You can invest abroad in two ways, and only one of them uses your foreign exchange limit. Send money out yourself under the Liberalised Remittance Scheme, capped at USD 2,50,000 per financial year, and buy US shares through a broker. Or buy an Indian mutual fund or ETF that invests overseas, which uses no LRS limit at all. The second route is simpler and cheaper for most people. The first gives you the actual shares.
The two routes compared
| Route | Uses your LRS limit? | TCS at remittance? | What you own | Who it suits |
|---|---|---|---|---|
| Direct US brokerage under LRS | Yes, against USD 2,50,000 a year | Yes, above ₹10,00,000 of remittances in the year | The shares themselves, held abroad | People who want specific US stocks and will file the extra disclosures |
| Indian mutual fund or ETF investing overseas | No | No | Units of an Indian scheme | Most people, especially anyone investing monthly |
How much can I send abroad in a year?
USD 2,50,000 per financial year, April to March, for each resident individual. The RBI’s Master Direction on the Liberalised Remittance Scheme sets it. Overseas portfolio investment is a permitted use.
Three details people get wrong. The limit is per person, so a family of four has four limits, and it applies to minors too, with Form A2 countersigned by a guardian. PAN is mandatory for every remittance. And there is no carry-forward. An unused limit resets on 1 April and is gone. Figures are from the Master Direction, last updated 6 September 2024.
What does it cost before you buy a single share?
Three charges stack up, and the exchange rate is usually the biggest of them.
| Item | Details |
|---|---|
| The forex margin. | Your bank converts rupees at a rate worse than the mid-market rate. On 26 August 2026 the mid-market rate was ₹95.42 to the dollar, per European Central Bank reference rates. What your bank offers will be below that. Our forex markup calculator shows the cost, and USD to INR tracks the benchmark. |
| The wire transfer fee. | A flat charge per remittance, so several small transfers cost far more than one large one. |
| TCS. | Tax collected at source applies once your LRS remittances cross ₹10,00,000 in a financial year. That threshold was raised from ₹7,00,000 in the Union Budget 2025-26. |
TCS is not a cost. It is your own tax, collected early. You claim it against your tax liability or get it refunded when you file. It is still a cash-flow hit, and our TCS on remittance calculator sizes it.
One thing we cannot tell you here. The Union Budget 2026-27 cut the TCS rate on LRS remittances for education and medical treatment from 5% to 2%. It said nothing about the rate on investment remittances, and we could not open a primary source stating that current rate. Ask your bank’s remittance desk for the applicable rate in writing before you send. Note also that the new Income-tax Act, 2025 takes effect from April 2026, so section numbers you may have seen quoted elsewhere have changed.
How are US stocks taxed for an Indian resident?
In both countries, with relief for the overlap. Dividends are taxed in the United States first, and the broker withholds it before the money reaches you. You then declare the gross dividend in India as income from other sources and claim credit for the US tax already paid. That credit needs Form 67, filed before your return.
Capital gains are taxed only in India. Foreign shares are not listed on a recognised Indian stock exchange, so they do not get the 12-month equity treatment. On our tax data as of 17 August 2026, the holding period for long-term treatment is 24 months and the long-term rate is 12.5%, with no indexation. A shorter holding is taxed at your slab rate.
The rupee is part of your return. Your gain is measured in rupees, so a falling rupee increases your taxable gain even if the share price did not move.
What must I disclose in my tax return?
Every foreign asset, in Schedule FA of your income tax return. That covers shares held abroad, the broker account itself, and any foreign bank balance. It applies whether or not the asset produced income, and whether or not you sold anything.
This is the part people skip and it is the expensive one. Non-disclosure of foreign assets is dealt with under the black money law, not the ordinary penalty provisions. If you hold a single US share, the return you file gets more complicated. Decide if that trade-off is worth it before you open the account.
The route that avoids all of this
Indian funds that invest overseas keep the whole problem inside India. You invest in rupees, no LRS limit is used, no TCS applies, and there is no Schedule FA entry. The fund does the currency conversion. See international funds for how these schemes are built.
The catch is availability. These schemes invest within industry-wide overseas limits set by the regulator. When those limits are near full, a fund can stop accepting fresh purchases. Check the scheme’s current status before you commit to a monthly SIP.
Frequently asked questions
Is it legal for Indians to buy US stocks?
Yes. Overseas portfolio investment is a permitted transaction under the RBI’s Liberalised Remittance Scheme, within USD 2,50,000 per financial year. You must use PAN, and you may not remit for margin or margin calls to overseas exchanges. Remittances to countries identified by the FATF as non-cooperative are not allowed.
Can I invest in US stocks without using the LRS limit?
Yes, through an Indian mutual fund or ETF that invests abroad. You buy in rupees from your Indian account. No foreign remittance happens, so no LRS limit is used and no TCS arises. It is the simpler route and the right default for most investors.
Do I have to pay tax twice on US dividends?
No. The United States taxes the dividend at source and India taxes your global income. You avoid double taxation by claiming a foreign tax credit for the US tax already withheld. File Form 67 before you file your return, otherwise the credit can be denied.
What is the cheapest way to send money to a US brokerage?
Fewer, larger transfers. The wire fee is usually flat, so ten small remittances multiply it tenfold. Compare the rate your bank offers with the mid-market rate before you send. Our page on remittance services covers how the margin is set.
Do I need to file Schedule FA if I made no profit?
Yes. Schedule FA reports holdings, not gains. A US brokerage account with a single share in it and no sale during the year is still a foreign asset and still has to be disclosed. Missing it is treated far more seriously than under-reporting a small gain.
Sources
- Reserve Bank of India, Master Direction — Liberalised Remittance Scheme, last updated 6 September 2024. Primary.
- Press Information Bureau, Union Budget 2025-26 highlights, on the LRS TCS threshold rising from ₹7 lakh to ₹10 lakh. Primary.
- Press Information Bureau, Summary of Union Budget 2026-27, on the LRS TCS rate for education and medical falling from 5% to 2%. Primary.
- European Central Bank reference rates via frankfurter.dev, USD to INR as of 26 August 2026.
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