How are U.S. stocks taxed for Indian investors?
Indian resident investors in U.S. stocks may have tax implications in both India and the U.S. The tax treatment primarily depends on whether the income is from capital gains or dividends. U.S. tax treaties can also affect how certain U.S.-source income is taxed.
How are capital gains from U.S. stocks taxed?
Capital gains from the sale of U.S. stocks are generally not taxed in the U.S. for an Indian resident investor. For taxation in India:
- U.S. stocks held for 24 months or less: The gains are treated as Short-Term Capital Gains (STCG) and taxed at the investor’s applicable income-tax slab rate.
- U.S. stocks held for more than 24 months: The gains are treated as Long-Term Capital Gains (LTCG) and taxed at 12.5% without indexation, subject to applicable Indian tax provisions.
How are dividends from U.S. stocks taxed?
Dividends received from U.S. stocks are generally subject to 25% withholding tax in the U.S. under the India–U.S. DTAA, subject to applicable treaty conditions. The gross dividend is also taxable in India at your applicable income tax rate. The tax withheld in the U.S. can generally be claimed as a Foreign Tax Credit (FTC) against your Indian tax liability, subject to applicable tax rules.
Note: Tax treatment may vary based on your residential status and individual circumstances. Please consult a qualified tax advisor for specific guidance.FAQ
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- What are the brokerage fees and other charges applicable for Geojit global investments?
- What is Tax Collected at Source (TCS) on global investments?
- What is the Double Tax Avoidance Agreement (DTAA) between India and the U.S.?
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