2026 Beginner's Guide to US Stocks and ETFs from India

Yes, Indian residents can legally invest in US stocks and ETFs. Under the Liberalised Remittance Scheme (LRS), you can send up to $250,000 abroad each financial year, and investing in overseas shares and ETFs is a permitted purpose.

What matters most for a beginner is the cost of sending money (TCS above ₹10 lakh), how gains and dividends are taxed in India, and whether to start with individual stocks or ETFs.

Table of contents

• Can Indians legally invest in US stocks?
• What are the ways to invest in US stocks and ETFs from India?
• How much money do you need to start?
• What does it cost to send money abroad?
• Should a beginner start with US stocks or ETFs?
• US-listed ETFs or UCITS ETFs?
• When can you trade US stocks from India?
• What risks should a beginner know about?
• How are US stocks and ETFs taxed in India?
• What do you need to report in your ITR?
• What mistakes do beginners make?
• How do you open an account with Paasa and start investing in US stocks and ETFs?

Can Indians legally invest in US stocks?

Yes. The RBI's Liberalised Remittance Scheme lets resident individuals remit up to $250,000 per financial year (April to March) for permitted current and capital account transactions.

Buying shares and ETFs listed abroad counts as Overseas Portfolio Investment, which LRS allows. You don't need RBI approval for it. For the full rules, see using LRS for investments.

A few rules to know:

• Who can use it: resident individuals, including minors (the guardian signs Form A2). Companies, HUFs, partnerships and trusts can't use LRS.
• How the money goes: through an authorised dealer bank, from a bank account in your own name.
• Purpose code: remittances for investing in overseas shares and ETFs go under purpose code S0001.
• The limit is per person: a couple can remit up to $250,000 each. The limit is shared across all LRS purposes, so foreign travel, education or gifts sent abroad in the same year use up part of it.

Two LRS rules beginners often miss:

• Idle money must come back within 180 days. Funds remitted under LRS that you don't invest, and sale proceeds you don't reinvest, must be brought back to India within 180 days. Dividends and other income earned on your investments can be retained and reinvested abroad.
• No margin trading. LRS doesn't allow remittances for margins or margin calls, so you buy with the money you've sent.

Note: LRS applies to Indian residents. If you are an NRI, you invest abroad from your overseas income without LRS, and the Indian tax rules in this guide apply only once you become resident.

What are the ways to invest in US stocks and ETFs from India?

There are four main routes. The first two let you own US stocks and ETFs directly; the other two give you US exposure through an Indian fund.

Which route fits depends on what you want to own and how much paperwork you're comfortable with.

1. Global investing platform. You send money abroad under LRS and buy US stocks and ETFs directly, along with ETFs listed in other markets, such as UCITS ETFs, depending on the platform. This gives the widest choice of the four routes. In return, you deal with TCS above ₹10 lakh, the 180-day rule on idle funds and foreign asset reporting in your ITR.
2. GIFT City (IFSC) broker. You also send money under LRS, but to a broker set up in GIFT City, India's international financial services centre. You own US stocks and ETFs, and the same LRS and Indian tax rules apply, including 20% TCS on remittances above ₹10 lakh. The range of stocks and markets depends on what the broker offers.
3. Indian international mutual fund or FoF. You invest in rupees through any Indian mutual fund platform, and the fund buys US stocks or ETFs for you. There's no LRS remittance or TCS, and you can invest through a SIP like any Indian fund. You can't pick individual stocks, a fund of funds charges its own expense ratio on top of the underlying fund's, and fresh investments have been paused at times when industry-wide overseas limits were reached.
4. US-index ETF listed in India. You buy units on the NSE through your demat account, in rupees, during Indian market hours. There's no LRS. Choice is limited to the few US indices these ETFs track, and when fresh units can't be created, the price can rise well above the value of the ETF's holdings.

Note: routes 3 and 4 are taxed as Indian fund units, not as foreign shares, so the tax rules later in this guide apply to routes 1 and 2.

How much money do you need to start?

There is no legal minimum. LRS sets a ceiling of $250,000, not a floor.

In practice, you can start small for two reasons:

• Fractional shares: you can buy part of a share. A $1,000 budget doesn't stop you from owning a slice of a $500 stock.
• No minimum balance: many global investing platforms don't require a minimum balance to open an account.

What does limit a small investor is fixed costs. Bank wire charges and per-trade minimums matter more on a ₹50,000 remittance than on a ₹10 lakh one. Sending money in fewer, larger batches usually works out cheaper.

What does it cost to send money abroad?

Up to ₹10 lakh a financial year, no TCS applies. Above ₹10 lakh, your bank collects 20% TCS on the amount over the threshold.

Tax collected at source (TCS) on LRS remittances sits in section 394 of the Income-tax Act, 2025 (formerly section 206C(1G)). The rates for tax year 2026-27:

Note: Budget 2026 cut TCS on education and medical remittances from 5% to 2%. The 20% rate for other purposes, which covers investment, did not change.

The ₹10 lakh threshold is per person, across all your LRS remittances in the financial year.

TCS is not an extra tax. It's an advance payment that shows up in your Form 26AS and AIS. You claim it against your income tax when you file your ITR, and get a refund if it exceeds what you owe. More on this in TCS on foreign investments.

The other costs to check:

• Bank charges: a fixed wire fee per remittance, which varies by bank.
• Currency conversion: the rupee-to-dollar rate your bank offers, plus any conversion fee at your broker.
• Brokerage: platforms charge a percentage of each trade, a fixed fee per trade, or both, often with a minimum per trade. These add up on small trades, so compare them before you start.

Should a beginner start with US stocks or ETFs?

For most beginners, a broad-market ETF is the simpler first investment. One ETF gives you hundreds of companies in a single trade, so one bad pick can't sink your portfolio.

An ETF (exchange-traded fund) holds a basket of shares and trades on an exchange like a single stock. An S&P 500 ETF, for example, holds the 500 large US companies in that index.

Individual stocks make sense once you have a core holding in place and a clear reason to own a specific company. Many investors use a broad ETF as the base and add a few stocks around it.

Which ETFs do beginners usually look at?

The most common starting points track the S&P 500, the whole US market, or the Nasdaq-100. Each comes in a US-listed version and an Irish-domiciled UCITS version (more on the difference in the next section).

Note: these are examples, not recommendations. Expense ratios are from each fund provider's page as of October 2026. Compare S&P 500 UCITS options in CSPX vs VUAA.

US-listed ETFs or UCITS ETFs?

Both give you the same US market exposure. UCITS ETFs often suit Indian investors better for two reasons: lower dividend tax leakage and no US estate tax exposure.

UCITS ETFs are funds domiciled in Ireland (or another EU country) that hold US shares. CSPX, for example, holds the same S&P 500 companies as IVV.

1. Dividend withholding. On a US-listed ETF, the US withholds 25% on dividends paid to Indian residents under the India-US tax treaty. An Irish UCITS fund generally suffers 15% at the fund level instead. Many UCITS ETFs are also accumulating: they reinvest dividends rather than paying them out. See dividend withholding on Irish UCITS.
2. US estate tax. Shares of US companies, including US-listed ETFs, count as US-situated assets. If a non-US person dies holding more than $60,000 of them, the executor must file a US estate tax return, and the top US estate tax rate is 40%. Irish-domiciled UCITS ETFs are not US-situated assets, so they sit outside this. More in how US estate tax works for Indians.

US-listed ETFs still have their place. They often have lower expense ratios and more trading volume. For a full comparison, read UCITS for Indian investors, and for the buying process, how to buy UCITS ETFs from India.

When can you trade US stocks from India?

The US market's regular session runs 9:30 am to 4:00 pm New York time. In India, that's late evening to early morning, and the exact hours shift with US daylight saving time.

You don't have to stay up. A limit order placed during the Indian day waits and executes when the market opens, if your price is reached. UCITS ETFs on the London Stock Exchange trade during London hours, which fall in the Indian afternoon and evening.

What risks should a beginner know about?

US stocks and ETFs carry the usual market risk, plus one risk specific to investing from India: currency.

• Market risk: prices fall as well as rise. Even an S&P 500 ETF can drop 20% or more in a bad year.
• Currency risk: your returns in rupees depend on the dollar-rupee rate. A weaker rupee adds to your rupee returns, and a stronger rupee cuts into them, even if the US price doesn't move. See how the dollar and rupee affect your returns.
• Concentration risk: a few stocks in one sector can swing much harder than a broad ETF.

Note: currency moves have historically favoured Indian investors in US assets, since the rupee has weakened against the dollar over the long run. That's a past trend, not a guarantee.

How are US stocks and ETFs taxed in India?

As an Indian resident, you pay Indian tax on your US dividends and gains. The US taxes only dividends, and India gives you credit for that US tax. For the full picture, see how global stocks and ETFs are taxed in India.

1. Dividends

The US withholds 25% on dividends paid to Indian residents under the India-US tax treaty. To get the treaty rate, you file a W-8BEN form with your broker.

In India, the dividend is added to your income and taxed at your slab rate. You then claim the US tax as a foreign tax credit by filing Form 44 (which replaced Form 67) alongside your ITR. Read more in dividend tax on foreign stocks and ETFs.

2. Capital gains

The US does not tax capital gains for Indian residents. India does, based on how long you held the shares or ETF units.

The 12.5% rate comes from section 197 of the Income-tax Act, 2025. US stocks and ETFs are not listed on an Indian stock exchange, so they become long-term only when held for more than 24 months, not more than 12 months as with Indian listed shares.

Note: the ₹1.25 lakh yearly exemption on long-term gains applies only to Indian listed equity and equity funds. It does not apply to US stocks or ETFs.

To work out the gain in rupees, compute it in dollars first, then convert once at the SBI TT buying rate on the last day of the month before the month of sale. This follows Rule 206 of the Income-tax Rules (formerly Rule 115). See SBI TTBR explained and capital gains tax on foreign stocks and ETFs.

Here's how TCS, dividends and capital gains come together in one year.

Example. Suppose you are a salaried resident in the 30% slab. In tax year 2026-27, you remit ₹12 lakh to buy US ETFs and stocks. During the year, your ETFs pay $400 in dividends, with $100 withheld in the US. You also sell one stock after eight months at a $1,500 gain. Assume an exchange rate of ₹88 per dollar throughout, and ignore surcharge and cess.

The result: the TCS covered almost all the tax

The ₹40,000 your bank collected at remittance was not lost. It went toward your ₹41,360 tax bill, leaving ₹1,360 to pay. If the stock had been held for more than 24 months, the gain would have been taxed at 12.5% instead, and the TCS would have produced a refund.

What do you need to report in your ITR?

Once you hold US stocks or ETFs, you file ITR-2 or ITR-3 (not ITR-1) and report your foreign holdings, even if you sold nothing and earned nothing. See which ITR form to use for foreign assets.

The three pieces:

• Schedule FA: lists every foreign account and holding you had during the calendar year (January to December), including the US brokerage account, each stock and ETF, and its value. Missing it can attract penalties under the Black Money Act. See the Schedule FA guide.
• Schedule FSI: reports income earned abroad, such as US dividends and the tax withheld on them.
• Form 44: claims credit for the US tax withheld on your dividends.

For how all three fit together, read reporting foreign assets in your ITR.

What mistakes do beginners make?

Most beginner mistakes are about tax and paperwork, not about picking the wrong stock.

• Treating TCS as a cost. TCS above ₹10 lakh is adjustable against your tax. Plan for the cash it ties up, but claim it back in your ITR.
• Skipping Schedule FA. A small holding still has to be reported, even in a year with no sales or dividends.
• Not filing W-8BEN. Without it, US dividends can be withheld at 30% instead of the 25% treaty rate.
• Forgetting advance tax. Salary TDS doesn't cover tax on US dividends and gains. If your tax still due for the year is ₹10,000 or more after TDS and TCS, advance tax applies, and paying late attracts interest. See how to adjust TCS against advance tax.
• Leaving cash idle abroad. Money remitted under LRS and not invested, or sale proceeds not reinvested, must come back to India within 180 days.
• Ignoring estate tax. US-listed holdings above $60,000 create US estate tax exposure. UCITS ETFs avoid it. Estimate your exposure with the US estate tax calculator.
• Putting everything in a few stocks. A broad ETF as the core holding keeps one bad pick from doing real damage.
• Assuming the ₹1.25 lakh exemption applies. It covers Indian listed equity only, not US stocks or ETFs.

How do you open an account with Paasa and start investing in US stocks and ETFs?

With Paasa, you open your account online, send money from your bank under LRS and place your first order. Here's how it works.

1. Complete KYC. Sign up on Paasa and complete KYC digitally with your PAN and Aadhaar. Paasa also handles your W-8BEN form, so US dividends are withheld at the 25% treaty rate instead of 30%.
2. Get your account. Your account is opened in your own name and PAN.
3. Remit funds under LRS. Transfer money from an Indian bank account in your name, using purpose code S0001. Your bank collects TCS if your remittances cross ₹10 lakh in the financial year.
4. Choose what to buy. Search the stock or ETF by name or ticker. On Paasa you can buy in the fund's trading currency (USD, GBP, EUR and others), so UCITS lines like CSP1 in GBP are available too.
5. Place the order. A market order buys at the current price. A limit order buys only at your price or better. For a first trade, a limit order close to the current price avoids surprises. You can also buy fractional shares.
6. Keep your records. At year end, Paasa sends the tax reports you need for your ITR, including Schedule FA, Schedule FSI and capital gains.

Note: if you already hold US shares with another broker, you can usually transfer them in without selling. See transferring US stocks without selling.

About Paasa

Paasa is a global investing platform for Indians. It gives you direct access to stocks and ETFs in the US, UK, Switzerland, Germany, France, the Netherlands, Hong Kong, Japan, Singapore and Canada, and helps with the two parts that trip up most first-time investors: sending money abroad and filing tax.

• Global markets in one place: start with US stocks and ETFs, including UCITS ETFs, and add other markets from the same account.
• Help with sending money: Paasa handles the LRS paperwork with your bank and offers preferred exchange rates through partner banks.
• Tax reports for your ITR: Paasa gives you the documents you need to file, covering Schedule FA, Schedule FSI and capital gains.