With platforms like Vested, INDmoney, and Groww, investing in global giants like Apple, Tesla, and Google has become very simple for Indian residents. However, cross-border investing comes with distinct tax responsibilities. Failing to disclose foreign shares can result in severe penalties under the Black Money Act. Let's explore the US stock taxation framework in India.

The Mandatory Schedule FA (Foreign Assets) Disclosure

As a resident taxpayer in India, you are legally required to disclose all foreign assets, including global shares, under Schedule FA of your tax return.

• No Exemption Limit: There is no minimum limit. Even if you own fractional shares worth ₹100, disclosure is mandatory.
• Form Disqualification: Disclosing foreign assets automatically disqualifies you from using the simple ITR-1 form. You must file ITR-2 (for capital gains) or ITR-3 (if you are a business/professional trader).

Taxation of US Stock Income

Your investments generate income in two ways:

1. Dividends: US companies deduct a flat 25% withholding tax on dividends. In India, this dividend is added to your income and taxed at your applicable slab rate.
2. Capital Gains:
   • If held for more than 24 months, gains are classified as Long-Term Capital Gains (LTCG) and taxed at 20% with indexation benefits.
   • If held for 24 months or less, gains are Short-Term Capital Gains (STCG) and taxed at your normal slab rate.

Avoiding Double Taxation (DTAA & Form 67)

To avoid being taxed twice on dividends (once in the US and once in India), you can claim a Foreign Tax Credit (FTC). Under the Double Taxation Avoidance Agreement (DTAA) between India and the US, you must file Form 67 before filing your ITR to claim credit for the US tax withheld.