How to Invest in US Stocks from India: LRS Limit, TCS and Tax Basics (2026)
Quick answer: A resident Indian can invest in US stocks through the Reserve Bank of India's Liberalised Remittance Scheme (LRS). Each resident individual can send up to USD 2,50,000 abroad in a financial year (April to March), counting every LRS remittance that year, not just investments. The money goes out through a bank that is an authorised dealer, and you need a PAN. From 1 April 2026, once your LRS remittances in a year cross ₹10 lakh, tax is collected at source (TCS) on the amount above ₹10 lakh: 20% for purposes such as investing, and 2% for education or medical treatment.
This guide explains how LRS works for US stocks, how the money leaves India, how TCS is worked out, and a few basic tax points. The rules come from RBI's own LRS FAQ, the Income-tax Act, 2025, the Finance Act, 2026 and Press Information Bureau (PIB) releases. Links are in the sources at the end.
What the Liberalised Remittance Scheme is
LRS is the RBI framework that lets resident individuals send money abroad for permitted purposes. RBI describes two kinds of use: current account transactions, such as travel, education or medical treatment, and capital account transactions, such as buying shares abroad. Buying US stocks is a capital account transaction.
A few points from RBI's FAQ on who can use it:
All resident individuals can use LRS, including minors. For a minor, the natural guardian countersigns the LRS declaration form.
It isn't available to companies, partnership firms, HUFs or trusts.
Remittances can be made in any freely convertible foreign currency, not only US dollars.
The USD 2,50,000 limit, explained
The limit is USD 2,50,000 per resident individual per financial year. Here's how RBI says it works:
It's a combined limit. All foreign exchange you buy or send through all sources in India during the year counts towards it, whether it goes to US shares, a foreign university or a holiday.
There's no limit on how often you remit, as long as the yearly total stays within USD 2,50,000.
Once you've used the full limit, you can't send more under LRS that year, even if you bring the proceeds of your investments back to India.
Income from your LRS investments, such as dividends, can be kept abroad and reinvested. Foreign exchange you receive, realise or don't use has to be brought back to India within 180 days, unless it's reinvested.
The limit is in US dollars, while the TCS threshold below is in rupees. The two are separate tests, so keep track of both.
What LRS doesn't allow for stock investing
RBI's list of prohibited items under LRS includes:
Sending money for margin or margin calls to overseas exchanges or overseas counterparties.
Sending money to trade in foreign exchange abroad.
RBI also says that LRS doesn't envisage banks giving loans or credit facilities to individuals to fund capital account remittances, such as investing in shares abroad. So don't expect your bank to lend you money to invest abroad under LRS.
How the money goes out: bank or platform
Whichever route you use, the money leaves India through an authorised dealer (AD) bank under LRS. The paperwork is broadly the same:
PAN is mandatory for all LRS transactions made through authorised persons.
You declare the purpose of the remittance in Form A2. The bank relies on your declaration, but RBI says the final responsibility for following FEMA rules is yours.
For capital account remittances, the bank account should normally have been with that bank for at least one year. If you're a new customer, the bank carries out extra checks and may ask for the previous year's bank statement to confirm your source of funds.
Some people send money directly from their bank to an overseas brokerage account. Others use an app or platform in India that offers US stocks. A platform doesn't create a separate limit: the money still goes out through an AD bank, and it still counts towards your USD 2,50,000 and your TCS threshold.
Before choosing any route, check these points neutrally:
Which bank sends the money, and that the remittance is processed as an LRS transaction with your PAN.
The full cost: the exchange rate margin, bank and platform charges, and any account or transfer fees.
Where your shares are held, in whose name, and what happens to them if the platform shuts down.
What statements and tax documents you'll get, since you'll need them when you file your return.
RBI's FAQ says no ratings or guidelines are prescribed under LRS on the quality of what you buy. You're expected to do your own due diligence, and your investments have to follow the Overseas Investment Rules and Regulations, 2022.
TCS on LRS remittances from 1 April 2026
TCS (tax collected at source) is collected by the authorised dealer bank when you send money abroad under LRS. The Income-tax Act, 2025 came into force on 1 April 2026. As amended by the Finance Act, 2026, it sets out TCS on LRS remittances like this:
Purpose of remittance | Up to ₹10 lakh in a year | Above ₹10 lakh |
|---|---|---|
Investing, including US stocks | No TCS | 20% |
Education or medical treatment | No TCS | 2% |
The ₹10 lakh threshold applies to "an amount or aggregate of the amounts", and TCS applies only to the part above ₹10 lakh. For example, if your LRS remittances for investing total ₹12 lakh in a year, TCS is collected on ₹2 lakh, which at 20% is ₹40,000. Your bank's records should show the exact amount collected.
Two other points from the Act: no TCS is collected on an education remittance funded by a loan from a financial institution, and the education and medical rate fell from 5% to 2% through the Finance Act, 2026. The threshold went up from ₹7 lakh to ₹10 lakh in Budget 2025.
TCS isn't a separate, final tax. The Act treats tax collected at source, once paid to the government, as tax paid on behalf of the person it was collected from. How you account for it in your return depends on your own situation, so speak to a chartered accountant.
Basic tax points to keep in mind
If you're resident in India (and not "not ordinarily resident"), Indian tax law includes income that arises outside India in your total income. So dividends and gains from US stocks are part of your income in India.
TCS collected on your remittances is treated as tax paid on your behalf, as explained above.
The US may also tax some of this income, and you may have extra reporting in your Indian return because you hold foreign assets. These details depend on your situation and change over time, so check them with a chartered accountant before you file.
This guide doesn't cover tax rates on foreign shares or US tax rules. We've left them out because they depend on your circumstances, and a CA can work them out for your case.
Other things to understand before you start
Currency risk: your returns in rupees depend on the dollar-rupee rate as well as the share price.
Market hours: US markets trade late at night in India. Our guide to US stock market timings in IST explains the current hours and what changes when US daylight saving time ends.
Costs: conversion margins and fees reduce what you actually invest, especially on small, frequent transfers.
If you want to learn how US and Indian markets connect, our Global Stock Market Course with AI (Indian + US markets) covers both.
Frequently asked questions
Can Indians legally invest in US stocks?
Yes. Resident individuals can invest in US stocks through RBI's Liberalised Remittance Scheme, within the limit of USD 2,50,000 per financial year. The investment has to follow the Overseas Investment Rules and Regulations, 2022.
Is the USD 2,50,000 LRS limit only for investments?
No. It's one combined limit for all LRS remittances in a financial year (April to March), such as education and travel. Whatever you send for other purposes reduces what's left for investing.
How much TCS is charged when I send money to invest in US stocks?
From 1 April 2026, no TCS is collected until your LRS remittances in the year cross ₹10 lakh. On the amount above ₹10 lakh, TCS is 20% for purposes such as investing.
Can a minor invest in US stocks under LRS?
Yes. RBI allows all resident individuals, including minors, to use LRS. For a minor, the natural guardian countersigns the LRS declaration form.
Can I trade on margin in US stocks under LRS?
No. RBI prohibits remittances for margin or margin calls to overseas exchanges or counterparties, and banks aren't expected to lend to fund capital account remittances under LRS.
Sources
Checked on 26 October 2026:
Rules and rates can change. Check the latest RBI and Income Tax Department updates, or ask a chartered accountant, before you remit.
About this guide
Published by Mentor Aditya Jain Academy.
This guide is for education only. Mentor Aditya Jain Academy is an educational institute, not an advisory. It doesn't give tips, calls or recommendations to buy or sell any security.
