Global investing · Guide
Taxation for residents: gains, dividends, and Schedule FA
How Indian tax law treats overseas stocks, funds, and ETFs; foreign tax credits; and the annual foreign-asset disclosure most investors miss until their CA asks.
Residency drives everything
If you are a resident and ordinarily resident (ROR) in India, you pay Indian tax on worldwide income. Global investing does not move you outside that frame.
Non-resident Indians (NRIs) have different rules; this guide focuses on residents investing from India.
Capital gains — overseas direct stocks
Gains on US (or other foreign) shares are typically taxed in India as capital gains. Holding period and rate depend on whether the asset is treated as equity-oriented under the Income-tax Act for that year’s rules.
US securities held directly are usually non-equity for Indian tax — shorter holding periods can attract slab rates; longer holds may get indexation benefits only where applicable law allows (verify each year’s Finance Act).
Keep trade confirms in USD and INR; your CA will convert at RBI reference rates for the transaction date.
Capital gains — India-listed international funds & ETFs
If the Indian fund or ETF qualifies as equity-oriented (≥65% domestic equity test or as defined for overseas funds in that year’s rules), long-term gains may get the equity LTCG treatment; otherwise debt-like rates apply.
Read the latest factsheet classification — fund houses state whether the scheme is equity or other for tax.
Dividends and withholding
US dividends often arrive net of 25% withholding under default rules; India–US DTAA can reduce to 15% or 25% depending on forms (W-8BEN) and entity type.
Report gross dividend in India; claim foreign tax credit per Section 90/91 with proof of US tax withheld.
India-listed funds: dividends taxed at slab for residents (post-2020 regime) unless reinvested in a growth plan.
Schedule FA (foreign assets)
If you hold foreign assets above de minimis thresholds, disclose them in Schedule FA of the ITR — including overseas brokerage accounts, foreign stock, and some foreign retirement accounts.
Missing FA when required is a common source of compliance pain; automate a year-end export from your US broker.
Practical filing checklist
April: tally LRS used vs USD 250k cap.
Year-end: download US 1099 / broker gain-loss report.
Before ITR due date: reconcile TCS credits, FA schedule, and advance tax if gains are large.
Work with a CA the first year you sell — template yourself only after you understand the pattern.