India-based investors can remit up to $250,000 a year under the LRS, but TCS generally starts on most overseas investment remittances above ₹10 lakh from 1 April 2025.
Investors in India buying US stocks need to track two separate limits under the Liberalised Remittance Scheme: the annual remittance ceiling and the tax-collection threshold. According to the Reserve Bank of India’s framework, resident individuals can send up to $250,000 a financial year, running from 1 April to 31 March, for permitted overseas transactions, including foreign investments. That cap is cumulative, so money moved abroad for US shares counts alongside other eligible remittances made during the same year.
The tax impact begins at a different point. From 1 April 2025, Tax Collected at Source generally applies at 20% on the amount above ₹10 lakh in a financial year for most LRS remittances other than specified education and medical payments. Industry and tax guidance published by RBL Bank, the Income Tax Department and several advisory firms says overseas investments, including purchases of US-listed shares, usually fall within that bracket. In practical terms, if an investor sends ₹12 lakh abroad for US stocks and has no other relevant remittances, the TCS would typically apply to the extra ₹2 lakh, creating a collection of ₹40,000.
That levy is not a separate final tax on the investment. The amount collected at source is generally available as a credit against the investor’s income-tax bill when the return is filed, subject to the normal rules and proper reflection in tax records. If the TCS paid is higher than the final liability, the excess can usually be claimed back as a refund, though investors may feel the short-term cash-flow pressure because the money is collected up front and recovered later through the tax-filing process.
For anyone planning overseas equity purchases, the key is not to confuse the remittance cap with the tax-collection trigger. The $250,000 LRS limit governs how much can be sent abroad in a year, while the ₹10 lakh threshold determines when TCS starts to bite on most non-exempt remittances. Investors should also budget for brokerage fees, foreign-exchange conversion costs and any other charges, and keep remittance records handy so the tax credit can be matched correctly later.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
