Capital gains tax on US stocks: Short-Term vs long-term for Indians
More Indians now invest directly in US stocks through platforms like Winvesta, Vested, and INDmoney. Apple, Tesla, and Nvidia sit in portfolios across Mumbai, Bengaluru, and Chennai. Yet many investors remain unclear about one critical detail: how India taxes profits from these holdings.
The tax treatment of US stocks differs sharply from that of Indian equities. Your favourite NYSE or NASDAQ stock follows a completely different set of rules under the Income Tax Act. Getting this wrong can lead to incorrect filings, missed deductions, or penalty notices from the tax department.
This guide breaks down everything you need to know about capital gains tax on US stocks in India — from holding periods and tax rates to currency conversion and ITR reporting.
Why are US stocks treated as "unlisted" shares in India
The Indian Income Tax Act defines "listed securities" as shares listed on recognised Indian stock exchanges, such as the BSE and the NSE. Stocks traded onthe NYSE or NASDAQ do not qualify under this definition. As a result, the tax department classifies all US stocks as unlisted shares for Indian residents.
This single classification drives the entire tax framework. It determines the holding period threshold, the applicable tax rate, and even the exemptions you can or cannot claim. The ₹1.25 lakh LTCG exemption under Section 112A that applies to Indian equities does not extend to US stocks. Every rupee of long-term gain from US stocks is fully taxable.
The 24-month holding period for US stocks in India
The 24-month holding period for US stocks in India is the dividing line between short-term and long-term gains. If you hold a US stock for more than 24 months from the date of purchase, any profit qualifies as a long-term capital gain. If you sell within 24 months, the profit is a short-term capital gain.
The Fi reduced the threshold from 36 months to 24 months on 23 July 2024. Before 23 July, 2024, investors had to hold foreign shares for more than three years to qualify for long-term capital gains treatment. The current rule is more investor-friendly.
The holding period begins on the trade date listed on your broker's contract note. It does not start from the settlement date when shares appear in your account. CBDT Circular No. 704 clearly confirmed this position.
STCG tax at slab rate on US stocks
Short-term capital gains on US stocks are not subject to any special concessional rate. STCG tax at the slab rate on US stocks means the profit is added to your total income and taxed at whatever bracket you fall into.
Under the new tax regime for FY 2025–26, income above ₹24 lakh faces a 30% tax rate. Add surcharge and 4% health and education cess, and the effective STCG rate can reach 39% or higher for high earners. Under the old regime, the maximum effective rate was 42.74%.
This makes the holding period decision financially significant. Selling a US stock one month before the 24-month mark could cost you substantially more in taxes compared to waiting a few extra weeks.
Here is a quick comparison of rates for FY 2025–26:
| Type | Tax rate | Exemption available? |
|---|---|---|
| STCG (≤ 24 months) | Your income tax slab rate | No |
| LTCG (> 24 months) | 12.5% flat | No (₹1.25L exemption does not apply) |
| Health & education cess | 4% on tax + surcharge | — |
LTCG at 12.5% on US stocks without indexation
If you hold a US stock for more than 24 months, the profit is taxed at a flat LTCG 12.5% on US stocks in India under Section 112. The Union Budget 2026 confirmed that this rate remains unchanged for FY 2026–27.
The Finance Act, 2024, introduced two major changes affecting this rate. First, it lowered the LTCG rate from 20% to 12.5% for most capital assets. Second, it removed the indexation benefit entirely for shares. You cannot adjust your purchase cost for inflation before computing the gain.
The maximum LTCG surcharge is capped at 15%, even for incomes above ₹5 crore. This brings the effective LTCG rate to approximately 14.95% at the highest bracket (12.5% × 1.15 surcharge × 1.04 cess).
For most investors in the 20–30% slab, the 12.5% LTCG rate delivers meaningful savings compared to short-term taxation. This tax difference makes the 24-month holding threshold worth planning around.
Cost basis calculation for US stocks in India
The cost basis calculation for US stocks in India follows the FIFO (First In, First Out) method. When you sell shares of a stock you bought at different times, the shares purchased earliest are deemed sold first.
This rule applies per brokerage account. If you hold the same stock in two different accounts, each account maintains its own FIFO queue independently.
Here is how a typical cost basis calculation works:
Example: Ravi bought 10 shares of Apple at $150 each in March 2023. He bought another 10 shares at $180 each in September 2023. In April 2025, he sells 15 shares at $210 each.
Under FIFO, the first 10 shares sold carry a cost of $150 each, and the next 5 carry a cost of $180 each. His total cost basis for the 15 shares is $2,400 (10 × $150 + 5 × $180). His total sale proceeds are $3,150 (15 × $210). The capital gain in dollar terms is $750.
Currency conversion and the SBI TT buying rate
Indian tax law requires all foreign income to be reported in Indian rupees. Rule 115 of the Income Tax Rules specifies exactly which exchange rate to use for this conversion.
You must use the SBI TT buying rate (Telegraphic Transfer Buying Rate) on the last day of the month immediately preceding the month of sale—I 15 August, US stocks on 15 August 2025, you 31 July, SBI TTBR as of 31 July 2025.
The key insight here is that a single exchange rate applies to both the purchase cost and the sale proceeds. You compute the entire capital gain in US dollars first, then multiply by that one SBI TTBR to arrive at the taxable gain in rupees.
Continuing Ravi's example: His $750 gain from the Apple sale needs to be converted. On 31 March 2025 (the last day of the month before the April 2025 sale), the SBI TTBR is ₹85.50. His taxable capital gain in rupees is ₹ 64,125, calculated as $750 × ₹85.50.
Since all 10 shares from March 2023 have been held for more than 24 months, the gain on those shares (10 × $60 = $600 → ₹51,300) qualifies as LTCG at 12.5%. The remaining 5 shares from September 2023 have been held for about 19 months, so the gain on those (5 × $30 = $150 → ₹12,825) is STCG taxed at the slab rate.
This single-rate method also means that currency gains are not separately taxed. If the stock price stays flat but the rupee depreciates, your dollar gain is zero. Zero multiplied by any TTBR still gives zero taxable gain. There is no separate forex taxation event.
You can learn more about the broader tax framework, including dividend taxation and DTAA benefits, in this detailed guide on tax implications for Indian residents investing in the US stock market.
Reporting US stock gains in your ITR
Indian residents with US stock investments must file ITR-2 or ITR-3. You cannot use the simpler ITR-1 or ITR-4 forms if you hold foreign assets or earn foreign income.
Four schedules need your attention during filing:
Schedule CG captures all capital gains. Report each US stock sale separately, with the purchase date, sale date, INR-converted purchase cost, and INR-converted sale proceeds. Split entries into STCG and LTCG sections based on the 24-month holding period.
Schedule FA requires the mandatory disclosure of all foreign assets you held during the calendar year (January to December). This follows the calendar year, not the financial year. Even if you did not sell a single share, you must report every US stock holding here.
Schedule FSI captures foreign-source income, such as dividends from US companies.
Schedule TR lets you claim the Foreign Tax Credit for US taxes withheld on dividends. File Form 67 with supporting documents like the 1042-S form from your US broker to claim this credit.
Non-disclosure of foreign assets attracts severe penalties under the Black Money Act, 2015. For assets exceeding ₹20 lakh, the penalty is ₹10 lakh, with potential prosecution and imprisonment up to 7 years.
If you are also navigating the remittance process for funding your US brokerage account, this guide on LRS for US stock investing covers the limits, TCS rules, and Form A2 requirements.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
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Table of Contents
More Indians now invest directly in US stocks through platforms like Winvesta, Vested, and INDmoney. Apple, Tesla, and Nvidia sit in portfolios across Mumbai, Bengaluru, and Chennai. Yet many investors remain unclear about one critical detail: how India taxes profits from these holdings.
The tax treatment of US stocks differs sharply from that of Indian equities. Your favourite NYSE or NASDAQ stock follows a completely different set of rules under the Income Tax Act. Getting this wrong can lead to incorrect filings, missed deductions, or penalty notices from the tax department.
This guide breaks down everything you need to know about capital gains tax on US stocks in India — from holding periods and tax rates to currency conversion and ITR reporting.
Why are US stocks treated as "unlisted" shares in India
The Indian Income Tax Act defines "listed securities" as shares listed on recognised Indian stock exchanges, such as the BSE and the NSE. Stocks traded onthe NYSE or NASDAQ do not qualify under this definition. As a result, the tax department classifies all US stocks as unlisted shares for Indian residents.
This single classification drives the entire tax framework. It determines the holding period threshold, the applicable tax rate, and even the exemptions you can or cannot claim. The ₹1.25 lakh LTCG exemption under Section 112A that applies to Indian equities does not extend to US stocks. Every rupee of long-term gain from US stocks is fully taxable.
The 24-month holding period for US stocks in India
The 24-month holding period for US stocks in India is the dividing line between short-term and long-term gains. If you hold a US stock for more than 24 months from the date of purchase, any profit qualifies as a long-term capital gain. If you sell within 24 months, the profit is a short-term capital gain.
The Fi reduced the threshold from 36 months to 24 months on 23 July 2024. Before 23 July, 2024, investors had to hold foreign shares for more than three years to qualify for long-term capital gains treatment. The current rule is more investor-friendly.
The holding period begins on the trade date listed on your broker's contract note. It does not start from the settlement date when shares appear in your account. CBDT Circular No. 704 clearly confirmed this position.
STCG tax at slab rate on US stocks
Short-term capital gains on US stocks are not subject to any special concessional rate. STCG tax at the slab rate on US stocks means the profit is added to your total income and taxed at whatever bracket you fall into.
Under the new tax regime for FY 2025–26, income above ₹24 lakh faces a 30% tax rate. Add surcharge and 4% health and education cess, and the effective STCG rate can reach 39% or higher for high earners. Under the old regime, the maximum effective rate was 42.74%.
This makes the holding period decision financially significant. Selling a US stock one month before the 24-month mark could cost you substantially more in taxes compared to waiting a few extra weeks.
Here is a quick comparison of rates for FY 2025–26:
| Type | Tax rate | Exemption available? |
|---|---|---|
| STCG (≤ 24 months) | Your income tax slab rate | No |
| LTCG (> 24 months) | 12.5% flat | No (₹1.25L exemption does not apply) |
| Health & education cess | 4% on tax + surcharge | — |
LTCG at 12.5% on US stocks without indexation
If you hold a US stock for more than 24 months, the profit is taxed at a flat LTCG 12.5% on US stocks in India under Section 112. The Union Budget 2026 confirmed that this rate remains unchanged for FY 2026–27.
The Finance Act, 2024, introduced two major changes affecting this rate. First, it lowered the LTCG rate from 20% to 12.5% for most capital assets. Second, it removed the indexation benefit entirely for shares. You cannot adjust your purchase cost for inflation before computing the gain.
The maximum LTCG surcharge is capped at 15%, even for incomes above ₹5 crore. This brings the effective LTCG rate to approximately 14.95% at the highest bracket (12.5% × 1.15 surcharge × 1.04 cess).
For most investors in the 20–30% slab, the 12.5% LTCG rate delivers meaningful savings compared to short-term taxation. This tax difference makes the 24-month holding threshold worth planning around.
Cost basis calculation for US stocks in India
The cost basis calculation for US stocks in India follows the FIFO (First In, First Out) method. When you sell shares of a stock you bought at different times, the shares purchased earliest are deemed sold first.
This rule applies per brokerage account. If you hold the same stock in two different accounts, each account maintains its own FIFO queue independently.
Here is how a typical cost basis calculation works:
Example: Ravi bought 10 shares of Apple at $150 each in March 2023. He bought another 10 shares at $180 each in September 2023. In April 2025, he sells 15 shares at $210 each.
Under FIFO, the first 10 shares sold carry a cost of $150 each, and the next 5 carry a cost of $180 each. His total cost basis for the 15 shares is $2,400 (10 × $150 + 5 × $180). His total sale proceeds are $3,150 (15 × $210). The capital gain in dollar terms is $750.
Currency conversion and the SBI TT buying rate
Indian tax law requires all foreign income to be reported in Indian rupees. Rule 115 of the Income Tax Rules specifies exactly which exchange rate to use for this conversion.
You must use the SBI TT buying rate (Telegraphic Transfer Buying Rate) on the last day of the month immediately preceding the month of sale—I 15 August, US stocks on 15 August 2025, you 31 July, SBI TTBR as of 31 July 2025.
The key insight here is that a single exchange rate applies to both the purchase cost and the sale proceeds. You compute the entire capital gain in US dollars first, then multiply by that one SBI TTBR to arrive at the taxable gain in rupees.
Continuing Ravi's example: His $750 gain from the Apple sale needs to be converted. On 31 March 2025 (the last day of the month before the April 2025 sale), the SBI TTBR is ₹85.50. His taxable capital gain in rupees is ₹ 64,125, calculated as $750 × ₹85.50.
Since all 10 shares from March 2023 have been held for more than 24 months, the gain on those shares (10 × $60 = $600 → ₹51,300) qualifies as LTCG at 12.5%. The remaining 5 shares from September 2023 have been held for about 19 months, so the gain on those (5 × $30 = $150 → ₹12,825) is STCG taxed at the slab rate.
This single-rate method also means that currency gains are not separately taxed. If the stock price stays flat but the rupee depreciates, your dollar gain is zero. Zero multiplied by any TTBR still gives zero taxable gain. There is no separate forex taxation event.
You can learn more about the broader tax framework, including dividend taxation and DTAA benefits, in this detailed guide on tax implications for Indian residents investing in the US stock market.
Reporting US stock gains in your ITR
Indian residents with US stock investments must file ITR-2 or ITR-3. You cannot use the simpler ITR-1 or ITR-4 forms if you hold foreign assets or earn foreign income.
Four schedules need your attention during filing:
Schedule CG captures all capital gains. Report each US stock sale separately, with the purchase date, sale date, INR-converted purchase cost, and INR-converted sale proceeds. Split entries into STCG and LTCG sections based on the 24-month holding period.
Schedule FA requires the mandatory disclosure of all foreign assets you held during the calendar year (January to December). This follows the calendar year, not the financial year. Even if you did not sell a single share, you must report every US stock holding here.
Schedule FSI captures foreign-source income, such as dividends from US companies.
Schedule TR lets you claim the Foreign Tax Credit for US taxes withheld on dividends. File Form 67 with supporting documents like the 1042-S form from your US broker to claim this credit.
Non-disclosure of foreign assets attracts severe penalties under the Black Money Act, 2015. For assets exceeding ₹20 lakh, the penalty is ₹10 lakh, with potential prosecution and imprisonment up to 7 years.
If you are also navigating the remittance process for funding your US brokerage account, this guide on LRS for US stock investing covers the limits, TCS rules, and Form A2 requirements.
Disclaimer: The views and recommendations made above are those of individual analysts or brokerage companies, and not of Winvesta. We advise investors to check with certified experts before making any investment decisions.
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