Kickstart 2021 By Buying Your Favourite US Stocks!
Explore Now
Investing Related

Tax Implications For Indian Residents Investing In The US Stock Market

Want to invest in US Stocks but don’t know what taxes you’ll pay? Read this to know more.
October 25, 2020

Schedule a call based on your convenience. And get an expert to help you invest.

Top 4 Reasons To Try Our Powerful Investment App!

  • High Quality MFs
  • Top Notch Stock Advisory
  • Expert Financial Advisors
  • Alternative Investments

The US markets have grown exponentially over the past 2 decades and currently have a whopping market cap of $36,258,650.9 million. When you compare the dollar to the Indian rupee, there’s only one clear winner. So people choose to invest in their favourite US brands to create wealth for their child’s university education abroad or to simply create a nest egg. 


But with every investment, comes taxes. And when it comes to taxes, it’s good to be sure of how much you’ll likely pay. So before you buy an Apple, Google, Microsoft, Tesla, or Netflix share, read this blog to know exactly what tax rules and regulations will apply to your US stock investments.


Fun Fact: Einstein did not understand taxes. He was an expert in theoretical physics. Read more about tax saving mistakes to avoid in 2020.


What Are The Tax Implications?


The tax rules and regulations are different for both countries. But fortunately, India and the US have a Double Tax Avoidance Agreement (DTAA) in place. This ensures that you don't pay a tax on the same income twice. Here is a list of the taxes you need to be aware of:


1. Tax on Dividends 


  • Flat tax @ 25% in the US deducted before you receive the dividends. 
  • Tax is also applicable to the dividends in India received in cash or if reinvested. 
  • DTAA allows you to offset the tax liability in India with the taxed money held in the US.


2. Capital Gains Tax


  • No capital gains tax in the US.
  • In India, Long Term Capital Gains tax applicable on stocks held for over 2 years. 
  • 20% plus all applicable fees and surcharges for LTCG.
  • Short Term Capital Gains applicable on stocks held for less than 2 years.
  • Tax rate according to investor’s slab for STCG.


Let’s assume you invest $1000 in the US markets. You receive $100 dividends. You earn a profit of $800. The amount you receive after paying:


  • Tax on $100 dividends @ 25% = $75
  • Dividend tax liability in India @ 40%: 60 - 25 = $35 [Tax paid in the US offsets the tax to be paid in India]
  • LTCG in India after 24 months at 20% = $640
  • STCG: Depends on your tax slab.


How Cube Wealth Can Help You?


When you invest in the US markets from India, you deal with 2 currencies. So naturally, there are FOREX implications to be mindful of along with brokerage charges, account maintenance charges, etc. There’s also the risk of currency fluctuations. 


But if you invest through an app like Cube, you can transfer money from your US Brokerage account in one go to avoid this risk. Cube is the first app to bring US advisory to India. Our advisory partner, award-winning RIA, Rick Holbrook, currently manages ~$130 million for HNIs. 


To invest in the best US stocks from India, speak to a wealth coach or Download the app today.

You can invest in your favourite US brands on your own using Cube. To try, start with as little as $1.


Shriram Shekhar
Shriram is a Consultant at CubeWealth. He has developed cutting edge IT products for over 2 years before turning to his passion for the written word. His love for philosophy, developing products, and empowering people through quality content is what got him to CubeWealth.

Top 4 Reasons To Try Our Powerful Investment App!

Schedule a call based on your convenience. And get an expert to help you invest.

  • High Quality Mutual Funds
  • Top Notch Stock Advisory
  • Expert Financial Advisors
  • Alternative Investments

Grow your money without wasting time

on stock picking, poring over excel sheets, financial news, analyzing market trends, tracking the Sensex, researching company fundamentals, comparing mutual funds, reading financial reports, trying to predict the future & losing your sanity!