📋 Route 4 of 5 · Tax
Tax on US stocks — resident, NRI, and US-NRI rules
Last verified: May 2026
Tax treatment of US stock gains depends entirely on your residency status — not where the company is listed, but where you are a tax resident. Three separate situations, three separate sets of rules.
🇮🇳 Resident Indians
- Long-term capital gains (LTCG), held 24+ months: 12.5% in India, post the July 2024 Budget simplification. No indexation. This applies to direct US stocks held via Vested / IBKR / etc.
- Short-term capital gains (STCG), held under 24 months: Taxed at your income slab rate (up to 30% + surcharge).
- Dividends — US withholding tax: US companies withhold 25% on dividends paid to non-US persons who have filed Form W-8BEN (reduced from the standard 30% under the India–US Double Taxation Avoidance Agreement, DTAA). This 25% is deducted before dividends reach your account.
- Claiming the withholding credit: File Form 67 in your Indian income tax return to claim the US withholding as a Foreign Tax Credit (FTC). This prevents double taxation — you claim 25% credit against your Indian tax liability on the same dividend income.
- Schedule FA disclosure: Resident Indians must disclose foreign assets annually in Schedule FA of ITR-2 or ITR-3. This includes the value of your US brokerage account holdings as of December 31 of the assessment year.
🌍 Non-US NRIs (UK, UAE, Canada, Singapore, Australia)
- India side: If you're a non-resident for Indian tax purposes, US stock gains are not taxed in India. No Schedule FA filing required (you're not resident here).
- Host country side: Tax is determined by your country of residence. UAE: no capital gains tax. UK: Capital Gains Tax (CGT) applies. Canada: 50% of gains included as income. Singapore: no CGT. Australia: 50% CGT discount for assets held 12+ months. Each country has its own filing obligations.
- Dividends: US withholding still applies at 25% (after W-8BEN), or lower if your host country has a stronger DTAA with the US (UAE DTAA, for example, may allow a lower rate — verify with your local tax advisor).
- Platform choice: For non-US NRIs, India-based platforms (Vested, INDmoney) are often not the optimal route — see the NRI rules page for platform eligibility by country.
🇺🇸 US-NRIs and US persons (in the US, or with US citizenship / green card)
- Don't use Indian platforms. If you're a US person (citizen, green card holder, or resident for US tax purposes), using an India-based platform for US stocks adds complexity with zero benefit. Use Schwab, Fidelity, or Robinhood directly.
- Reporting US stock gains: Report on Schedule D in your US tax return. Standard US capital gains rules apply (long-term: 0%, 15%, or 20% depending on income; short-term: ordinary income rate).
- PFIC (Passive Foreign Investment Company): PFIC rules apply to certain foreign funds — specifically Indian mutual funds and ETFs held by US persons. PFIC does NOT apply to US stocks you hold directly (Apple, Microsoft, S&P 500 ETFs). PFIC is the primary reason US persons should not hold Indian MF FOFs. If you're a US person holding Indian mutual funds or ETFs, consult a US tax attorney.
- FBAR: If you hold a foreign financial account (including a foreign brokerage account) with more than $10,000 at any point in the year, you must file an FBAR (FinCEN 114). Applies to IBKR India or Vested accounts held by US persons.
- W-8BEN is not for you. W-8BEN certifies you are a non-US person. US persons file W-9 instead. If you're a US person who has incorrectly filed W-8BEN with an Indian platform, you may have under-withheld tax — speak to a tax advisor.
What is Form W-8BEN? A US IRS form that certifies you are not a US person for tax purposes. All Indian-based US stock platforms require you to file it. It reduces US dividend withholding from 30% to 25% under the India–US DTAA, and ensures you're taxed under the non-resident regime in the US. It expires after 3 years and needs to be re-filed. Your platform usually handles this digitally during onboarding.
One thing to avoid — residency status confusion: If you become an NRI mid-year (e.g., leave India for a job abroad on June 1), your Indian tax residency changes for that financial year. US stock gains made while you were resident and while you were non-resident are treated differently. Don't assume one rule applies to the whole year — consult a CA who handles cross-border taxation before you sell.