Investing in US stocks has become more accessible for Indian investors through the Reserve Bank of India's (RBI) Liberalised Remittance Scheme (LRS). While investing overseas is relatively straightforward, many investors are unsure about the process of bringing their investment proceeds back to India.
This guide explains how resident Indian individuals can withdraw funds from the US market, covering the RBI's LRS rules, the repatriation process, tax implications and the key documents to retain.
Key Takeaways
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Resident Indians can invest in US securities under the RBI's LRS scheme.
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The LRS allows outward remittances of up to USD 2,50,000 per financial year for eligible overseas investments.
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Overseas investment proceeds can remain abroad if reinvested; otherwise, they should be repatriated to India within 180 days.
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The USD 2,50,000 limit applies only to outward remittances and does not restrict bringing investment proceeds back to India.
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Income from US investments may be taxable in India, and eligible investors can claim Foreign Tax Credit through Form 67 for taxes paid overseas.
What Is the RBI's Liberalised Remittance Scheme (LRS)?
The Liberalised Remittance Scheme (LRS), introduced by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA), allows resident Indian individuals to remit up to USD 2,50,000 per financial year for permitted current and capital account transactions, including investments in overseas securities such as US stocks and exchange-traded funds (ETFs).
Remittance refers to the transfer of money from India to a foreign country for permitted purposes, while repatriation refers to bringing money earned or invested abroad back to India.
The USD 2,50,000 limit applies only to outward remittances from India and does not restrict the amount an investor can bring back from overseas investments.
The scheme provides the regulatory framework for making overseas investments and repatriating investment proceeds to India.
Understanding the 180-Day Repatriation Rule
Under the RBI's LRS framework, proceeds and income earned from overseas investments can continue to remain abroad if they are retained for reinvestment.
For instance, if an investor sells US stocks and uses the proceeds to purchase other overseas securities, or reinvests dividend income, there is no immediate requirement to transfer the funds to India.
However, if the realised proceeds or income are not intended for reinvestment, they should be repatriated and surrendered to an authorised dealer bank in India within 180 days of receipt or realisation, as applicable.
How to Withdraw Funds from the US Market?
Once you decide to withdraw your investment proceeds from the US market, follow these steps:
1. Sell Your Overseas Investments
If your money is still invested in US stocks or other securities, sell your holdings first. The sale proceeds will be credited to your brokerage account after the trade is settled.
2. Ensure the Proceeds Are Available as Cash
Once the sale is settled, the funds become available in your brokerage account and can be transferred to your linked bank account.
3. Initiate an International Wire Transfer
Transfer the funds to your resident Indian bank account through the SWIFT international wire transfer network. Depending on your investment platform, the transfer may be processed directly by the broker or through its remittance partner.
4. Receive the Funds in Your Indian Bank Account
The beneficiary account should be your own resident Indian bank account. During the transfer, the amount is converted from US dollars to Indian rupees, either by your broker or your Indian bank, depending on the transfer route.
5. Keep the Required Documents
After receiving the funds, retain the Foreign Inward Remittance Certificate (FIRC) or equivalent inward remittance advice, the remittance purpose code and your brokerage statements. Since banks link inward remittances with your PAN, ensure your PAN details are correctly updated with your bank.
Tax Implications for Indian Investors
As a resident Indian, your global income is taxable in India. This means that capital gains and dividend income earned from US investments are generally subject to Indian tax laws, irrespective of whether the money remains overseas or is transferred back to India.
1. Capital Gains on US Stocks
The applicable tax depends on the holding period of the investment.
|
Type |
Holding Period |
Tax Treatment |
|
Short-Term Capital Gain (STCG) |
Up to 24 months |
As per applicable income tax slab |
|
Long-Term Capital Gain (LTCG) |
More than 24 months |
12.5% without indexation |
The US generally does not levy capital gains tax on non-resident investors selling listed US shares. As a result, these gains are generally taxed in India and should be reported while filing the Income Tax Return (ITR).
2. Tax on Dividend Income
Dividend income is treated differently from capital gains.
When US companies distribute dividends, tax is generally withheld before the amount is credited to the investor. Under the India-US tax treaty, dividend withholding for eligible portfolio investors is generally capped at 15%.
Since resident Indians are taxed on their global income, the dividend is also taxable in India.
3. Claiming Foreign Tax Credit Through Form 67
Investors can claim credit for tax paid overseas by filing Form 67 on the Income Tax Department's e-filing portal.
Form 67 must be filed on or before the end of the relevant assessment year, provided the Income Tax Return has been filed within the due date under Section 139(1) or the belated return deadline under Section 139(4).
Capital gains should be reported under Schedule CG, while dividend income should be reported under Schedule OS, after which the eligible foreign tax credit can be claimed.
4. Reporting Foreign Assets Under Schedule FA
Apart from reporting foreign income, investors are also required to disclose their overseas investments under Schedule FA (Foreign Assets) while filing their Income Tax Return.
The disclosure requirement generally applicable for every year the foreign assets are held, irrespective of whether they have been sold, or the money has been repatriated.
5. Does TCS Apply When Bringing Money Back?
Tax Collected at Source (TCS) under the Liberalised Remittance Scheme applies to outward remittances made from India. It does not apply when investors transfer their own overseas investment proceeds back to their Indian bank account.
However, TCS may become relevant if fresh overseas investments are made during the financial year.
Conclusion
Withdrawing funds from the US market to your Indian bank account involves understanding the RBI's Liberalised Remittance Scheme (LRS), the repatriation process and the applicable tax requirements. By maintaining the required documentation and complying with the relevant reporting obligations, resident Indian investors can repatriate their overseas investment proceeds smoothly.
Disclaimer: Access to US securities is offered via IFSCA Global Access route. Angel One Limited is registered with IFSCA as a Global Access Provider. Investment in securities market is subject to market risks, read all the documents carefully before investing. Any reference to securities is indicative and not a recommendation. Angel One Limited claims no right, title or interest therein, and no endorsement or affiliation is implied. Office address: Unit No. 256, Seats 1 to 4 located on the first floor of Pragya Accelerator II, Building -15B, Block – 15, Road No- 1C, Zone-1, GIFT SEZ, GIFT City, Gandhinagar – 382050. IFSCA Broker-Dealer Registration No. CMI2026BDK1061, GAP Registration No. IFSCA/GAP/BD/2026-2027/016.
