LRS for US stock investing: everything Indians need to know

You've opened a Winvesta account. You're ready to buy Tesla or Apple shares. But your first remittance just failed.

Your bank wants Form A2. They're asking about LRS limits. Someone mentions TCS. You're confused.

Here's what's happening: Every rupee you send abroad goes through the Liberalised Remittance Scheme. Miss one rule, your money gets stuck. Understand it properly, and investing becomes smooth.

This isn't another generic LRS explainer. This is specifically for Indians buying US stocks. Real scenarios. Actual numbers. No jargon.

What is LRS, and why does it matter for US stock investors

The Liberalised Remittance Scheme lets Indian residents send up to $250,000 abroad each financial year. The Reserve Bank of India started it in 2004.

Think of LRS as your passport for money. Just like you need a passport to travel abroad, your money needs LRS approval to leave India.

For US stock investors, LRS controls three things:

• How much you can invest (the $250,000 limit)
• How you send money (through authorised dealer banks)
• What you must report (Form A2, tax declarations)

Without LRS, you can't buy US stocks legally. It's that simple.

How LRS changed over time

When LRS launched in 2004, the limit was just $25,000 per year. That's ₹10.5 lakh at 2004 exchange rates.

The government gradually increased it:

• 2004: $25,000
• 2007: $50,000
• 2013: $200,000
• 2015: $250,000 (current limit)

This shows India opening up to global investing. More Indians can now diversify into the US markets.

Your $250,000 annual limit explained

You get $250,000 per financial year. That's April 1 to March 31.

The limit covers ALL foreign remittances:

• US stock investments
• International vacations
• Foreign education fees
• Gift to relatives abroad
• Medical treatment overseas

Example: Priya from Bangalore invested $80,000 in US stocks in May. Her son's US college fee is $50,000 in August. She plans a European trip costing $5,000 in December.

Total used: $135,000
Remaining: $115,000 for the rest of the financial year.

The limit tracks your PAN number. Change banks mid-year? Doesn't matter. All your remittances count toward the same $250,000 cap.

What happens when the year resets

April 1 arrives. Your limit resets to $250,000. Yesterday's balance doesn't carry forward.

Used only $100,000 last year? The remaining $150,000 disappears. You can't save it for next year.

Crossed $230,000 in March and want to invest more? Wait until April 1. Fresh $250,000 becomes available.

Family limits work individually

Four people in your family? That's potentially $1 million combined ($250,000 × 4).

Each family member gets their own $250,000 limit:

• You: $250,000
• Spouse: $250,000
• Adult children: $250,000 each
• Minor children: $250,000 each

Yes, even a 5-year-old has a separate LRS limit. The parent signs Form A2 on their behalf.

But you can't pool money for joint investments. If you and your spouse want to buy a US property together, each must remit separately from their accounts.

Step-by-step: how to remit money for US stocks

Documents you need

Start with these three:

• PAN card (mandatory)
• Bank account (where money sits)
• KYC documents (Aadhaar, passport, address proof)

Your bank already has most of these. Check if your PAN links to your Aadhaar. Unlinking causes delays.

Filling Form A2

Form A2 is your LRS declaration. Banks won't process remittances without it.

The form asks for:

• Purpose code (S0001 for equity investments)
• Amount in USD
• Beneficiary bank details (Winvesta provides this)
• Source of funds (salary, business income, savings)

Critical mistake people make: Writing wrong purpose codes. S0001 is specifically for buying foreign stocks. Other investments use different codes.

Most banks offer online Form A2 submission now. HDFC, ICICI, Axis all have digital processes.

The actual remittance process

Log in to net banking or visit your branch:

Option 1 - Online (most common)

1. Select "Overseas Remittance" or "Wire Transfer"
2. Choose purpose as "Investment in shares"
3. Fill beneficiary details (Winvesta's US bank account)
4. Upload Form A2
5. Submit

Processing time: 2-5 business days

Option 2 - Branch visit

1. Fill the Form A2
2. Provide beneficiary bank details
3. Bank officer processes the remittance
4. Collect the transaction reference number

Processing time: 3-7 business days

Costs involved in remitting

Banks charge for LRS remittances. These aren't hidden fees but you should know them:

Wire transfer charges: ₹250 to ₹1,500 per transaction.
Forex markup: 0.25% to 2% above interbank rates.
Swift charges: ₹500 to ₹1,000 (sometimes charged by intermediary banks)

Example: Sending $10,000

• Wire fee: ₹750
• Forex markup (1%): ₹835 (at ₹83.5 per dollar)
• Total cost: ₹1,585

Some banks, such as ICICI and Axis, offer preferential rates for large remittances. Negotiate if sending over $50,000.

TCS on LRS: what you actually pay

Tax Collected at Source trips up most first-time investors. Here's what really happens.

Budget 2025 increased the TCS-free threshold from ₹7 lakh to ₹10 lakh per year.

How TCS works for stock investments

Send up to ₹10 lakh abroad: Zero TCS Send above ₹10 lakh: 20% TCS on the amount exceeding ₹10 lakhs

The 20% applies ONLY to amounts over ₹10 lakh, not your entire remittance.

Example 1: Rajesh sends ₹8 lakh for US stocks TCS: ₹0

Example 2: Meera sends ₹15 lakh for US stocks TCS: 20% of ₹5 lakh (₹15L - ₹10L) = ₹1 lakh

She must pay ₹16 lakh total (₹15L investment + ₹1L TCS)

Getting your TCS back

TCS isn't a tax. It's an advanced collection.

When filing your ITR:

1. Check Form 26AS (shows TCS deducted)
2. Claim it against your total tax liability
3. If you owe less tax, get a refund

Example: Meera paid ₹1 lakh TCS. Her annual tax liability is ₹60,000. She gets ₹40,000 refunded.

Most people in the 30% tax bracket adjust TCS completely against their taxes.

Multiple remittances in one year

TCS tracks your total LRS usage per financial year, not per transaction.

Example: Amit's remittance timeline

• June: ₹6 lakh (no TCS)
• September: ₹3 lakh (no TCS, total ₹9L)
• January: ₹5 lakh (20% TCS on ₹4L)

Total remittance: ₹14 lakh TCS paid: ₹80,000 (on ₹4L above ₹10L)

Banks track this automatically using your PAN.

What you can and cannot do under LRS

Allowed investments in US markets

Buy these freely under LRS:

• Individual US stocks (Apple, Tesla, Microsoft)
• US ETFs (VOO, SPY, QQQ)
• US mutual funds
• ADRs of foreign companies
• Corporate bonds listed on US exchanges
• REITs trading on US stock exchanges

Platforms like Winvesta give you access to 11,000+ US stocks and ETFs. All qualify under LRS.

Strictly prohibited uses

Don't try these - banks will reject your remittance:

Margin trading: Borrowing money from US brokers to buy more stocks. Derivatives on foreign exchanges: Options, futures, CFDs trading. Cryptocurrencies: Bitcoin, Ethereum purchases (still restricted).
Lottery tickets or gambling: Any speculative betting.
Banned magazines or content: RBI-specified restricted items.

Some investors try clever workarounds. They fail. Banks verify purpose codes strictly.

The grey area: options and futures

Can you trade US stock options through Winvesta or other platforms?

Technically, derivative trading on foreign exchanges falls outside LRS. But if your platform offers options and it's structured as a direct investment (not margin-based), some banks process it.

Check with your bank before remitting for options trading. Get written confirmation. Don't assume.

Tax implications every investor must know

How US stock gains get taxed in India

India taxes your worldwide income. That includes US stock profits.

Long-term capital gains (LTCG):

• Holding period: More than 24 months
• Tax rate: 12.5% (no indexation benefit)

Short-term capital gains (STCG):

• Holding period: Less than 24 months
• Tax rate: Your income tax slab rate (up to 30%)

Example: You bought Apple shares for $10,000. Sold after 3 years for $15,000. Profit is $5,000 (₹4.17 lakh at ₹83.5/USD).

Tax: 12.5% of ₹4.17L = ₹52,125

Notice something? The US stock holding period is 24 months (not 12 like Indian stocks). RBI treats them as unlisted foreign assets.

Dividend taxation

US companies pay dividends. Two countries want to tax them:

US withholding tax: 25% automatically deducted.
Indian income tax: Added to your taxable income.

But India and the US have a tax treaty (DTAA - Double Taxation Avoidance Agreement). You get credit for US taxes paid.

Example: Google pays you $100 dividend.

• US deducts 25% = $25 (you receive $75)
• In India, you show $100 as income
• Your tax rate is 30% = $30 tax
• You get $25 credit for US tax
• Additional Indian tax = $5

Effectively, you pay the higher of the two rates.

Filling Form W-8BEN

Before receiving US dividends, complete Form W-8BEN with your broker.

This form:

• Declares you're an Indian tax resident
• Claims DTAA benefits
• Reduces US withholding from 30% to 25%

Winvesta helps you complete this during account opening. It's valid for 3 years.

Reporting in your ITR

Schedule FA (Foreign Assets) is mandatory. Report:

• All US stocks held (regardless of profit/loss)
• Value as of March 31
• Peak value during the year
• Income earned (dividends, capital gains)

Not reporting attracts a penalty under Black Money Act. ₹10 lakh penalty per violation.

Use Schedule FSI (Foreign Source Income) to report dividends and capital gains.

Common mistakes that cost investors money

Mistake 1: Remitting without checking annual usage

Vishal already sent $180,000 for business expenses. He forgot when remitting $100,000 for US stocks.

Total: $280,000 (exceeds $250,000 limit)

The bank rejected the transaction. He had to wait until April for the limit reset. Tesla shares jumped 15% in that time.

Fix: Track all LRS usage in a spreadsheet. Include vacation spending on international credit cards.

Mistake 2: Wrong beneficiary bank details

Incorrect SWIFT code or account number? Your money reaches the wrong destination. Or sits in limbo for weeks.

Winvesta provides exact beneficiary details. Copy-paste them. Don't type manually.

One wrong digit can delay your transfer by 10-15 days.

Mistake 3: Not linking PAN and Aadhaar

Priyanka's bank rejected her remittance. Her PAN wasn't linked to Aadhaar.

Since 2021, PAN-Aadhaar linking is mandatory for LRS transactions. Check linkage status before remitting.

Mistake 4: Assuming NRE funds are exempt

"I earned this in the US. It's already foreign money. Why do I need LRS?"

Wrong. LRS applies only to resident Indians. NRIs can't use LRS at all.

If you're back in India and resident again, money in your NRE account counts as Indian funds. Transferring it abroad uses LRS.

Mistake 5: Selling US stocks and keeping dollars abroad

You sold Apple shares. $50,000 sits in your US brokerage account. You'll reinvest later.

Fine for now. But if you bring it back to India and send it out again, it counts as fresh LRS usage.

Example:

• April: Send $100,000 to buy stocks
• July: Sell everything, get $120,000
• October: Want to invest $120,000 again

The October remittance uses $120,000 from your $250,000 limit, not just the $20,000 profit.

Better strategy: Keep funds invested or bring them back to India only when done investing.

Special scenarios and how to handle them

What if you need more than $250,000?

Four options:

Option 1: Use family member limits. Spouse needs just $50,000 this year? Use yours and split next year.

Option 2: Apply for RBI approval. File an application with the RBI for amounts above $250,000. Approval takes 6-8 weeks. Usually granted for education or medical emergencies, rarely for investments.

Option 3: Invest through India-based mutual funds. Motilal Oswal S&P 500 Index Fund invests in US stocks. Doesn't use your LRS limit. Returns in rupees, not dollars.

Option 4: Wait until next financial year. Patience saves hassle. April brings fresh $250,000.

Minor children investing in US stocks

Yes, minors can invest. The guardian signs Form A2.

Aarav is 12. His father opens a Winvesta account in Aarav's name. Remits $20,000 for US stock investments under Aarav's ₹10 lakh TCS-free threshold.

Tax benefits: Aarav's income is separate. If he has no other income, the first ₹2.5 lakh is tax-free. Smart families use this for tax planning.

But clubbing rules apply. If a minor earns over ₹1,500/year, it is clubbed with the parents' income.

Using forex cards for US investments

Some platforms let you load forex cards and invest.

The card load counts as LRS usage. Whether you invest immediately or after 2 months doesn't matter.

Example: Loading $10,000 on a forex card uses your LRS limit immediately, not when you invest it.

Forex cards make sense for travellers, less so for investors. Direct bank transfer is cleaner.

Emergency situation: pulling money back

Your US stocks tanked. You need money urgently back in India.

Sell stocks → Withdraw to Indian bank account → Funds arrive in 3-5 business days

The returned money doesn't restore your LRS limit. You already used it for the year.

Bringing money back to India is easy. Sending it out again consumes fresh LRS limit.

How platforms like Winvesta simplify LRS

Integrated remittance process

Traditional way:

1. Open a US brokerage account separately
2. Get US bank details
3. Visit your bank, fill out forms
4. Transfer money
5. Start investing

Winvesta integrates steps 1-4:

1. Open a Winvesta account
2. System generates LRS documentation
3. One-click bank transfer
4. Start investing in 2 days

Pre-filled beneficiary details

Winvesta provides exact SWIFT details for remittance. You don't figure out foreign bank routing.

This prevents 90% of transfer failures.

LRS tracking dashboard

See your annual LRS usage inside Winvesta. Track:

• Total remitted this financial year
• Remaining limit
• TCS paid
• Upcoming TCS liability

Many users don't realise they're close to ₹10 lakh until Winvesta alerts them.

Form A2 templates

Winvesta gives you a pre-filled Form A2 with the correct purpose codes. Just add your bank details and sign.

Banks accept these instantly. No back-and-forth on "wrong purpose code."

Future of LRS: what's changing

Budget 2025 updates

The government increased the TCS-free threshold from ₹7 lakh to ₹10 lakh. This helps investors.

₹3 lakh extra without TCS means more people can invest $12,000 yearly (roughly ₹10L) without advance tax.

No change to the $250,000 annual limit itself.

Potential reforms being discussed

Finance ministry committees are debating:

• Increasing limit to $500,000 for high-net-worth individuals
• Separate limits for investments vs consumption
• Faster processing (currently 2-5 days)

Nothing confirmed yet. Track RBI notifications.

What this means for investors

LRS is getting easier, not harder. India wants capital flowing both ways - inward and outward.

More Indians investing globally strengthens the economy. The government knows this.

Expect smoother processes, possibly higher limits in 3-5 years.

Your LRS journey begins with one remittance. Get your PAN ready, link Aadhaar, and choose your first US stock.

Understanding LRS isn't complicated once you've done it once. The second time becomes automatic.

Don't let forms and regulations stop you from diversifying globally. Millions of Indians already invest in US stocks through LRS. You can too.

Ready to start investing in US stocks? Open your Winvesta account today and get your first remittance processed with dedicated support. Zero platform fees, full LRS compliance.