As an Indian resident you are taxed on your global income — buying Apple or an S&P 500 ETF does not move the tax bill offshore. Three Indian levies touch US stocks, plus one American tax most investors miss. Here is each, with the exact rates.
1. Capital gains: 12.5% after 24 months, slab before
- Foreign stocks count as unlisted securities: hold for more than 24 months and gains are long-term, taxed at 12.5% (plus surcharge and 4% cess, no indexation) for transfers on or after 23 Jul 2024.
- Sell within 24 months and gains are short-term — added to your income and taxed at your slab rate.
- Convert cost and sale price to rupees using the SBI TT buying rate on the respective dates, and keep both contract notes.
Held 24 months or less
Short-term — taxed at your slab rate
The gain is added to your income for the year and taxed at your marginal rate. No indexation is available.
Held more than 24 months
Long-term — 12.5%, plus surcharge and 4% cess
Applies to transfers on or after 23 July 2024, with no indexation. The ₹1.25 lakh exemption that applies to Indian-listed shares does not apply here.
2. Dividends: slab in India, 25% withheld in the US
- US dividends are taxable in India at your slab rate.
- The US withholds 25% flat under the India-US tax treaty — but only if your broker has your W-8BEN form on file; without it the default US withholding is 30%.
- Claim the withheld amount back as a foreign tax credit by filing Form 67 before your ITR — otherwise you are taxed twice on the same dividend.
3. TCS: 20% above Rs.10 lakh is cash-flow, not cost
- Remittances for investing attract 20% TCS on amounts above Rs.10 lakh per year (nil up to Rs.10 lakh).
- TCS is adjustable against your income-tax liability (or refunded) — but it leaves your account the day you remit, so model it in our US-cost calculator.
- Cross-check the entries in your Form 26AS / AIS before filing.
4. Schedule FA: disclose every year
Resident Indians must report foreign stocks and brokerage accounts in Schedule FA of the ITR every year — even tiny fractional holdings. Non-disclosure attracts penalties under the Black Money Act, so treat the FA schedule as part of the trade, not an afterthought.
5. The American tax: estate tax above $60,000
- Non-resident aliens get only a $60,000 US estate-tax exemption; US-situated assets above it (including directly held US shares) can face up to 40% estate duty via Form 706-NA.
- This matters for large, buy-and-hold portfolios — not for a $500 starter.
- Holding US exposure through Indian feeder mutual funds keeps the asset outside the US estate net, since you own Indian fund units, not US shares.
Record-keeping checklist
- W-8BEN filed with every US broker/app you use.
- Buy/sell contract notes + SBI TT rates for each conversion.
- Dividend statements with US tax withheld, for Form 67.
- 26AS/AIS TCS entries reconciled before filing.
Pair this with 10 things to know before you buy and the US investing hub.
Educational content, not tax advice. Rates change — confirm against incometax.gov.in and IRS guidance before filing.
| Levy | Rate | When it applies | Can you recover it? |
|---|---|---|---|
| Long-term capital gains | 12.5% + surcharge + 4% cess | Held over 24 months | No |
| Short-term capital gains | Your slab rate | Sold within 24 months | No |
| Dividend tax in India | Your slab rate | On every dividend received | Partly — via Form 67 |
| US dividend withholding | 25% with a valid W-8BEN, 30% without | On the US side, at source | Yes — claim the credit in India |
| TCS on the remittance | 20% above ₹10 lakh | When you remit for investing | Yes — adjustable against your tax |
| US estate tax | Up to 40% above $60,000 of US-situs assets | At death | No — no India–US estate tax treaty |
Scroll the table sideways for more →