Capital gains, TCS, DTAA, Schedule FA, Form 67, and every form you need. The one-stop tax reference for global investors.
15 min read · April 2026
Updated with Budget 2026
Tax confusion kills more global investing plans than market fear does. The acronyms are intimidating: TCS, LTCG, STCG, DTAA, FTC, Schedule FA, Form 67. This guide is designed to be bookmarked and referenced every tax filing season.
20%
TCS ON INVESTMENTS
12.5%
LTCG RATE
25%
US DIVIDEND WITHHOLDING
40%
US ESTATE TAX RATE
TCS RATES
TCS on LRSRemittances (Budget 2026)
Purpose
Rate
Threshold
Investment in foreign securities
20%
Above ₹10L per FY
Education (self-funded)
2%
Above ₹10L
Education (via approved loan)
0%
Fully exempt
Medical treatment
2%
Above ₹10L
Overseas tour packages
2%
From ₹1 (flat)
TCS is fully adjustable against your income tax liability. You get every rupee back.
CAPITAL GAINS
Tax on ReturnsWhen You Sell
Type
Rate
Note
Short-term (held < 24 months)
Your income tax slab rate
Same as any short-term capital asset. No special treatment.
Long-term (held ≥ 24 months)
12.5% flat
No indexation benefit. Applies to all foreign securities.
Dividends from foreign stocks
Added to total income (slab rate)
US withholds 25% under DTAA. Claim FTC via Form 67.
Interest from foreign bonds
Added to total income (slab rate)
May have withholding at source. Claim FTC.
REIT distributions
Added to total income (slab rate)
Treatment depends on structure (income vs capital).
"Tax confusion kills more global investing plans than market fear does. Here is every rule, every rate, and every form, explained once, clearly."
Disclose every foreign asset held at any point during the year: stocks, ETFs, bonds, bank accounts, property. Report country, entity name, acquisition date, closing value as of Dec 31. Non-disclosure: penalties up to ₹10L/year under Black Money Act.
Form 67Foreign Tax Credit claim(Before or with ITR)
File to claim credit for taxes paid abroad (US dividend withholding, etc.) against your Indian tax liability. Must be filed before or along with your ITR. Not filing means you pay double tax.
Form A2LRS remittance declaration(At time of remittance)
Filed with your bank for every outward remittance. Captures purpose code, amount, beneficiary. Bank retains copy and reports to RBI.
Form 26ASAnnual tax statement(Available year-round)
Shows all TCS deducted by banks on your LRS remittances. Cross-check against bank confirmations. Claim as advance tax paid.
Schedule CGCapital gains schedule(ITR filing)
Report all capital gains from foreign securities. Separate short-term and long-term. Convert gains to INR at SBI TT buying rate on date of sale.
WORKED EXAMPLE
End-to-EndTax Walkthrough
Buy VOO → Hold 30 months → Sell
You buy $10,000 of VOO ETFLRS remittance
Bank collects TCS (if above ₹10L cumulative)20% on excess
VOO pays dividend ($100)US withholds 25% = $25
You receive$75 net dividend
In Indian ITR: report $100 as incomeTaxed at slab rate
Claim $25 US withholding as FTC (Form 67)Credit against Indian tax
You sell VOO after 30 months for $13,000$3,000 gain
Convert to INR at SBI TT buying rate~₹2,79,000 gain
Tax rate (held > 24 months)12.5% = ~₹34,875
TCS already paid on remittanceAdjusted in ITR
US ESTATE TAX
The Hidden RiskNobody Tells You About
Non-US residents holding US-situs assets (US stocks, US-listed ETFs) above $60,000 at time of death face estate tax of up to 40%. This is not refundable. UCITS ETFs (Ireland-domiciled) and IFSCA custody can mitigate this entirely.
$50,000 in US stocks at death$0 (below $60K threshold)
$200,000 in US stocks at death~$56,000 (40% on $140K excess)
$500,000 in US stocks at death~$176,000 (40% on $440K excess)
$200,000 in UCITS ETFs (Ireland)$0 (not US-situs)
FREQUENTLY ASKED
TaxQuestions
Do I need to file ITR-2 or ITR-3 if I have foreign investments?
Yes. If you hold foreign assets or earn foreign income, you must file ITR-2 (for individuals without business income) or ITR-3 (if you also have business income). ITR-1 is not sufficient.
What if I held foreign stocks but earned zero income from them?
You must still disclose them in Schedule FA. The disclosure requirement applies to all foreign assets regardless of whether they generated income. Penalties apply for non-disclosure.
How do I convert foreign currency gains to INR?
Use the SBI TT buying rate on the date of the transaction (purchase or sale). For dividends, use the rate on the date of receipt. Maintain records of exchange rates used.
Can I offset foreign losses against Indian capital gains?
Foreign capital losses can only be offset against foreign capital gains of the same type (short-term vs long-term). They cannot be offset against domestic gains. Carry forward for 8 years.
What is the penalty for not filing Schedule FA?
Under the Black Money (Undisclosed Foreign Income and Assets) Act, penalties can reach ₹10 lakh per year for non-disclosure. Prosecution is possible in serious cases. File correctly.
Tax-smart global investing
Invest globally. File correctly. Sleep well.
Valura generates India-ready tax reports: Schedule FA pre-fills, capital gains summaries, TCS tracking, and Form 67 FTC support.
Disclaimer: This content is for informational purposes only. Tax laws are subject to amendments. Rates and rules are current as of April 2026 post-Budget. Consult a qualified tax advisor for advice specific to your situation. Valura is an IFSCA-registered broker-dealer, not a tax advisory firm.
