Indian residents can invest in US stocks by remitting money abroad under the Liberalised Remittance Scheme (LRS) introduced by the Reserve Bank of India (RBI). While overseas investing has become more accessible, investors should understand the annual remittance limit, applicable Tax Collected at Source (TCS), and compliance requirements before transferring funds.
Knowing how LRS and TCS work can help investors plan overseas investments more efficiently and avoid unexpected cash flow issues.
Key Takeaways
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Resident Indians can remit up to USD 250,000 per financial year under the Liberalised Remittance Scheme (LRS).
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Overseas investments in US stocks are permitted under LRS.
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TCS applies only after the prescribed remittance threshold is exceeded.
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TCS is not an additional tax and can be adjusted while filing the income tax return.
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LRS remittances must comply with RBI and FEMA regulations.
What Is the Liberalised Remittance Scheme (LRS)?
The Liberalised Remittance Scheme (LRS) is an RBI framework that allows resident individuals to remit money outside India for permitted current and capital account transactions.
Eligible purposes include:
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Investing in foreign stocks
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Investing in overseas ETFs and mutual funds
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Overseas education
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Medical treatment abroad
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Travel
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Gifts and donations
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Purchase of overseas assets
LRS is available only to resident individuals. NRIs, companies, partnership firms, trusts, and HUFs cannot use this scheme.
What is the LRS Limit?
Under the current LRS framework, a resident individual can remit up to USD 250,000 per financial year (April–March) for all permitted transactions combined.
This limit is:
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Per individual
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Per financial year
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Cumulative across all eligible overseas remittances
For example, if you remit money for overseas education, travel, and US stock investments during the same financial year, the combined amount counts towards the USD 250,000 limit.
Can You Use LRS to Invest in US Stocks?
Yes. Resident Indians can use LRS to invest in:
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US-listed stocks
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Foreign mutual funds
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Other eligible overseas securities
The investment is generally made through an international brokerage account or an Indian broker offering access to global markets. The funds are remitted through an authorised dealer (bank) in accordance with RBI and FEMA regulations.
What Is TCS Under LRS?
Tax Collected at Source (TCS) is an amount collected by the authorised dealer bank when processing certain overseas remittances under LRS.
It is important to understand that TCS is not an additional tax. Instead, it functions as a tax collected in advance and can be adjusted against your final income tax liability or claimed as a refund while filing your income tax return.
When Does TCS Apply to US Stock Investments?
For overseas investments such as US stocks:
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No TCS is collected on aggregate LRS remittances up to ₹10 lakh in a financial year.
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A 20% TCS applies only to the amount exceeding ₹10 lakh.
Example
Suppose your total overseas remittances during a financial year amount to ₹15 lakh, all for investing in US stocks.
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First ₹10 lakh: No TCS
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Remaining ₹5 lakh: 20% TCS applies
TCS collected:
₹5,00,000 × 20% = ₹1,00,000
This ₹1,00,000 is reflected in your tax records and can be adjusted when filing your income tax return.
Is TCS a Cost or a Refundable Amount?
Many investors mistake TCS for an additional tax on overseas investments.
In reality:
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It is collected upfront by the bank.
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It appears in Form 26AS.
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It can be adjusted against your income tax liability.
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If your total tax liability is lower, you may claim a refund while filing your income tax return.
RBI and FEMA Compliance Requirements
All overseas investments made under LRS must comply with the Foreign Exchange Management Act (FEMA) and RBI guidelines.
Some important requirements include:
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Investments must be made through an authorised dealer bank.
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PAN is mandatory for LRS remittances.
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Investors may need to submit Form A2 and other declarations required by the bank.
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The total remittance during a financial year should remain within the prescribed LRS limit.
Documents Required for LRS Remittance
While documentation may vary across banks, investors are generally required to provide:
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PAN card
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Valid identity proof
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Bank account details
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Form A2
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LRS declaration
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Details of the overseas investment or brokerage account
Additional documents may be requested depending on the purpose of the remittance.
Things to Consider Before Investing in US Stocks
Track Your Annual Remittances
The LRS limit applies to all eligible overseas remittances combined, not just investments.
Plan for TCS
If your remittances exceed ₹10 lakh in a financial year, be prepared for the upfront TCS requirement.
Maintain Proper Records
Keep remittance receipts, brokerage statements, and TCS records for tax filing purposes.
Understand Currency Risk
Returns from US investments are affected by fluctuations in the USD/INR exchange rate in addition to stock performance.
Conclusion
The Liberalised Remittance Scheme enables resident Indians to invest in US stocks by remitting up to USD 250,000 per financial year for permitted purposes. While TCS may apply once the prescribed remittance threshold is crossed, it is not an additional tax and can generally be adjusted against your income tax liability. Understanding LRS limits, TCS provisions, and RBI compliance requirements can help investors plan overseas investments more effectively.
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.
