Contents
Definition
US stocks are equity shares in companies listed on American exchanges — primarily the NYSE and Nasdaq. For an Indian investor, they represent exposure to US corporate earnings, dollar-denominated growth, and sectors (consumer tech, cloud, biotech) underrepresented on domestic indices. Access is not direct; it flows through the Reserve Bank of India's Liberalised Remittance Scheme (LRS) or through Indian-domiciled international funds.
How an Indian investor accesses this
The primary route is LRS (RBI Master Direction — Liberalised Remittance Scheme, updated 2023), which permits resident individuals to remit up to USD 250,000 per financial year for permitted capital-account transactions including listed overseas securities. An Indian investor opens an account with an LRS-enabled broker — platforms such as Vested Finance, INDmoney, and Groww Global (beta) act as intermediaries that hold a US brokerage account on the investor's behalf (custodial model) or partner with FINRA-registered US brokers for a proprietary account. Fractional share investing is available on most platforms. Minimum remittances are typically USD 1–10. Alternatively, the investor can buy units of an Indian-domiciled international fund or FoF without using LRS at all. NRIs holding an NRE/NRO account may invest through NRI-specific brokerage rails under FEMA (Non-Debt Instruments) Rules, 2019.
Tax treatment
For resident Indians: gains on directly-held US stocks are taxed as capital gains in India. Post Finance Act 2023, listed foreign securities held by residents are taxed at slab rate for short-term (held <24 months) and at 20% with indexation for long-term (≥24 months) — same treatment as unlisted domestic securities. US dividends attract a 25% withholding tax at source under the India–US DTAA; the net dividend is then added to Indian income and taxed at slab, with a credit for the US withholding (Form 67 mandatory). No Securities Transaction Tax applies. LRS remittances above ₹7 lakh per year attract Tax Collected at Source (TCS) at 20% under §206C(1G) of the IT Act, creditable against final tax liability.
Currency consideration
Returns are USD-denominated. When the INR depreciates against the USD, a rupee-denominated investor benefits on currency translation; when INR strengthens, returns compress. Historically, INR has depreciated against USD at roughly 3–4% per annum over long periods (driven by the inflation differential per purchasing-power parity). This structural tailwind has added to USD-asset returns for Indian investors. However, in the short run INR-USD volatility can be ±5–8% annually. Investors holding US assets through Indian international funds bear the same currency exposure unless the fund is hedged (see currency hedging).
Worked example
Priya, a Bangalore software engineer, remits USD 5,000 (≈ ₹4.17 lakh at ₹83.4/$) via an LRS-enabled platform in April 2024. She buys 10 shares of a US index ETF at USD 500 each. By April 2026, the ETF is at USD 620 and INR has moved to ₹85/$. Her gain in USD is USD 1,200 (24%). In INR terms: exit value = 10 × 620 × 85 = ₹5,27,000; cost = 10 × 500 × 83.4 = ₹4,17,000; gain = ₹1,10,000 (26.4%). Held 24 months exactly — qualifies for long-term treatment at 20% with indexation. TCS paid at remittance time (₹4.17L < ₹7L threshold, so no TCS in this case) is fully creditable.
See also
- International Fund
- Currency Hedging
- INR-USD Exchange Rate
- NRI Investing — Complete Guide
- Liberalised Remittance Scheme (LRS)
Primary source
RBI Master Direction — Liberalised Remittance Scheme (updated 2023): rbi.org.in. FEMA (Non-Debt Instruments) Rules, 2019: Ministry of Finance Gazette. IT Act §206C(1G) TCS on remittances: incometax.gov.in. This content is educational and not investment advice. MintByte is SEBI-registered (ARN-314872, APMI APRN-01658). Consult a qualified advisor before investing.