Your First Step to Investing Globally

To know how to invest in global stocks, you should first know that these transactions are governed and controlled by FEMA, RBI regulations and the Liberalised Remittance Scheme (LRS). In the case of resident Indians, investment to diversify financial portfolios in bonds and stocks abroad is allowed under LRS. The only limitation is the cap on the amount you can invest, that is, up to the value of $250,000 for each financial year. Moreover, LRS only applies to a resident of India. NRIs are not limited to the $250,000 remittance amount and are able to invest without any limitations from their assets overseas.

Want to Buy US Stocks Like Apple or Tesla? Your Simple Guide to LRS and TCS!

The Liberalised Remittance Scheme (LRS) is an RBI policy that allows individual Indian residents to legally send up to USD 250,000 abroad every financial year to invest in US stocks, fund global education, or travel. Distributed as roughly ₹2+ crore per year, this limit allows you to seamlessly diversify your portfolio into global tech giants, ETFs, and foreign assets. Subject to the limits, tax laws and rates prescribed by RBI from time to time.

If you are an investor looking to fund your US stock account from India, understanding LRS limits and Tax Collected at Source (TCS) rules will help you manage your capital efficiently.

What Exactly is LRS and How Does it Impact You?

Think of LRS as your financial passport. The Reserve Bank of India uses this framework to track how much money leaves the country for personal uses. For equity investors, it controls the capital you send to your international brokerage account.

• Who Can Invest? Only individual residents (including minors with a guardian's signature) can use LRS. It cannot be used by corporates, partnership firms, or HUFs.
• Reinvesting Profits: You can freely hold and reinvest any dividends or capital gains you earn inside your US brokerage account. However, any uninvested cash sitting idle must be brought back to India within 180 days.
• Prohibited Trading: You can buy delivery-based stocks and ETFs. However, you are strictly banned from using these funds for overseas margin trading, short-selling, or foreign exchange speculation.

Budget Updates: TCS Rates for US Stock Investors

When you send money to your US stock account, your bank collects an upfront tax called Tax Collected at Source (TCS).

Following the implementation of major Budget changes, the annual tax-free threshold has been raised from ₹7 lakh to ₹10 lakh per financial year. This adjustment allows you to fund your global portfolio up to ₹10 lakh entirely tax-free.

For general investments, including purchasing US stocks and real estate, the current TCS breakdown is outlined below:

Real-World Example:

If you transfer ₹12 lakh from India to your US stock investment account in a single financial year:

• The first ₹10 lakh attracts 0% TCS.
• The remaining ₹2 lakh attracts 20% TCS = ₹40,000.
• Your bank processes a total deduction of ₹12,40,000, and ₹12 lakh lands in your brokerage account.

Key Points to Remember About TCS

• TCS is Not an Extra Tax Expense: It is an advance tax collection that is credited directly to your PAN profile. It appears on your Form 26AS, meaning you can use it to offset your final income tax liability or claim a full cash refund when filing your Income Tax Return (ITR).
• The Threshold Covers All LRS Spends: The ₹10 lakh tax-exempt limit is aggregated across all banking platforms you use. If you spend ₹6 lakh on an international vacation and then try to send ₹5 lakh to your US stock account, your total reaches ₹11 lakh, and the final ₹1 lakh will trigger TCS.
• PAN is Non-Negotiable: You must provide a valid Permanent Account Number (PAN) to execute any LRS remittance or open an international trading desk.

Start Investing Globally with Confidence

LRS provides Indian investors with a simple and regulated pathway to access some of the world's largest companies and diversify beyond domestic markets. By understanding the LRS limits and TCS provisions, you can plan your overseas investments efficiently and avoid unnecessary surprises during fund transfers.

Whether you're investing in global technology leaders, international ETFs, or building a long-term diversified portfolio, knowing these regulations helps you invest with confidence.

Disclaimer: This article is intended solely for educational and informational purposes and should not be construed as investment, tax, legal, accounting, or financial advice, or as an offer or solicitation to buy or sell any securities. Overseas investments are subject to FEMA, RBI regulations, applicable tax laws, eligibility requirements, and investment risks, including market, currency, liquidity, and geopolitical risks. LRS limits, TCS provisions, and other regulatory requirements may change from time to time. Investors should consult their financial, tax, or legal advisors before making investment decisions.

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