More Indians than ever are looking beyond the BSE and NSE to build wealth. Apps that let you buy Apple or Tesla shares in a few taps, the rupee’s steady slide against the dollar, and a genuine desire to diversify beyond Indian markets have all pushed global investing into the mainstream. But investing abroad isn’t as simple as clicking “buy” — RBI sets a cap on how much money you can send out each year, banks collect tax the moment you remit it, and the profits you eventually earn are taxed very differently from Indian shares. This guide breaks down the legal routes available, the money-transfer rules you must follow, and exactly how your gains and dividends get taxed — so you can invest abroad with confidence, not confusion.
Ways to Buy US Stocks/Foreign Shares
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- Foreign broker apps (Vested, INDmoney, Interactive Brokers) — buy US stocks directly.
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- Indian brokers with global tie-ups (ICICI Direct, Kotak) — same idea, one app.
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- Indian mutual funds that invest abroad — you invest in rupees, no extra paperwork. But note: SEBI has capped how much money the whole Indian mutual fund industry can send abroad ($7 billion total), so many funds keep pausing new investments. Check before you invest.
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- International ETFs on NSE/BSE — trade in rupees like any Indian stock, same cap issue as above.
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- GIFT City route — buy US stocks (as “UDRs”) through an India-based demat account. No stamp duty or STT.
The Basic Rule: RBI’s LRS Limit
Every route above ultimately uses RBI’s Liberalised Remittance Scheme (LRS).
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- You can send up to $250,000 per year abroad.
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- This limit covers almost everything — travel, education, gifts, investing — not just investing.
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- Each family member gets their own separate $250,000 limit; it can’t be shared.
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- Money is sent through your bank using a form called Form A2. PAN is compulsory.
Tax Collected When You Send Money (TCS)
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- Send up to ₹10 lakh a year — no tax collected.
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- Send more than that for investing — bank collects 20% tax (TCS) on the extra amount.
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- This isn’t a real extra cost — it gets adjusted against your income tax when you file your return in the form of TCS credit.
Tax on Your Profits (Capital Gains)
Here’s the part people get wrong: foreign shares are taxed like “unlisted” shares, not like normal Indian stocks. This means you do not get the ₹1.25 lakh tax-free profit that applies to Indian shares.
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- Hold for more than 24 months → profit taxed at a flat 12.5%, no exemption.
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- Hold for 24 months or less → profit added to your income and taxed at your normal slab rate (can go up to 30%+).
Tax on Dividends
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- The US cuts tax before paying you — usually 25% if you’ve filled a form called W-8BEN (30% if you haven’t).
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- India taxes the same dividend again as your regular income.
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- To avoid paying tax twice, file Form 67 (called Form 44 from 2026) and claim credit for the tax already paid in the US.
Don’t Forget: You Must Report Foreign Holdings
If you own any foreign shares, even for one day, you must report it in Schedule FA while filing your tax return. Investing through an Indian mutual fund that buys foreign stocks does not need this reporting — only direct foreign holdings do.
In Short
Buying foreign shares from India is completely legal and fairly easy to start. But the tax rules are stricter than for Indian shares — no exemption, a longer wait for lower tax, and a strict, high-penalty reporting rule. Hold your shares long enough, file Form 67/44 on time, and never skip Schedule FA — that’s really the whole game.
