- Why does ITR filing matter if you hold US stocks?
- How are US Stock Investments Taxed?
- Which ITR form to use
- How to file ITR for returns from US stock investments?
- Key mistakes to avoid while filing ITR
- ITR Filing Deadlines for Belated and Updated returns
The due date for filing income tax returns (ITR) for FY 2024-25 lapsed on September 16. The government had extended the deadline by one day to September 16. If you still missed the deadline, do not panic. The Income Tax Act allows you to file a belated return, though it comes with certain conditions and late fees.
If you are someone who invests in US stocks from India and has not filed your income tax return (ITR) yet, here’s a complete guide that will help you correctly file your ITR (even if belated) and stay compliant.
Why does ITR filing matter if you hold US stocks?
When you invest in US equities through platforms like INDmoney, or directly via brokers, you create foreign income and assets. This attracts additional disclosure requirements under Indian tax law. Failing to file your return on time means late fees, interest, and penalties for non-disclosure of foreign assets.
How are US Stock Investments Taxed?
| Nature of Income | Taxable in US? | Tax Rate (US) | Taxable in India? | Tax Rate (India) | Comments |
| Dividends | Yes | 25% (withholding, under India–US DTAA) | Yes | Applicable slab rates | Foreign Tax Credit (FTC) available in India for US tax deducted |
| Long-Term Capital Gains (LTCG) | No | – | Yes | 12.5% without indexation (for transfers on/after 23 July 2024) | Holding period: More than 24 months; surcharge and cess apply |
| Short-Term Capital Gains (STCG) | No | – | Yes | At applicable slab rates | Holding period: Up to 24 months; surcharge and cess apply |
To understand everything in great detail with proper examples, Read This.
Which ITR form to use
If you have foreign income or capital gains, here are the ITR forms that you need to use to file your income tax return
- ITR-2: Use this if you have salary income, capital gains, and foreign assets (most investors fall here).
- ITR-3: Use only if you also report business income (e.g., F&O trading treated as business).
Documents Needed to File ITR for US Stock Investments
| Document | Purpose | Relevant ITR Schedule / Form |
| Broker transaction statement/contract notes | Details of buy/sell of US stocks for capital gains calculation | Schedule CG |
| Dividend statement | Shows dividend income received from US companies | Schedule OS |
| Form 1042-S (or broker tax certificate) | Proof of US tax withheld on dividends | Form 67, Schedules FSI & TR |
| Bank account statement | Verify remittances under LRS and dividend/sale proceeds credited | Used for reconciliation (not attached to ITR) |
| Forex conversion rate | Convert US$ amounts into INR for tax reporting | Applies across CG, OS, FSI |
| Form 26AS | Check Indian TDS/TCS credits (if any) | Pre-fill verification |
| AIS/TIS | Cross-verify income (dividends, foreign transactions reported to ITD) | Pre-fill verification |
| Form 67 | Mandatory to claim Foreign Tax Credit (FTC) | Filed online before/with ITR |
| US brokerage account details | Disclosure of foreign asset holding | Schedule FA |
| Year-end holding statement/ peak balance report | Report closing balance and peak value of foreign holdings | Schedule FA |
How to file ITR for returns from US stock investments?
Step 1: Visit the Income Tax e-filing portal and log in using your PAN and password.
Step 2: Choose ITR-2 or ITR-3 based on your income sources.
- ITR-2 → If you have salary, capital gains, and/or foreign assets/income.
- ITR-3 → If you also have business or professional income (e.g., F&O treated as business).
Step 3: Report dividend income under Schedule OS (Other Sources). Convert USD to INR using the SBI TT buying rate on the dividend date.
Step 4: Report capital gains under Schedule CG (Capital Gains), not FSI.
Step 5: Declare your foreign assets in Schedule FA.
Step 6: File Form 67 to claim Foreign Tax Credit (FTC) for the 25% US dividend tax withheld. Note: Form 67 is only for FTC, not for reclaiming TCS.
- TCS on foreign remittances (over ₹10 lakh under LRS) is already reflected in Form 26AS/AIS and can be claimed directly in the ITR as a credit, no Form 67 needed.
Step 7: Review your return, pay any self-assessment tax if due, then submit and e-verify your ITR. Keep documents like broker statements, Form 1042-S, Form 26AS, and bank proofs safely for records.
Key mistakes to avoid while filing ITR
- Using ITR-1 despite holding US stocks.
- Forgetting Schedule FA (foreign assets).
- Not filing Form 67 before claiming FTC.
- Applying the old 20% with indexation LTCG rules, new 12.5% flat rate applies for transfers after July 2024.
ITR Filing Deadlines for Belated and Updated returns
- Belated return for FY 2024-25 (AY 2025-26): You can still file until 31 December 2025, with late fees and interest. Some losses cannot be carried forward.
- Updated return (ITR-U): You can file or revise an already filed return within 48 months from the end of the assessment year (for AY 2025-26, up to March 2030).
Even if you missed the original September deadline, you can still file your belated ITR and stay compliant. For US stock investors, the critical steps are using the correct form, reporting all foreign income and assets, and claiming foreign tax credit. Filing accurately ensures you avoid double taxation and penalties, while staying on the right side of both Indian and international tax rules.
Disclaimer:
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