# Tax on US Stocks & Foreign Shares

> For Indian residents, US stocks and ETFs are unlisted in India for tax purposes: gains are long-term after 24 months and taxed at 12.5%, or at slab rates if sold sooner. US dividends are taxed in India at slab rates with credit for the 25% US withholding (claimed through Form 67). Every foreign holding must be reported in Schedule FA on a calendar-year basis, and large US holdings may face US estate tax on death.

Practice: Trader & Investor Tax — https://www.industax.com/services/investor-tax/

Schedule FA asks for the peak and closing value of each holding during the calendar year, plus income, in rupees. Brokers' annual statements rarely give this directly, so we compute it from transaction data and SBI reference rates.

We also flag a risk most investors overlook: non-US persons holding US-situs assets such as US shares above USD 60,000 can be subject to US estate tax, which some investors manage through ETFs domiciled outside the US.

## Key facts

| Item | Detail |
| --- | --- |
| LTCG | After 24 months, 12.5% |
| STCG | Slab rates |
| Dividends | Slab rates; credit for US withholding (25%) |
| Disclosure | Schedule FA, calendar year |
| Remittance | LRS; TCS above ₹10 lakh a year |

## Who needs this

- Residents investing via US brokerage apps
- Employees holding RSUs or ESPP shares of foreign employers
- Returning NRIs with foreign portfolios

## What's included

- Gain and dividend computation in INR
- Form 67 for foreign tax credit
- Schedule FA preparation
- Estate-tax awareness check

## Documents

- Broker annual statements and transaction history
- 1042-S / dividend statements
- LRS remittance records

## Process

1. **Convert** — Transactions converted to INR at prescribed rates.
2. **Compute** — Gains, dividends and credits computed.
3. **Disclose** — Schedule FA and Form 67 filed.

## FAQs

### Do I pay US tax on selling US stocks?

Generally no — non-resident aliens aren't taxed by the US on capital gains from US shares (with limited exceptions). Tax is paid in India.

### What is the penalty for not reporting foreign shares?

Non-disclosure can attract a ₹10 lakh penalty under the Black Money Act; since October 2024 it doesn't apply where total movable foreign assets are ₹20 lakh or less, but reporting is still required.

### Is TCS on LRS a cost?

No, it is an advance tax credit. It appears in your tax credit statement and is adjusted against your tax or refunded.

## Official sources

- Income Tax e-Filing portal: https://www.incometax.gov.in/
- incometaxindia.gov.in: https://www.incometaxindia.gov.in/

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Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.