Overseas investing options for retail investors are becoming stricter. The Securities and Exchange Board of India (SEBI) has imposed an industry- ceiling of seven billion dollars for Indian mutual funds that invest overseas and also a one billion dollar limit for each individual company. As these ceilings neared, fund houses such as Nippon India and Axis halted investments in certain international funds in April and May 2026. Kotak meanwhile set a ceiling of one lakh rupees per PAN per month for investments.
When international funds and fund-of-funds shut their doors the primary alternative for gaining exposure to United States markets is to buy United States-listed exchange traded funds (US ETFs)
United States ETFs provide something that Indian funds cannot easily duplicate. A Nasdaq 100 or S&P 500 ETF allows an investor to own shares in Apple, Microsoft, Nvidia, Alphabet and Amazon many of which are not listed in India.
The three routes to buying United States ETFs
Through GIFT City IFSC platforms. This route is currently the compliant and cost-controlled option for Indian retail investors. Tickertape, in partnership with ViewTrade International IFSC lets investors purchase stocks and ETFs in a United States investment account with an amount of one dollar and a brokerage fee as low as 0.15 percent. Dhan using its subsidiary Raise IFSC Private Limited offers ETF trading on Nasdaq and New York Stock Exchange with a brokerage of 0.25 percent of the transaction value and no account maintenance or custody fees.
Through investing apps. INDmoney, Vested Finance and Koshex established their United States investing businesses before the GIFT City framework became the route. These platforms usually partner with United States clearing brokers such as DriveWealth or Alpaca and support buying.
Through NSE International Exchanges global access platform. NSE International Exchange, operating within GIFT City offers a global access platform that lets investors remit in rupees and trade United States-listed ETFs in dollars. This platform covers than 150 international exchanges and supports fractional investing.
How to get started, step by step
Step 1: Choose a platform and complete KYC. Open a GIFT City investment account through the brokers application or website. You need a PAN, Aadhaar, a passport to confirm residence status and bank account details. A W-8BEN form is also required to establish -US status, which allows the lower twenty-five percent dividend withholding rate instead of thirty percent.
Step 2: Remit funds under the Liberalised Remittance Scheme (LRS). Use the banks banking service to send rupees to the GIFT City account under the Liberalised Remittance Scheme. Form A2, the declaration of remittance purpose is required. The bank converts rupees to dollars. Applies a foreign exchange spread of one percent to one and a half percent.
Step 3: Select an ETF and place the order. Browse the list of United States ETFs on the platform. Broad market index ETFs such as VOO, VTI and QQQ normally have the expense ratios and the deepest liquidity. Enter either the amount to invest or the fractional quantity to buy. Orders are. Settled in dollars.
Step 4: Track the holding. Keep tax documents. Fractional positions appear in the account. Platforms such as Tickertape provide the tax documents needed for Income Tax Return filing.
The cost structure
Brokerage. Tickertape starts at zero point one five percent. Dhan charges zero point two five percent. Some platforms do not charge account maintenance or custody fees.
Foreign exchange conversion. The bank applies a spread of one percent to one and a half percent when converting rupees to dollars. This is the controllable cost in the entire process for Indian investors.
Tax Collected at Source (TCS). Once total LRS remittances exceed ten lakh rupees in a year twenty percent TCS applies on the excess. This is not a tax. It appears in Form 26AS. Is adjustable against the final liability when the return is filed or refundable.
The tax treatment
Capital gains. United States ETFs are treated as securities under Indian tax law. The long-term holding period is twenty-four months, not the twelve months that applies to listed equity. Gains realised after twenty-four months are taxed at twelve point five percent without indexation and the one lakh twenty-five thousand rupee exemption does not apply, because that exemption is for Indian listed securities on which Securities Transaction Tax has been paid. Gains realised before twenty-four months are added to income and taxed at the slab rate.
Dividends. The United States withholds twenty-five percent on dividends if a Form W-8BEN is, on file. India then taxes the dividend at the slab rate. Form 67 allows a Foreign Tax Credit to offset the United States portion, capped at the lower of the two liabilities.
Schedule FA disclosure. A Resident and Ordinarily Resident taxpayer must disclose every asset on Schedule FA of the Income Tax Return even if you did not sell any shares or receive any dividends during the year. The period covered is the calendar year from 1 January to 31 December, not the year. If you fail to disclose the Black Money Act may be invoked. However the penalty is waived if the total value of all movable assets – stocks, ETFs and bank accounts – does not exceed twenty lakh rupees. The duty to disclose continues of the amount.
What retail investors should keep in mind
The GIFT City framework addresses the compliance issue, not the tax complexity. A US ETF investor must still handle the Schedule FA disclosure the Form 67 filing deadline and the cash flow effect of Tax Collected at Source (TCS). First‑time overseas investors do not realise that Schedule FA exists and that lack of awareness creates the largest compliance risk.
The holding period determines the tax rate and the threshold is twenty‑four months. Gains on holdings than twenty‑four months are taxed at twelve point five percent. Gains realised before that period are taxed at the slab rate, which can be over thirty percent. For an investor planning long‑term US ETF exposure this difference can lead to tax savings.
Indian‑listed international ETFs are not a substitute. SEBI’s overseas investment limits cause India‑listed international ETFs to trade at a premium. Limit the selection available. Purchasing US‑listed ETFs through GIFT City gives wider access and clearer pricing.
FAQs
1. Can Indian residents legally buy US ETFs?
Yes. Under the Reserve Bank of India’s Liberalised Remittance Scheme a resident individual may remit up to two hundred fifty thousand dollars per year for allowed overseas investments. GIFT City platforms regulated by the Indian Financial Services Regulatory Authority provide a route for investing in US ETFs.
2. What is the minimum investment?
Tickertape, Dhan, INDmoney, Vested and SBICAP Securities all support investing from one dollar, which is approximately ninety rupees.
3. What is the long‑term capital gains rate on US ETFs?
Gains on holdings than twenty‑four months are taxed at twelve point five percent without indexation and the one lakh twenty-five thousand rupee exemption does not apply. Gains on holdings of twenty‑four months or less are added to income. Taxed at the applicable slab rate.
4. How are dividends from US ETFs taxed?
The United States withholds percent on dividends if Form W‑8BEN is filed. India then taxes the dividend at the slab rate. Form 67 allows a foreign tax credit to offset the US portion, capped at the lower of the two liabilities.
5. Do I need to disclose US ETF holdings to the tax department?
Yes. Resident and Ordinarily Resident taxpayers must disclose every asset, on Schedule FA of the Income Tax Return even if no shares were sold and no dividends were received. The disclosure follows the calendar year.
