How to Disclose Investments in US Stocks in Your ITR ?

Investing in US stocks has become increasingly popular among Indian investors. From tech giants like Apple and Google to innovative startups listed on US exchanges, global investing allows you to diversify beyond Indian markets.

But here’s the catch—if you’re an Indian resident with investments in US stocks, you need to disclose them while filing your Income Tax Return (ITR). Missing this step may lead to penalties under the Black Money Act. Don’t worry—we’ll simplify the process for you.

Why Do You Need to Disclose US Stock Investments?

The Income Tax Department requires residents and ordinarily residents (RORs) in India to report all foreign assets. This includes:

• US stocks held directly or through brokers/platforms.
• ESOPs (Employee Stock Options) of US-based companies.
• Dividends received from US companies.

This disclosure ensures transparency and avoids double taxation issues.

Step-by-Step: How to Disclose US Stocks in ITR

1. Choose the Right ITR Form

• You cannot file ITR-1 or ITR-4 if you hold foreign assets.
• You must file ITR-2 (for salaried/other income + foreign investments) or ITR-3 (if you have business income).

2. Fill Schedule FA (Foreign Assets)

This is where you disclose details of your US stock investments:

• Country: USA
• Name of the broker/platform (e.g., INDmoney, Groww, Vested)
• Nature of asset: Equity/Stock
• Investment value at the start of the year
• Closing value as on 31st March

3. Report Dividend Income

• Dividends from US stocks are taxed 25% at source in the US.
• You still need to report them in India under “Income from Other Sources”.
• To avoid double taxation, you can claim a Foreign Tax Credit under DTAA (India-US tax treaty).

4. Report Capital Gains on Sale of US Stocks

• Short-Term Capital Gains (STCG): If held < 24 months → taxed as per your income slab.
• Long-Term Capital Gains (LTCG): If held ≥ 24 months → taxed at 20% with indexation.

Example

Imagine you bought Apple shares worth $5,000. By March 31, their value rose to $6,000. Later, you sold them for $7,000 after 3 years.

• Closing balance disclosed in Schedule FA: $6,000
• Profit ($2,000) treated as LTCG and taxed at 20% with indexation in India.
• If you earned dividends, report them too and claim foreign tax credit.

How JM Financial Services Helps

At JM Financial Services, we don’t just provide access to domestic equities, bonds, IPOs, and mutual funds—we also help you diversify your portfolio globally.

With JM Financial Services, you get:

• Expert guidance on tax-efficient investing.
• Support in understanding foreign asset disclosure rules.
• A seamless platform to align global investments with your long-term wealth strategy.

FAQs :-

Q1. Do I need to disclose US stocks if I didn’t sell them?
Yes. Even if you only hold US stocks (without selling), you must report them in Schedule FA.

Q2. What happens if I don’t disclose US stock investments?
Non-disclosure may attract penalties under the Black Money (Undisclosed Foreign Income and Assets) Act.

Q3. Can I claim tax credit on US dividends?
Yes. Since the US deducts 25% tax on dividends, you can claim this as a credit under the DTAA while filing your ITR in India.

Q4. Which ITR form should I use?
Use ITR-2 if you have salary, capital gains, or other income. Use ITR-3 if you have business/professional income.

Q5. Do ESOPs of US companies also need to be reported?
Yes. ESOPs, RSUs, or any other foreign securities granted by your employer must also be disclosed.