How much tax on US stocks and ETFs in India? Dividends, capital gains, Form 44, Schedule FA and LRS TCS
Short answer. A resident Indian pays Indian tax on foreign shares exactly as on any other income from anywhere in the world. Dividends are taxed at your slab rate, with credit for the 25% the US withholds. Gains are long-term after 24 months and taxed at 12.5%; sold earlier, they are taxed at your slab rate. You must also report the holdings in Schedule FA every year, even with no income. Money sent abroad beyond ₹10 lakh a year attracts 20% TCS, which you get back through your return.
Do I have to pay tax on US stocks in India?
Yes, if you are resident in India. A resident and ordinarily resident person is taxed on worldwide income, so dividends and gains from shares listed in New York are taxable here even when the money never comes to India. The US also taxes the dividends, and the India–US tax treaty gives relief from double taxation. Non-residents and people who are "not ordinarily resident" are outside most of this article; see our NRI guide.
How much tax do I pay on US stocks?
| Income | Tax in the US | Tax in India | Where it goes in the return |
|---|---|---|---|
| Dividend | 25% withheld at source with a valid W-8BEN; 30% without | Slab rate, as income from other sources. Credit for the US tax through Form 44 | Schedules OS, FSI and TR |
| Gain on sale within 24 months | Generally none for a non-resident of the US | Short-term: slab rate | Schedule CG |
| Gain on sale after more than 24 months | None | Long-term: 12.5%, no indexation, and no ₹1.25 lakh exemption | Schedule CG |
| Holding, with or without income | — | No tax, but disclosure is compulsory | Schedule FA |
| Remittance to buy the shares | — | TCS of 20% above ₹10 lakh a year; adjustable against your tax | Schedule TCS |
Add 4% cess, and surcharge where it applies. Long-term gains fall under Section 197 of the Income-tax Act, 2025 (formerly s.112). The 12-month period and the ₹1.25 lakh exemption belong only to shares and equity funds listed in India on which STT is paid.
Is dividend from a foreign company taxable, and how does the credit work?
Yes. The gross dividend, before US tax, is added to your income and taxed at your slab rate in the year you receive it. The US withholds 25% from residents of India who have filed Form W-8BEN with the broker. India then gives credit for that tax, limited to the Indian tax on the same income (Section 159, formerly s.90). The credit is the lower of the two taxes. Any excess US tax is lost; it is neither refunded nor carried forward.
Worked example. You receive gross dividends of $400 in the year; the US withholds $100. At an SBI rate of ₹86 that is income of ₹34,400 and US tax of ₹8,600.
| Indian tax rate on this income | Indian tax | Credit | Payable in India | US tax unused |
|---|---|---|---|---|
| 28% (a high earner) | ₹9,632 | ₹8,600 | ₹1,032 | Nil |
| 12% | ₹4,128 | ₹4,128 | Nil | ₹4,472 |
The Indian tax on foreign income is commonly worked out at your average rate of tax for the year. [VERIFY: average-rate method for computing the Indian tax attributable to foreign income] Either way, the total tax on the dividend ends up as the higher of the two countries' rates. Convert each dividend at State Bank of India's telegraphic-transfer buying rate on the last day of the month before the month of payment (formerly Rule 115), and use the same figures everywhere in the return.
What is the LTCG and STCG tax on US stocks in India, and how do I calculate it?
Foreign shares are not listed on an Indian exchange, so they become long-term only after more than 24 months. Long-term gains are taxed at 12.5% without indexation. Short-term gains are added to income and taxed at slab rates. The US does not tax these gains in the hands of an Indian resident, so no credit arises.
The gain is computed in rupees. In practice the cost is converted at the rate on the date you bought, and the sale proceeds at the SBI rate on the last day of the month before the sale. A falling rupee therefore adds to the taxable gain.
Worked example. You buy 50 shares at $200 when the rate is ₹84, and sell them 26 months later at $260 when the applicable rate is ₹88. You are in the 30% slab; surcharge is ignored.
| Step | Working | Amount |
|---|---|---|
| Cost | 50 × $200 × ₹84 | ₹8,40,000 |
| Sale value | 50 × $260 × ₹88 | ₹11,44,000 |
| Long-term capital gain | ₹11,44,000 − ₹8,40,000 | ₹3,04,000 |
| Tax at 12.5% plus 4% cess | ₹3,04,000 × 13% | ₹39,520 |
| Same gain if sold within 24 months | ₹3,04,000 × 31.2% | ₹94,848 |
Crossing 24 months changes the tax by ₹55,328 here. Of the ₹3,04,000 gain, ₹40,000 comes purely from the rupee moving from ₹84 to ₹88 on the original cost. Losses follow the usual rules: a short-term loss can be set off against any capital gain, a long-term loss only against long-term gains, and unused losses are carried forward for eight years if the return is filed on time. Our tax harvesting note explains how set-off works; the capital gains calculator covers Indian listed shares and equity funds only.
Are US ETFs taxed differently from US shares?
For equity ETFs listed abroad, no. Their units are treated like foreign shares: 24 months for long-term status, 12.5% on long-term gains, slab rates on short-term gains, slab rates on distributions, and the same reporting. They are not equity-oriented funds under Indian law, so the 12-month rule for Indian equity funds does not apply. For foreign bond or money-market ETFs the position is less clear, because Indian law treats gains on funds holding more than 65% in debt as short-term whatever the holding period (formerly s.50AA), and it is not settled whether that rule reaches funds set up abroad. [VERIFY: treatment of overseas debt ETFs under the specified-mutual-fund rule]
What is Form 67, now Form 44, and what is its due date?
It is the online statement of foreign income and foreign tax that you must file to claim the credit. Without it the credit is denied even if the US tax was really paid. Form 67 applies up to FY 2025-26. From tax year 2026-27 it is Form 44 under Rule 76 of the Income-tax Rules, 2026.
- Due date. Within 12 months from the end of the tax year, provided the return itself was filed on time or as a belated return. For FY 2025-26 that means Form 67 by 31 March 2027. Filing it before the return is safest.
- Proof. A statement of the income and the tax deducted: the broker's Form 1042-S or the annual dividend statement.
- New under Form 44. Verification by an accountant is required where the foreign tax paid in a year is ₹1 lakh or more.
- Revised returns. If a revised return changes the foreign income or the credit, revise the form as well.
What is Schedule FA?
Schedule FA is the part of the return where a resident and ordinarily resident person lists every foreign asset: the overseas brokerage account, the shares and ETF units in it, and any foreign bank account. It is a disclosure, separate from tax on income, and is required even in a year with no dividend and no sale.
- Period. The calendar year ending 31 December that falls within the tax year, not April to March. A return for tax year 2026-27 reports calendar year 2026.
- Figures. For each holding: the initial value, the peak value during the year, the closing value, income credited and sale proceeds, all converted at SBI telegraphic-transfer buying rates.
- Form. ITR-2, or ITR-3 if you have business income. ITR-1 and ITR-4 cannot be used once you hold a foreign asset. See which ITR form to file.
- Penalty. Non-disclosure can attract ₹10 lakh under the Black Money Act. A relief applies where foreign assets other than immovable property total ₹20 lakh or less [VERIFY: scope and effective date of the ₹20 lakh relief]. A one-time scheme for small past omissions, FAST-DS 2026, is open from 16 August to 31 December 2026.
Employees holding RSUs or ESPP shares of a foreign parent have the same duty; the RSU and ESOP guide covers their two-stage tax.
What is LRS TCS, and what is the TCS rate on foreign remittance?
Under the RBI's Liberalised Remittance Scheme a resident individual may send up to USD 250,000 abroad in a financial year. The bank collects tax at source (TCS) on such remittances once your total for the year, across all banks and purposes, exceeds ₹10 lakh (Section 394(1) of the 2025 Act, formerly s.206C(1G)). Finance Act 2026 cut some rates from 1 April 2026; the rate for investments did not change.
| Purpose of remittance | Up to ₹10 lakh a year | Above ₹10 lakh |
|---|---|---|
| Investment in foreign shares, ETFs, deposits or property; gifts; other purposes | Nil | 20% |
| Education funded by a loan from a financial institution | Nil | Nil |
| Other education, and medical treatment | Nil | 2% |
| Overseas tour package | 2% | 2% |
Example. You remit ₹15,00,000 for investment in FY 2026-27. TCS is 20% of the ₹5,00,000 above the threshold: ₹1,00,000. Your account is debited ₹16,00,000.
How to claim TCS back. TCS is not a cost; it is tax paid in advance in your name. It appears in your annual tax statement (Form 26AS, now Form 168) and in the AIS. You can use it in three ways: reduce your advance tax instalments by that amount; if you are salaried, report it to your employer in Form 122 (earlier Form 12BAA) so that less TDS is deducted from salary; or claim it in Schedule TCS of the return and receive any excess as a refund. No interest is paid for the months the money stays blocked. Check the entry before filing; see AIS, TIS and Form 26AS.
One tax that is not Indian: US estate tax
The US levies estate tax when a non-resident who is not a US citizen dies holding US-situated assets, which include shares of US companies, worth more than $60,000. This is US law, not Indian, and it applies to the holding itself, whatever Indian tax has been paid.
Related reading
- RSU and ESOP tax in India
- Tax-loss and tax-gain harvesting
- Which ITR form should I file?
- What to do if you get an income-tax notice
FAQ
Do I have to pay tax on US stocks in India?
What is the LTCG tax on US stocks in India?
What is the foreign dividend tax rate in India?
Can Form 67 be filed late or after the return?
Is TCS on foreign remittance refundable?
What is the TCS rate on LRS remittances for investing abroad?
Do I need to report US stocks if I did not sell anything?
Sources: TaxGuru: Form 44 and Rule 76; ClearTax: Form 67; ClearTax: Schedule FA; KPMG: FAST-DS Rules, 2026; Standard Chartered India: TCS on LRS from 1 April 2026; ClearTax: TCS on foreign remittance; TDSMAN: Section 394(1); Income-tax Act, 2025, s.425; IRS: estate tax for non-residents. All checked 19 Sep 2026. Exchange rates in the examples are illustrative.
Education only. This article names no broker, fund or security and recommends none. Astra Wealthcraft Advisory LLP is a tax and compliance practice. It is not regulated by SEBI and does not provide investment advice or research. Spotted an error? Write to us.
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