gain is added to your income and taxed at your slab rate. A listed ETF unit is long-term after 12 months. The ₹1,25,000 allowance for Indian equity gains does not apply. Schemes with at least 80% overseas must pay redemption money within 5 working days.

A distributor such as Koshex, a registered intermediary that helps you buy and manage funds, helps you choose a fund that suits your goal and timeline. See the international funds category page for the funds listed, index funds for how index tracking works, and exchange traded funds for the ETF route.

What are the ways to buy US shares directly?

You send money abroad through your bank under the LRS to an account with a broker that offers US shares, then buy shares listed on a foreign exchange. The bank that sends the money is called an authorised dealer bank.

The rules are short. Listed foreign shares are allowed. Unlisted debt, derivatives (unless the RBI permits them) and commodities are not. Your PAN is mandatory, and you name one bank branch and give it Form A2 for the remittance. Your bank cannot lend you the money for this, and the money cannot go to margin or margin calls on overseas exchanges.

Any income you earn can be kept abroad or reinvested. Foreign exchange you do not use must come back to India within 180 days unless it is reinvested. Under the LRS, the RBI has prescribed no ratings or guidelines on the quality of what you buy.

How does GIFT City work?

GIFT City is an International Financial Services Centre (IFSC). You can send money there under the LRS, open a foreign currency account with a bank unit there, and buy foreign securities. That includes receipts on US shares listed on NSE IX.

A depository receipt is a tradable instrument that represents shares of a company in another country. NSE IX lists depository receipts on US stocks. Money sent to GIFT City counts against the same US$2,50,000 limit, with the same PAN and Form A2 rules.

How much can you send abroad, and what is TCS?

A resident can send up to US$2,50,000 in each financial year (April to March) under the LRS. When you send money to invest, your bank collects TCS of 20% on the part above ₹10 lakh.

Once you have sent US$2,50,000 in a year, you cannot send more that year, even if the proceeds of earlier investments have been brought back.

TCS is not an extra tax. It counts as tax you have already paid, so it reduces the tax due in your return, and any excess is refunded. It can also be set against the TDS deducted from your salary, through your employer.

Take ₹14,00,000 sent for investment. The part above ₹10 lakh is ₹4,00,000, and 20% of that is ₹80,000. That ₹80,000 comes back as a credit in your return, or through your employer against salary TDS. Money sent to buy a foreign employer's shares counts too; the ESPP article covers that case. The TCS article covers the rules in full.

What does investing in US stocks cost?

On the direct route you pay your bank's exchange rate and charges on each remittance, your overseas broker's fees, and TCS, which counts as tax you have already paid. On the fund route you pay the fund's expense ratio.

Bank and broker charges are set by each bank and broker, so ask for the full rate before you send money. The expense ratio is the fund's yearly fee, shown as a percentage of your money. It is taken out of the fund's value, so it shows up inside the NAV, the price of one unit. Read more in what an expense ratio is.

How are US shares taxed in India?

As a resident you pay Indian tax on the gains and the dividends. US-listed shares turn long-term only after more than 24 months. The rate then is 12.5%, with no adjustment for inflation; before that, the gain is taxed at your slab rate. The ₹1,25,000 allowance for Indian shares does not apply, because it needs securities transaction tax (STT), which is charged only on trades on Indian exchanges.

For shares you bought yourself, the gain is the sale price minus what you paid. Convert the gain into rupees at the State Bank of India buying rate for the last day of the month before you sell.

A worked case, with assumed figures. You buy shares for ₹1,70,000 and sell after 30 months with a ₹60,000 gain.

• Long-term at 12.5%: ₹7,500, plus 4% cess of ₹300, so ₹7,800.
• The same gain after 18 months is short-term. For someone in the 30% slab it is ₹18,000 plus ₹720 cess, so ₹18,720.

Cess is an extra 4% on the tax itself. Surcharge is a further charge on the tax once total income passes ₹50 lakh. On the tax on a long-term gain, and on dividend income, it is capped at 15%. The figures above leave it out. A capital loss can be set off only against other capital gains, never against salary, and carried forward for 8 years if you file your return on time.

A dividend is cash a company pays its shareholders out of its profits. US dividends are added to your income in India as income from other sources and taxed at your slab rate. No Indian TDS applies. The dividend is converted at the same State Bank of India rate, for the last day of the month before it is declared, distributed or paid.

Tax already withheld in the US can be set against the Indian tax on the same dividend, up to the Indian amount, if you file Form 44 with your return. A foreign tax credit is that relief: the lower of the Indian tax on that income and the foreign tax paid. Form 44 must be filed within twelve months of the end of the tax year.

Do you have to report US shares in your tax return?

Yes. A resident who holds shares or an account abroad at any time during the tax year must file a return, even with no income, and list those foreign assets in it.

Not reporting them can mean a ₹10 lakh penalty under the Black Money Act. This does not apply where your foreign assets other than property add up to ₹20 lakh or less, a relaxation in force from 1 October 2024.

Your Indian fund units are held in India. The income tax return article covers how filing works.

What is currency risk, and how does it change your return?

US shares are priced in dollars, so the rupee value of your holding rises or falls with the exchange rate even if the share price stands still. The exchange rate is how many rupees one dollar costs on a given day.

An assumed example, not a forecast. You buy US$2,000 of US shares when a dollar costs ₹85. That is ₹1,70,000. A year later the shares are still worth US$2,000, but the dollar costs ₹89. Your holding is now ₹1,78,000, a rise of ₹8,000 from the exchange rate alone. If the dollar had cost ₹81, it would be ₹1,62,000, a fall of ₹8,000.

The same applies inside an international fund. Its scheme documents must disclose currency risk. Whether you hold the shares directly or through a fund, the rupee value moves with the dollar as well as with the shares.