How US Stocks Are Taxed in India: Foreign Asset Reporting, Capital Gains and FTC Explained

Indian investors are increasingly investing in US stocks and other overseas equities to diversify their portfolios. However, resident taxpayers must comply with Indian tax laws by reporting foreign assets, disclosing overseas income and, where eligible, claiming Foreign Tax Credit (FTC) to avoid double taxation. 

Under the Income-tax Act, 2025, the global income of Indian resident taxpayers is taxable in India. This means income earned from foreign shares; overseas brokerage accounts and certain overseas trading activities may have to be reported while filing the Income Tax Return (ITR). 

How Are US Stocks and Foreign Shares Taxed? 

Shares listed only on overseas exchanges, including those in the US, are treated as unlisted securities under Indian tax law. 

According to tax experts quoted by Moneycontrol, long-term capital gains (LTCG) on foreign shares held for more than 24 months are taxed at 12.5% without indexation. If the holding period is 24 months or less, the gains are treated as short-term capital gains (STCG) and taxed according to the investor's applicable income tax slab. 

Taxpayers should also convert both the purchase cost and sale proceeds into Indian rupees using the prescribed exchange rates while calculating capital gains. As a result, currency exchange movements may impact taxable gains. 

Read More: How Is a Second Home Taxed? ITR Filing Rules Explained 

How Is Overseas Intraday Trading Taxed? 

The tax treatment of overseas intraday trading differs from that of delivery-based investments. 

Since intraday trades generally do not involve delivery of shares, the resulting profit is treated as business income rather than capital gains. Such income is taxed according to the taxpayer's applicable income tax slab. 

Similarly, business losses from overseas intraday trading may be set off or carried forward in accordance with the provisions of the Income-tax Act, 2025. 

Which Foreign Assets Must Be Reported? 

Resident and Ordinarily Resident (ROR) taxpayers are required to disclose all foreign assets held during the relevant financial year in Schedule FA of the income tax return. 

This includes: 

In addition, any income earned from these assets must be disclosed in Schedule FSI (Foreign Source Income), irrespective of the amount earned. 

How to Claim Foreign Tax Credit (FTC) 

If tax has already been deducted or paid in a foreign country, eligible taxpayers can claim Foreign Tax Credit (FTC) in India to avoid double taxation. 

To claim FTC, taxpayers should: 

The FTC available is limited to the lower of: 

Conclusion 

Indian residents investing in US stocks or other overseas securities should ensure they accurately report foreign assets and income while filing their ITR. Eligible taxpayers can also claim Foreign Tax Credit by filing Form 67 and maintaining the required documentation, helping avoid double taxation on foreign income. 

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.