Over the ten years to 31 October 2026, an Indian investor in the Nasdaq 100 earned about 23.7% a year in rupees. The Nifty 50, dividends included, earned 11.7%. Part of that gap had nothing to do with American companies: the rupee kept falling.
Getting money into US markets is easier than it was even a year ago. Groww and Zerodha now sell US shares inside their Indian apps. It is also easier to get wrong: TCS on large remittances, a foreign-asset schedule in your tax return, and a US estate tax most people only hear about when it is too late. This guide puts the five routes side by side, with the rules and fees as they stood on 29 October 2026.
- The five routes
- Indian funds
- GIFT City funds
- Apps and charges
- UCITS ETFs
- LRS and TCS
- Bank costs
- Tax
- FAQ
The short version
Five things to know before investing internationally
- Five legal routes. Only Indian mutual funds and ETFs skip LRS, TCS and foreign-asset reporting, and many of them are closed to new money because the industry's overseas limit is full.
- Everything else goes out under LRS: up to $250,000 per person per financial year, with 20% TCS on whatever you send above ₹10 lakh a year. You get the TCS back through your tax return, but the cash is locked up until then.
- Brokerage has stopped being the big cost. Most apps now charge 0.1% to 0.25% a trade. The spread your bank takes on converting rupees to dollars is often larger.
- Gains on foreign shares turn long-term after 24 months and are then taxed at 12.5%, with no ₹1.25 lakh exemption. The US keeps 25% of every dividend.
- US estate tax can apply once your US-listed holdings pass $60,000. Irish UCITS ETFs and GIFT City funds sit outside it.
Why the question keeps coming up
A rupee investor in the US earns two returns: what the shares do in dollars, and what the dollar does against the rupee. Over the last decade both worked in the investor's favour. The S&P 500 rose 13.6% a year in dollars, before dividends. The rupee lost 3.6% a year against the dollar, sliding from ₹66.8 at the end of September 2016 to about ₹95. Put together, that is 17.6% a year for someone who started with rupees.
10 years CAGR (in rupee terms)
The solid bar is what the index did in its own currency. The striped part is what the falling rupee added.
None of this says the next ten years will look the same. The decade was carried by a handful of very large American technology companies, and the Nasdaq 100 fell more than a third in 2022 alone. What it does show is that dollar assets have historically protected a rupee portfolio when India lagged. Over the last five years the Nifty 50 TRI grew 6.7% a year, while the S&P 500 in rupees grew 15.9%. For goals priced in dollars, such as a child's education abroad, that protection is the main reason many families hold some US exposure.
Why hire a Foliyo Advisor?
- Unbiased
- No commissions, ever
- SEBI-registered RIA
- Best-in-class research
The five routes to international investing from India
There are five legal ways for a resident Indian to own US companies. They differ in who holds the shares, which currency you hold, how the gains are taxed, and how much paperwork follows you every July.
| Route | LRS and TCS | Cost | Tax on gains (you) | US dividends | US estate tax | Schedule FA filing |
|---|---|---|---|---|---|---|
| Indian international mutual funds and ETFs | No | Expense ratio; a fund of funds also pays the underlying fund's fee | 12.5% after 24 months (12 for India-listed ETFs); slab rate before | Handled inside the fund | No | No |
| GIFT City outbound funds | Yes | 0.30% to 1.25%, plus the underlying ETF's fee in a fund of funds | The fund pays it; you get a post-tax NAV | Taxed inside the fund | Not directly | Usually yes |
| US stocks via an Indian app | Yes | Demat & Brokerage charges and Bank FX charges | 12.5% after 24 months; slab rate before | 25% withheld in the US; taxed at your slab in India, with credit | Above $60,000 | Yes |
| Global broker (IBKR, Paasa) | Yes | Lowest commissions; Bank FX charges | 12.5% after 24 months; slab rate before | As above | Above $60,000 | Yes |
| Irish UCITS ETFs | Yes | 0.07% to 0.22% for the large index ETFs | 12.5% after 24 months; slab rate before | 15% withheld inside the fund; accumulating classes pay you nothing to tax | Generally no | Yes |
Tax rates are before surcharge and 4% cess, for transfers on or after 23 July 2024. "Slab rate" means your income-tax slab.
Route 1: Indian international mutual funds and ETFs
This is the route with the least friction. You invest in rupees, just as you would buy any Indian mutual fund. There is no LRS form, no TCS, nothing to report in Schedule FA, and SIPs work where the fund is open. Since 1 April 2025 these funds are no longer taxed as "specified" funds at slab rates. Units held over 24 months (12 months for an ETF listed in India) count as long-term and are taxed at 12.5%. Our guide to international fund taxation walks through the change.
The catch: the industry's overseas limit is full
RBI and SEBI cap how much Indian mutual funds can hold abroad: $7 billion for the industry, a separate $1 billion for overseas ETFs, and $1 billion per fund house. Those limits were last raised in 2021 and have not moved since. When a fund house runs out of room, it stops taking money. In 2026 alone, ICICI Prudential closed three overseas schemes, its Nasdaq 100 index fund among them, to lump sums and new SIPs from March, Kotak capped inflows at ₹1 lakh per PAN a month from 30 April, and Axis suspended fresh money from 6 May. Before you plan a monthly SIP, check the fund's latest notice on whether it is accepting money.
The ETF premium trap
India-listed international ETFs have a quieter problem. When the fund house cannot create new units, the market price drifts above what the holdings are worth. The Mirae Asset NYSE FANG+ ETF traded about 17% above its NAV in November 2025. In September 2026 the Motilal Oswal Nasdaq Q50 ETF, after trading far above its NAV, fell about 46% in two sessions while the shares it held barely moved. Since September 2026, SEBI's new price bands (±10%, widening to ±20%) limit how far an ETF can move in a day. Comparing the price you pay with the live iNAV is still the only real protection.
The largest US-focused funds sold in India
Direct plans, returns in rupees after the fund's costs. Named as examples of the category, not as recommendations. None of the seven was taking new SIPs or lump sums on 29 October 2026.
| Fund | Fund size | Expense ratio | 1Y return | 3Y return (a.) | 5Y return (a.) | Open to SIP |
|---|---|---|---|---|---|---|
| Motilal Oswal Nasdaq 100 Fund of Fund | ₹8,032 crore | 0.77% | 16.1% | 34.2% | 19.4% | No, existing SIPs paused |
| Franklin U.S. Opportunities Eq Actv FoF | ₹6,185 crore | 0.53% | 6.7% | 23.0% | 8.2% | No, existing SIPs continue |
| Motilal Oswal S&P 500 Index Fund | ₹4,584 crore | 0.64% | 19.2% | 27.8% | 16.3% | No, existing SIPs paused |
| Edelweiss US Technology Equity FoF | ₹4,547 crore | 0.72% | 5.2% | 31.0% | 12.7% | No, existing SIPs cancelled |
| Mirae Asset NYSE FANG+ETF | ₹4,448 crore | 0.66% | 11.8% | 39.9% | 23.2% | No, an ETF: buy on the exchange |
| ICICI Prudential NASDAQ 100 Index Fund | ₹3,738 crore | 0.63% | 18.4% | 31.3% | 17.9% | No, existing SIPs continue |
| Navi Ttl Stck Mrkt US Spcfc Eq Pasv FoF | ₹1,087 crore | 0.07% | 19.7% | 28.1% | — | No, existing SIPs stopped |
Route 2: GIFT City outbound funds
Since 2025, Indian fund houses have launched dollar funds from GIFT City, India's international financial services centre (IFSC), that resident Indians can buy. They sit outside the mutual-fund industry's $7 billion limit, so they stay open. Seven retail outbound funds from five fund houses were available by mid-2026, among them the passive Parag Parikh IFSC S&P 500 and Nasdaq 100 funds of funds and the HDFC International Developed Markets fund, which tracks the MSCI World. You can compare their live dollar NAVs, returns and expense ratios on our GIFT City funds page.
How it works: you open an account with the fund's IFSC arm (KYC and FATCA usually take three to seven days), then send dollars from your bank under LRS. The minimum is typically $5,000, with top-ups from $500, and there are no SIPs.
The tax is the unusual part. The fund pays the tax itself: 12.5% on gains held over 24 months, and 30% on short-term gains and dividends. It then publishes post-tax NAVs, and PPFAS describes what you receive on redemption as tax-free in your hands. Many advisers still list the holding in Schedule FA, and it is worth confirming with your CA. There are two drawbacks: you cannot offset a loss on these funds against other gains, and you cannot claim the US tax the fund has paid.
Route 3: US stocks through an Indian app
This route changed the most in the last year. In August 2025, IFSCA, the GIFT City regulator, created a "Global Access Provider" licence: a GIFT City entity that passes your order to a regulated US broker. Indian brokers adopted it quickly. Groww is live for all users, Zerodha opened a public beta on Kite on 19 October 2026, Dhan has offered it since about June 2026, Upstox is live, and Angel One is rolling it out in phases. INDmoney and Vested hold the licence too. Whichever app you use, the money still leaves India under LRS, and TCS still applies.
Where your money goes when you buy a US share in an app
- 01Your Indian bankConverts rupees to dollars, files the LRS declaration and collects TCS above ₹10 lakh.
- 02The app's GIFT City armThe Global Access Provider: Groww IFSC, INDmoney Global, India INX for Zerodha.
- 03A US brokerAlpaca, DriveWealth, ViewTrade or the app's own broker-dealer executes the trade.
- 04Your sharesHeld in a US custody account. Most platforms state SIPC cover of up to $500,000.
What the apps charge
We read each platform's pricing page on 29 October 2026. GST at 18% is added to brokerage everywhere.
| Platform | How your order travels | Brokerage (+18% GST extra) | Currency conversion | Withdrawals | Indian tax reports |
|---|---|---|---|---|---|
 INDmoney | GIFT City (INDmoney Global) to DriveWealth or Alpaca | 0.25%, capped at $25 | Bank FX charges | Free | Capital gains, Schedule FA, free ITR filing |
 Groww | GIFT City (Groww IFSC) to Alpaca | 0.1% or $1, whichever is higher | Bank FX charges | Not published | Not published |
 Zerodha beta | India INX Global Access to ViewTrade | 0.1%, capped at $10 an order | 0.4% to 1.4% over the RBI reference rate via a bank partnership | Not published | Not published yet |
 Vested | Its own US broker-dealer, VF Securities | 0.25% (Basic) or 0.15% (Premium), capped at $35 | Not published | Free to India via Vested Direct | ITR documents |
 Interactive Brokers | Your own account with IBKR LLC in the US | $0.005 per share (min $1) | Bank FX charges | One free a month; then $10 | US forms only |
 Paasa | App built on IBKR | 0.10% + $0.15 (min $0.50, max $50) | 0.03% (min $2) | Two free a month, then $10 | Schedule FA, foreign income, capital gains |
Others: Dhan charges 0.25% through its GIFT City arm; Angel One has waived brokerage until December 2026, then 0.1% (minimum $0.99); HDFC Sky sells plans from $2.99 a trade; Upstox and Appreciate also offer US stocks. Paasa is run alongside a SEBI-registered investment adviser.
Passive investors: 5 purchases of $2,000 in a year
You add $10,000 to your wallet and buy five times. Brokerage for the year before 18% GST, at each platform's published rate; the percentage is of the $10,000.
INDmoney Vested Basic Vested Premium Paasa Groww Zerodha Interactive Brokers 8 shares of $250 an order Active investors: 20 buys and 20 sells of $1,000 in a year
The same $10,000 in your wallet, traded in and out 20 times: 40 orders of $1,000. Brokerage for the year before 18% GST; the percentage is of the $10,000.
INDmoney Vested Basic Vested Premium Paasa Groww Zerodha Interactive Brokers 4 shares of $250 an order Pros and cons of each app
INDmoney
GIFT City route; fractional shares from $1
- Free withdrawals, and the fullest Indian tax pack: capital gains, Schedule FA and ITR filing.
- One app for Indian and US holdings.
- At 0.25%, its brokerage is among the highest in this list.
- The currency spread depends on your bank.
Groww
GIFT City route through Groww IFSC and Alpaca
- 0.1% brokerage, and no currency markup from Groww itself.
- Easy start if you already use Groww for Indian investing.
- Withdrawal charges and tax reports are not published yet.
Zerodha
Kite, via India INX Global Access and ViewTrade
- The lowest cap of the Indian apps: 0.1%, at most $10 an order.
- Inside Kite, next to your Indian holdings.
- Still a public beta; early users reported trouble adding funds.
- Its quoted conversion range of 0.4% to 1.4% can cost more than the brokerage.
Vested
Its own FINRA-registered broker-dealer; GIFT City licence since April 2026
- Premium plan cuts brokerage to 0.15%.
- Free withdrawals to India and ready ITR documents.
- Currency spread not published, and its own pages list the Premium price differently.
Interactive Brokers
A direct account with IBKR LLC in the US
- By far the cheapest per trade, and the only route here to London-listed UCITS ETFs and other markets.
- Low cost to convert currency once the money is in the account.
- Built for active traders; the Schedule FA workings are yours to prepare.
- Only one free withdrawal a month.
Paasa
An Indian front end on IBKR; shares in your own name
- IBKR's custody with Indian tax reports and a simpler app.
- 0.03% currency conversion inside the account.
- Costs more per trade than IBKR directly, with a $0.50 minimum.
Route 4: a global broker
Interactive Brokers is the account most experienced investors end up with. You open it online, send money from your bank under LRS, and trade US, London, European and Asian markets with commissions measured in cents. The shares are held by a US broker in your own name. The trade-off is that nothing is tailored to India: you get US tax forms, and the Schedule FA, foreign tax credit and capital-gains workings are yours or your CA's. Paasa sits on top of IBKR to fill that gap, at a higher price per trade.
Watch: open an IBKR account from India and transfer money to itA short video from Foliyo on YouTubeRoute 5: Irish UCITS ETFs
Funds such as an S&P 500 or MSCI World ETF domiciled in Ireland and listed in London hold the same shares as their US-listed cousins, with three differences that matter to an Indian investor.
- Dividends lose less. An Irish fund pays 15% US withholding under the US–Ireland treaty, against 25% for an Indian holding US shares directly.
- Accumulating share classes reinvest dividends inside the fund, so there is no yearly dividend to tax at your slab rate. You pay tax only when you sell.
- No US estate tax exposure. Irish fund units are generally not US assets, so the $60,000 threshold does not bite.
The large index ETFs charge 0.07% to 0.22% a year. You need a broker with London access, which in practice means Interactive Brokers or a platform built on it. For Indian tax they are treated as foreign, unlisted securities: long-term after 24 months and taxed at 12.5%, with Schedule FA reporting. Some of this treatment, the estate-tax position in particular, rests on common practice rather than a ruling, so it is worth confirming with a tax adviser.
vs 25%: what the US keeps of each dividend. For an investor in the 30% slab, a dollar of dividend from a US-listed ETF is taxed 25% in the US, and India then taxes the rest of the slab rate after credit. Inside an accumulating Irish ETF the same dollar loses 15%, and the rest keeps compounding until you sell, when 12.5% capital-gains tax applies.
LRS and TCS: the rules of the road
The Liberalised Remittance Scheme
Every resident individual, minors included (a parent signs for them), can send up to $250,000 abroad in a financial year. The limit covers everything: travel, education, gifts and investments together. GIFT City counts as abroad for this purpose. Indian international mutual funds do not use your limit at all.
- No borrowed money: LRS cannot be used to send margin or meet margin calls abroad.
- No idle cash: money sent abroad and not invested, or sale proceeds you don't reinvest, has to come back within 180 days.
- Each family member has their own limit, and their own ₹10 lakh TCS threshold.
In late October 2026 RBI was reported to be considering a ₹50 lakh sub-limit for some kinds of remittance. Nothing has been notified, and portfolio investment is reportedly not affected.
TCS: not a tax, but your money tied up
Tax collected at source applies when your total foreign remittances cross ₹10 lakh in a financial year. The threshold is per person, across all banks and purposes. Above it, the bank collects 20% of the excess on investment remittances. Budget 2026 cut the rate for education and medical payments to 2% and left investment at 20%. TCS shows in your Form 26AS. You can set it off against your tax, ask your employer to count it against TDS, or get it back as a refund, which can take months.
Sending ₹25 lakh in one financial year
Adding FX via your bank: process and costs
- Open the investing account first: PAN, Aadhaar, and a W-8BEN form (usually signed digitally), which gets you the 25% treaty rate on dividends instead of 30%.
- Start an outward remittance in your net banking and choose LRS, with overseas portfolio investment as the purpose (usually purpose code S0001).
- Complete the Form A2 / LRS declaration online, with the beneficiary details your app or broker gives you.
- The bank converts the money at its rate, debits its fee and GST, and collects TCS if you are over ₹10 lakh for the year.
- The money arrives the same day to two working days later. Transfers made before about 2:30 pm usually move faster.
The costs are rarely shown in one place. Here is what sending ₹10 lakh through HDFC Bank costs, the first remittance of the year, so no TCS.
| Cost | Platform-negotiated rate | Ordinary branch rate |
|---|---|---|
| Currency spread | ₹5,000 to ₹12,0000.5% to 1.2% | ₹25,000assuming 2.5% |
| Bank fee | ₹1,180₹1,000 + GST | ₹1,180 |
| GST on currency conversion | ₹990 | ₹990 |
| Correspondent bank fee | ₹0 to ₹2,850none on some GIFT City routes; $15 to $30 otherwise | ₹1,425 to ₹2,850 |
| Total | ₹7,170 to ₹17,020 (0.7% to 1.7%) | ₹28,595 to ₹30,020 (about 3%) |
Before you confirm a transfer, compare the rate you are offered with the RBI reference rate for the day. On a large transfer, half a percent is real money.
How US investments are taxed in India
| US stocks, US ETFs, UCITS ETFs | Indian international mutual funds | GIFT City retail funds | |
|---|---|---|---|
| Sold within 24 months | Slab rate (24 months) | Slab rate (24 months; 12 for India-listed ETFs) | Fund pays 30%; deducted from your returns |
| Sold after 24 months | 12.5%, no indexation | 12.5%, no indexation | Fund pays 12.5%; deducted from your returns |
| ₹1.25 lakh LTCG exemption | No | No | No |
| Dividends | 25% withheld in the US (with W-8BEN); taxed at slab in India, with credit through Form 67 | Inside the fund | Taxed inside the fund at 30% |
| US tax on your gains | None for a non-resident | None | None |
| Schedule FA filing | Yes | No | Usually yes |
Plus surcharge and 4% cess. The ₹1.25 lakh exemption applies only to listed Indian equity on which STT was paid.
Schedule FA, and what happens if you miss it
Every foreign holding goes into Schedule FA of your return, however small, and the schedule runs on the calendar year (January to December), not the financial year. Accounts, shares, dividends and sale proceeds all go in. The Black Money Act penalty for leaving it out is ₹10 lakh. Since 1 October 2024 that penalty does not apply if your foreign assets other than property total ₹20 lakh or less, and Budget 2026 also removed prosecution for those cases. The duty to report has not gone away. If you have missed it in past years, the one-time FAST-DS 2026 disclosure window is open until 31 December 2026.
Tax deductions for the US tax on dividends
The 25% the US withholds is not lost: India gives you credit for it against your own tax on that dividend. To claim it you file Form 67 before the end of the assessment year. Without a W-8BEN on file with your broker, the US withholds 30%, and the extra 5% is not creditable.
The rule most investors find out about too late. When a non-American dies holding more than $60,000 of US assets (US-listed shares and ETFs, wherever the account sits), the US can levy estate tax at rates that rise to 40%. India has no estate-tax treaty with the US, and the threshold is not indexed for inflation. Heirs may also have to deal with a US filing before the broker releases the shares.
Irish UCITS ETFs, Indian international mutual funds and GIFT City funds are generally outside this. For larger US portfolios, the choice of wrapper matters as much as the choice of shares.
Which route does what
The right mix depends on the amount, the time horizon, your tax slab and how much paperwork you want to handle. As a broad map:
Six common mistakes
- Sending a year's investment in one go above ₹10 lakh, and tying up 20% of the excess in TCS until your refund arrives.
- Forgetting Schedule FA, or filing it on the financial year instead of the calendar year.
- Skipping the W-8BEN or Form 67, and losing part of every dividend for good.
- Building a large US-listed portfolio without checking it against the $60,000 estate-tax threshold.
- Buying an India-listed international ETF without comparing its price with its iNAV.
- Leaving cash idle abroad beyond 180 days.
Frequently asked questions
Can I start a SIP in US stocks from India?
Yes, in two ways. Indian international mutual funds accept SIPs when they are open to fresh money, which varies by fund because of the industry's overseas investment limit. Most US stock apps also allow recurring purchases, each funded from money already sent under LRS. GIFT City funds do not offer SIPs; they take top-ups from about $500.
Is TCS an extra tax on investing abroad?
No. TCS is tax collected in advance. Above ₹10 lakh a year, the bank collects 20% of the excess, which shows in your Form 26AS. You can set it off against your income tax, ask your employer to adjust it against TDS, or claim it as a refund. The real cost is the cash tied up until then.
Do I pay tax in the US on gains from US stocks?
No. A resident Indian who is not present in the US for 183 days or more pays no US tax on capital gains. Dividends are taxed in the US at 25% if you have filed a W-8BEN, and at 30% if you have not. In India, both gains and dividends are taxed, with credit for the US tax on dividends.
Is the ₹1.25 lakh LTCG exemption available on US stocks?
No. The exemption applies only to listed Indian equity shares and equity funds on which STT was paid. Gains on US shares and ETFs held over 24 months are taxed at 12.5% from the first rupee, with no indexation.
Do I need to report a small US holding in my tax return?
Yes. Every foreign asset, however small, goes into Schedule FA for the calendar year. Since October 2024 the ₹10 lakh Black Money Act penalty does not apply if your foreign assets other than property total ₹20 lakh or less, but you still have to report them.
Does investing in an Indian international mutual fund use my LRS limit?
No. The fund house invests abroad under its own limit, so your $250,000 LRS limit and ₹10 lakh TCS threshold are untouched, and the holding does not go into Schedule FA.
Why hire a Foliyo Advisor?
- Unbiased
- No commissions, ever
- SEBI-registered RIA
- Best-in-class research
Related reading
Sources
- RBI: Liberalised Remittance Scheme FAQs
- Memorandum to the Finance Bill 2026 (TCS rates, Black Money Act, FAST-DS)
- Memorandum to the Finance (No. 2) Bill 2024 (capital gains rates, Section 50AA)
- IRS: estate tax for non-residents and treaty withholding rates
- PPFAS: taxation of its GIFT City outbound funds
- HDFC Bank: remittance fees and charges
- Platform pricing pages of INDmoney, Groww, Zerodha, Vested and Paasa, read on 29 October 2026
- Index, currency and fund figures: Foliyo market and fund data (Morningstar)
For information and education. Fees, limits and tax rules are as we found them on 29 October 2026 and change often; confirm them with the platform, your bank and your tax adviser before acting. Personal investment decisions depend on your circumstances.
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