The US is home to some of the world’s largest and most influential companies—several of these in areas where India has few listed options, such as big tech, chips and AI. Owning some of them adds a second country and a second currency to your portfolio, so your savings don’t depend on one economy alone.
While you could invest in mutual funds or fund-of-funds that hold US stocks, direct investing gives you control over what you own. Buying a US stock from India comes down to four things: a verified account, money sent abroad under the RBI’s Liberalised Remittance Scheme (LRS), a buy order, and some tax paperwork later.
This guide walks you through each one, in order. It also explains the one choice that changes the plumbing underneath: the standard LRS route or the GIFT City (IFSC) route that we at InCred Money use.
The Whole Journey in Six Steps
- Pick your route and understand what it means for your money.
- Keep your documents ready.
- Open your account and finish KYC.
- Send money abroad under LRS and convert it to US dollars.
- Place your first US stock order.
- Sell when you choose to, withdraw the money, and report it in your tax return.
The Two Direct Routes: Choose Your Route
Under standard LRS you send money straight to a foreign broker, while on the GIFT City route you send it to an account with an IFSCA-regulated entity in GIFT City, which then takes you to US markets.
An IFSC, or International Financial Services Centre, is a special zone where financial business is done in foreign currency and treated differently from the domestic market. GIFT City, in Gujarat, is India’s first IFSC. The IFSCA, or International Financial Services Centres Authority, is the GIFT City regulator.
| Feature / Parameter | Standard LRS Route | GIFT City / IFSC Route |
|---|---|---|
| Where your account sits | With a foreign broker, in the US or elsewhere | With an entity licensed by the IFSCA, inside GIFT City, India’s international financial centre |
| Who regulates the account | The foreign broker’s home regulator (in the US, the SEC and FINRA), not Indian regulators | The IFSCA regulates the GIFT City layer; the US market layer is still regulated in the US |
| How money moves | You remit under LRS from your Indian bank straight to the foreign broker | You remit under LRS to a designated bank account in GIFT City, where it is converted to US dollars |
| How you reach US markets | The foreign broker trades for you | A Global Access Provider (GAP) in GIFT City routes your order to US markets through its regulated partners |
| Where your shares are held | With the foreign broker’s custodian | With US custody partners of the GIFT City entity |
| Annual limit | USD 250,000 per financial year per PAN | The same USD 250,000, shared with everything else you send abroad |
| TCS on remittance | 20% above ₹10 lakh a year | Applies the same way |
| US tax form | W-8BEN needed | W-8BEN needed; on ours it is collected in-app |
| Idle dollars | Unspent or uninvested foreign exchange must be brought back to India within 180 days | Can stay in your IFSC account; RBI removed the requirement to bring unused funds back within a fixed period* |
| Grievances | The foreign broker’s home regulator | IFSCA and InCred Money’s grievance process |
| What you handle yourself | LRS paperwork each way, a foreign account, often foreign tax forms | LRS to a GIFT City account; the platform handles the foreign-side onboarding |
*Source: RBI circular, April 2023, on LRS remittances to IFSCs. This graphic is for information only and is not investment advice or a recommendation of any kind.
What This Means for You
- Under standard LRS, you hold an account with an overseas firm. You handle the remittance each way and the foreign onboarding forms yourself.
- Under the GIFT City route, the part of the chain that touches India sits inside an IFSC, under the IFSCA, while US trading and custody still follow US rules.
- Either way, the money leaves India under LRS, so the same annual limit and the same tax collected at source (TCS) apply. GIFT City is not a way around them.
Before You Start
Are You Eligible?
LRS is open to resident individuals. If you’re an Indian resident with a PAN and a bank account in your own name, you’re who this guide is written for.
What to Keep Ready
- W-8BEN: A US tax form confirming you’re not a US person. With it, 25% US tax is withheld on dividends instead of 30%. You sign it in the app during KYC; it stays valid until the end of the third calendar year after signing, and we’ll remind you to renew.
| Item | Why It’s Needed |
|---|---|
| PAN | Every LRS remittance and every tax calculation is tied to your PAN |
| Aadhaar or other address proof | Identity and address verification (KYC) |
| Bank account in your name | The remittance leaves from here, and withdrawals return here |
| Photo and signature | Standard account-opening requirement |
| FATCA / tax-residency declaration | Required when you invest abroad; tells the platform and foreign custodians where you pay tax |
| LRS declaration (Form A2 or your bank’s equivalent) | Your bank collects it with each remittance and records the purpose |
Know Your Numbers Before You Send a Rupee
- The LRS limit is USD 250,000 per financial year per PAN. It covers everything you send abroad, from every bank and platform, including this one.
- Remittances above ₹10 lakh in a financial year attract 20% TCS (tax collected at source). It isn’t a final tax: you claim it as credit in your return, using the TCS certificate your bank issues (Form 27D; Form 133 from tax year 2026-27). Until then, the money is held as tax paid. Check current rules before you send a large amount.
- Decide your first amount as a number you can leave invested for years, not as the most you can send.
Getting Started: Step-by-Step Guide
Step 1: Open Your Account
You do: Download the InCred Money app or open the website, register with your mobile number and email, and start the US investing flow. Add your PAN and bank account when asked.
Behind the scenes: InCred sets you up to invest in global markets through its GIFT City set-up.
Step 2: Complete KYC
You do: Upload your PAN and address proof, take a selfie or photo, sign digitally, and accept the declarations: FATCA / tax residency, the US tax form W-8BEN, risk disclosure and terms.
Behind the scenes: Your details are verified.
Step 3: Fund Your Account Under LRS
You do: Choose how much to add. You then send the rupees from your own bank account to the designated GIFT City bank account, and your bank asks you to confirm the LRS declaration.
Behind the scenes: The rupees reach the GIFT City account and are converted to US dollars there. The dollars appear as a balance you can use to buy. Your bank counts the amount against your USD 250,000 annual LRS limit, and collects TCS if you’ve crossed ₹10 lakh in the year.
Step 4: Buy Your First US Stock
You do: Search for the company, check the live price, enter the number of shares or an amount, and pick an order type. Then confirm. A market order buys at the best price available right now (fast, though the price can move between tap and fill), while a limit order buys only at your price or better.
Behind the scenes: Your order is routed to the US market through the platform’s clearing and custody partners. Regular US trading hours are 9:30 am to 4:00 pm Eastern, which is 7:00 pm to 1:30 am IST while US daylight saving time runs, and 8:00 pm to 2:30 am IST after the clocks go back on 1 November 2026. US trades settle one business day after the trade (T+1).
Step 5: Sell When You Decide To
You do: Open the holding, choose Sell, set the order type and confirm.
Behind the scenes: The proceeds arrive as US dollars in your account. Every sale is a taxable event in India, so each one needs a record. The US generally doesn’t tax capital gains of non-US investors, so the tax on your gain is paid in India.
Step 6: Withdraw the Money and Report It
You do: Request a withdrawal. The dollars are converted to rupees and sent back to your Indian bank account.
Behind the scenes: The platform handles the foreign-side transfer. On the GIFT City route you don’t have to withdraw: your dollars can stay in your account for your next investment within a period of 6 months.
Costs and Taxes
US investing has two kinds of costs: what you pay to invest, and what you owe the taxman.
What It Costs to Invest: The InCred Advantage
- Fractional investing from $1
- Brokerage of 0.10% per order, or $9.99 a month for unlimited orders
- No charges for account opening and maintenance
- FX conversion at the rate shown to you before you confirm
- Access to curated baskets of stocks, ETFs and UCITS for 0.50% a year + 18% GST
Tax Collected When You Send Money: TCS
On LRS remittances above ₹10 lakh in a financial year, your bank will collect 20% TCS on the amount above ₹10 lakh. It isn’t a final tax. It counts as advance tax and you claim it as credit when you file your return.
Example: You send ₹15 lakh in a year. The first ₹10 lakh has no TCS. The remaining ₹5 lakh attracts 20%, so ₹1 lakh is collected up front. You then claim that ₹1 lakh against your tax bill at filing, and any excess comes back as a refund. The ₹10 lakh threshold is counted across all your LRS remittances in the year, not per platform.
Tax on Your US Investments
| What Happens | How It’s Taxed in India |
|---|---|
| You sell after more than 24 months | Long-term capital gain at 12.5% |
| You sell within 24 months | Short-term capital gain at your income tax slab rate |
| You receive dividends | Taxed at your slab rate. US tax withheld at 25% (with W-8BEN); claim credit in India |
| You hold foreign assets at year end | Must be reported in Schedule FA of ITR-2 or ITR-3 |
| You claim the TCS credit | Reported in your return |
Points to note on the table above:
- Holding period: Long-term means more than 24 months. US shares aren’t listed on an Indian exchange, so there is no indexation and the ₹1.25 lakh yearly exemption for Indian listed shares does not apply.
- Currency conversion: Gains are worked out in rupees. Cost and sale value are converted to rupees, so a weaker rupee adds to your taxable gain and a stronger rupee reduces it.
- Dividends: Dividends are taxed twice, then credited. The US withholds 25% (with a valid W-8BEN; 30% without). India taxes the full dividend at your slab rate, and you claim credit for the US tax.
- Capital gains in the US: The US generally doesn’t tax capital gains of non-US investors, so there is usually no foreign tax credit to claim on gains.
- Advance tax: Large dividends or gains during the year may need advance tax instalments. TCS already collected counts towards your tax.
- Return form: If you hold foreign assets you can’t use ITR-1 or ITR-4; use ITR-2 (or ITR-3 if you have business income).
Claiming Credit for US Tax: Form 67 Now, Form 44 Under the New Act
The US withholds tax on your dividends before they reach you. To avoid paying tax twice, you claim a foreign tax credit (FTC) in India under the India–US tax treaty. The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026, so the form depends on when you earned the income.
- Income up to 31 March 2026 (FY 2025-26, assessment year 2026-27): File Form 67 under the 1961 Act (sections 90 and 91, Rule 128). File it on or before the end of the assessment year, so by 31 March 2027, and before or with your return.
- Income from 1 April 2026 (tax year 2026-27 onwards): File Form 44 under the Income-tax Act, 2025 and the Income-tax Rules, 2026. The treaty relief section is now section 159 (section 160 for countries without a treaty). Form 44 replaces Form 67; check its filing deadline in the new rules before you file.
- What you need: Your annual tax statement from InCred Money showing each dividend, the US tax withheld and the dates. Keep it with your records.
- How much you can claim: The credit is the lower of the US tax paid and the Indian tax on that dividend. US tax above the Indian tax isn’t refunded. Amounts are converted at the SBI telegraphic transfer buying rate on the last day of the month before the month the tax was withheld.
- In your return: Show the dividend in Schedule FSI (foreign income), the credit in Schedule TR (tax relief), and your holdings in Schedule FA. The credit can be denied if the form isn’t filed in time.
Reporting Your Foreign Holdings: Schedule FA
- Report everything: Every foreign share, ETF and account goes in Schedule FA, even if the value is small or you sold it during the period.
- Calendar-year period: Schedule FA covers 1 January to 31 December, not April to March. The return for FY 2025-26 reports holdings for calendar year 2025; the return for tax year 2026-27 reports calendar year 2026.
- What to report: Initial value, peak value, closing value, dividends and sale proceeds, converted to rupees.
- Penalty: Not reporting can attract a ₹10 lakh penalty under the Black Money Act. Since October 2024, holdings other than property worth ₹20 lakh or less in total are exempt from that penalty, but they must still be reported.
What Changed With the Income-tax Act, 2025
The new Act applies to income from 1 April 2026. The rules for US investors are largely the same; the names, sections and form numbers change.
- Tax year: Replaces ‘previous year’ and ‘assessment year’. Income from April 2026 to March 2027 is tax year 2026-27.
- Foreign tax credit: Sections 90/90A and 91 become sections 159 and 160; Form 67 becomes Form 44.
- TCS on LRS: Section 206C(1G) becomes section 394(1) (Table item 7.D(b) for investment: 20% above ₹10 lakh). The TCS certificate Form 27D becomes Form 133.
- Your tax statement: Form 26AS becomes Form 168 (Annual Information Statement).
- Capital gains rates: The special rates in sections 111A–112A move to sections 196–198. The 12.5% long-term rate and 24-month holding period for foreign shares are unchanged.
Section and form numbers are as published for the Income-tax Act, 2025 and the Income-tax Rules, 2026. Check the latest CBDT notifications or check with a tax adviser before you file.
Rules and Limits That Apply to You
The GIFT City route doesn’t remove Indian rules. It adds a second regulator to the picture. Here’s who sets which rule:
- RBI (FEMA and LRS): How much you can send abroad (USD 250,000 a year) and for what. Your bank applies it.
- Income Tax Department (Income-tax Act, 2025 from 1 April 2026): TCS when you send money, tax on gains and dividends, the foreign tax credit and foreign-asset reporting.
- IFSCA: Regulates InCred Money’s GIFT City entity as a Global Access Provider (licence IFSCA/GAP/BD/2026-27/18): onboarding, disclosures and how your money is held in GIFT City.
- US regulators and the IRS: Trading, settlement and custody in the US (SEC and FINRA), and US tax withheld on dividends.
What the Limit Really Means
The USD 250,000 cap is a yearly ceiling on money leaving India, not a ceiling on what your portfolio can be worth. Because it’s counted in dollars, the rupee figure moves with the exchange rate. Anything you’ve already sent for travel, gifts, education or another platform uses up the same cap.
Investing Beyond US Stocks
The same account, LRS limit, TCS and tax reporting apply to all of these:
- US-listed ETFs: One trade buys a basket of stocks. Taxed like US shares: 25% US tax on dividends (with W-8BEN), Indian tax on gains.
- UCITS ETFs: European-regulated funds, many domiciled in Ireland, built for non-US investors. An Irish fund pays 15% US tax on US dividends inside the fund, and its units are generally outside US estate tax. Tax paid inside the fund can’t be claimed as a credit by you. Accumulating share classes reinvest dividends, so Indian tax arises mainly when you sell.
- ADRs of non-US companies: Shares of companies such as TSMC (Taiwan) or ASML (Netherlands), traded in the US. Dividends are taxed by the company’s home country (for example 21% Taiwan, 15% Netherlands), and the credit depends on India’s treaty with that country. ADRs of Indian companies are not available to resident Indians.
- Curated baskets: Ready-made groups of stocks, ETFs and UCITS around a theme. You own each holding directly, so each one is reported in Schedule FA and taxed on its own.
The Risks to Understand in US Investing
- Market risk: Like in Indian equities, stock prices fall as well as rise, and you can lose part or all of what you invest.
- Currency risk: You buy in dollars with rupees. If the rupee strengthens, your rupee return shrinks. If it weakens, your return grows. Either way, it’s an extra moving part.
- Costs that compound: FX spreads and TCS aren’t visible in the share price, but they come out of your return.
- Estate risk: US-listed shares held by a non-US person can attract US estate tax if the holder dies and their US assets are worth more than USD 60,000. India and the US have no estate tax treaty, so this is a planning point even for mid-sized portfolios.
- Structure risk: Your shares sit with partners in a chain, from the GIFT City entity to US clearing and custody firms.
- Tax and rule changes: LRS limits, TCS rates and tax rules change, as they did when the Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. Check the current rules before large remittances and before filing.
- Paperwork risk: A missed Schedule FA entry or a late foreign tax credit form can cost you a penalty or the credit itself. Keep your annual tax statement from day one.
Investing in US stocks from India sounds complicated, but it follows the same steps as investing in Indian stocks, with extra steps for sending money abroad and for tax. You open the account, finish KYC, send money under LRS, place an order, and later sell, withdraw and report.
Start small, check the exchange rate and charges every time, and keep your records from day one. If you get stuck at any step, reach out to InCred Money’s support team.
InCred Money’s GIFT City entity is registered with the IFSCA as a Global Access Provider (IFSCA/GAP/BD/2026-27/18). Investments in securities are subject to market risks; read all related documents carefully. This guide is for information only and is not investment, tax or legal advice. Tax rules are as of October 2026; consult a tax adviser for your situation.
Important Disclaimer
This note is provided solely for general informational and educational purposes and should not be construed as investment advice, financial advice, research advice, or a recommendation, offer or solicitation to buy, sell, subscribe to, hold or otherwise deal in any security. The analysis contains information, assumptions, estimates and forward-looking views that may change and may not be independently verified. Past performance is not indicative of future returns. Investments in foreign securities are subject to market, currency, liquidity, custody, settlement, technology, regulatory, taxation, remittance and other risks, and investors may lose part or all of their investment. InCred Money is an IFSCA-authorised Global Access Provider (Global Access Provider – IFSCA/GAP/BD/2026-27/18) facilitating eligible clients’ access to global markets in accordance with the applicable IFSCA Global Access framework and FEMA/LRS requirements. Investors should conduct their own independent assessment and seek appropriate professional advice before making any investment decision.
