TCS on money sent abroad to buy US stocks from India is 20%, but only on the part of your remittances above ₹10 lakh in a financial year, so ₹50,000 a month, ₹6,00,000 a year, attracts none. Any TCS collected is your own income tax paid early, set against your tax through salary TDS or your return and refunded if it exceeds what you owe. An international mutual fund bought in rupees needs no LRS and collects no TCS.

When is TCS charged on money sent abroad for shares?

Buying foreign shares directly means sending rupees out under the RBI's Liberalised Remittance Scheme (LRS), which allows up to US$2,50,000 a financial year. The bank collects TCS as it sends the money, under section 394(1) of the Income-tax Act, 2025 (section 206C(1G) of the 1961 Act).

For FY 2026-27 the rate for investment is 20% of the amount by which your LRS remittances for the year exceed ₹10,00,000; the line was ₹7 lakh until 31 March 2025. The only cost of TCS on foreign remittance is the cash held until it is set off.

What does Leela's ₹50,000 a month cost on each route?

Leela earns ₹40 lakh CTC, about ₹2,29,100 a month in hand under the new regime; her taxable salary, about ₹36 lakh, is in the 30% slab (31.2% with cess), below the ₹50 lakh surcharge line. She wants ₹50,000 a month in US equities, ₹6,00,000 a year.

Her ₹6,00,000 is under ₹10 lakh, so TCS is nil. The cost is the bank's: in 2026 markups ran from nil at one or two banks to about 2% or more over the market rate, plus a ₹500 to ₹1,500 transfer fee. At an assumed 1% markup and a ₹1,000 fee plus 18% GST, twelve monthly transfers cost ₹6,000 markup + 12 × ₹1,180 + 12 × ₹90 GST on the conversion = ₹21,240, 3.5%; four quarterly ones of ₹1,50,000 cost ₹6,000 + 4 × ₹1,180 + 4 × ₹225 = ₹11,620, 1.9%.

An international fund of funds takes her rupees by SIP, with no LRS, TCS or conversion fee of her own; its costs sit in the expense ratio. SEBI caps overseas investment at US$7 billion for all fund houses together and US$1 billion for each (circular of June 2021). With it nearly used, most international funds of funds stopped taking new SIPs or lump sums in 2026; existing SIPs usually carry on, though at least one fund house paused those too. Listed international ETFs stay open on the exchange, but in October 2026 some traded 10% or more above their holdings' value.

Direct US shares (LRS) International fund of funds International ETF listed in India
TCS on ₹6 lakh a year Nil, under ₹10 lakh Nil, no LRS Nil, no LRS
Long-term gain After 24 months, 12.5% After 24 months, 12.5% After 12 months, 12.5%
Schedule FA Every year No No

Every route carries the same currency risk: a weaker rupee lifts her return and a stronger one cuts it.

What if she sends ₹15 lakh, and how does the TCS come back?

Say Leela adds ₹9,00,000 of savings in March 2027, taking the year's remittances to ₹15,00,000. TCS is 20% of the ₹5,00,000 above the line, ₹1,00,000, collected on the transfer that crosses it.

That TCS shows against her PAN in Form 168, earlier Form 26AS, as Form 26AS vs AIS explains.

She can declare it to her employer on Form 122 (it replaced Forms 12B and 12BAA in April 2026), so the employer deducts less. In March only one month of salary TDS, about ₹57,100, is left: the employer takes that off, and the other ₹42,900 comes back as a refund after her return, due by 31 July 2027.

How are gains and dividends taxed on each route?

US shares are not listed on an Indian exchange, so Indian tax treats them as unlisted: long-term after 24 months at 12.5% without indexation. Short-term gains on every route go at her slab. The fund and ETF rules in the table are explained in mutual fund capital gains tax; none of the three gets the ₹1.25 lakh yearly exemption Indian equity has.

The US withholds 25% of a dividend paid to an Indian resident under the India-US tax treaty, once she has given the broker a W-8BEN form (30% without it). India taxes the full dividend at her slab and credits the 25% through Form 44 (Form 67 before tax year 2026-27), due within 12 months of the tax year's end. She pays 31.2% minus 25%, about 6.2%; the 25% slab leaves about 1%, and the 20% slab nothing, with the extra 4.2% lost because India credits no more than its own tax.

Do US shares go in Schedule FA every year?

Directly held foreign shares, and cash left with the overseas broker, go in Schedule FA of her return every year she holds them. Leaving them out can cost a ₹10 lakh penalty under the Black Money Act, 2015; since 1 October 2024 it does not apply where foreign assets other than immovable property total ₹20 lakh or less, a line her ₹50,000 a month reaches in about three years, sooner if the shares rise.

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Frequently asked questions

No. TCS is collected only on money going out under LRS; money coming back is not subject to it, though any gain on the sale is taxed in your return.
Per person. Each resident has their own ₹10,00,000 TCS line and US$2,50,000 LRS limit, so a spouse remitting their own money does not use yours. If you gift your spouse the money, the shares are theirs but the gains on them are added to your income.
A resident who holds any asset outside India cannot use ITR-1, so a salaried person with US shares files ITR-2 and fills in Schedule FA, even in a year with no sale and no dividend. Schedule FA has covered the calendar year, so the return for tax year 2026-27, due by July 2027, is expected to list what you held from January to December 2026.

This is general information for salaried individuals in India, not personalised financial advice.