How to Invest in US Stocks from India: Accounts, Funding & Taxes Explained
A clear, beginner-friendly guide for Indian residents: how to legally open a US brokerage account, send money abroad under the LRS, and exactly what taxes you owe in the US and in India.
Owning a piece of Apple, Microsoft, or a whole S&P 500 ETF is completely possible from India — and fully legal. Here is how it works, end to end, in plain English.
Is it legal for Indians to buy US stocks?
Yes. The Reserve Bank of India's Liberalised Remittance Scheme (LRS) lets every resident individual send up to USD 250,000 per financial year abroad — including to invest in US shares and ETFs. You do not need special permission; your bank processes the remittance.
Step 1 — Open a US-investing account (two routes)
| Route | What it is | Good for |
|---|---|---|
| A global US broker | A US brokerage that accepts Indian residents (e.g. Interactive Brokers). You complete KYC and submit a W-8BEN form. | Lower fees, the full range of US stocks/ETFs, more control |
| An Indian 'US stocks' app | Indian platforms that partner with a US broker behind the scenes (e.g. INDmoney, Vested, Groww). Onboarding is in INR and quick. | Simplicity, fractional shares, easy INR funding, beginners |
These are examples, not recommendations — compare fees, regulation, and reviews yourself before choosing.
Step 2 — Fund the account (the LRS remittance)
You convert INR to USD and send it abroad through your bank under the LRS. Watch three costs: the forex conversion markup, any remittance/brokerage fees, and TCS (Tax Collected at Source) on foreign remittances above a threshold. TCS is not money you lose — it is adjustable against your income tax (or refundable) — but the rate and threshold change, so check the current numbers.
Step 3 — Taxes, the US side
Before you trade, your broker has you file Form W-8BEN. It declares you are not a US person and claims India–US tax-treaty benefits. Then:
- Dividends: the US withholds tax automatically. Under the India–US treaty the rate is about 25%, taken before the dividend reaches you.
- Capital gains: the US does not tax capital gains for non-resident foreign investors. So when you sell a US stock at a profit, you owe no US tax on that gain.
Step 4 — Taxes, the India side
As an Indian resident you are taxed on your global income, so your US investments are taxed in India:
- Capital gains on US shares are taxable in India. Whether they count as long-term or short-term (and the rate) depends on the holding period and the current rules — these changed in recent Budgets, so verify the latest.
- Dividends are added to your income and taxed at your slab. To avoid being taxed twice, claim a Foreign Tax Credit for the ~25% already withheld in the US by filing Form 67 under the DTAA.
- Disclosure: you must report all foreign holdings in Schedule FA of your Income Tax Return. This is mandatory and separate from paying tax — do not skip it.
A simple starting checklist
- 1Pick a route (global broker or Indian US-stocks app) and complete KYC.
- 2File W-8BEN.
- 3Fund via LRS — mind the forex markup and TCS.
- 4Start small; a broad US index ETF is the simplest first holding. See how to start with $100.
- 5At tax time: report dividends and gains, claim the US credit (Form 67), and fill Schedule FA — ideally with a CA.
This is educational information, not tax or investment advice.
The Stocks School Editorial Team
Written and reviewed by The Stocks School's editorial team — an independent, education-first stock-research platform. We check every guide for accuracy against primary sources and update it as the data changes. About us · How we research