FAQs > Taxation

How are my gains and earnings in the US markets taxed?

There is no Tax Deduction at Source (TDS) for your stock market gains in the US. When you sell an investment on which you have made a profit, the entire amount is sent to your brokerage cash account without any tax deductions. You will be required to pay capital gains taxes on these profits in India. If you held the investment for less than 24 months, you will have to pay short-term capital gains tax. If you held the investment for over 24 months, you will have to pay long-term capital gains tax. There is a 25% TDS on your dividend earnings. So, if you own 10 shares of a company, and the company pays a $10 per share dividend, you will receive $75 as earnings in your brokerage cash account (10 shares x $10 per share dividend = $100 total dividend. 25% TDS on $100 = $25 TDS, leaving net $75 cash). US and India have a Double Taxation Avoidance Agreement (DTAA), which means you will not be taxed twice on the same income. You be able to claim any TDS on your US earnings when filing your taxes in India. You will receive a W-8BEN form that will document the TDS deducted on your US earnings, which can be used when filing your taxes in India as proof that you have already paid taxes on that income.

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Disclaimer: This article is for informational purposes only. None of the contents of this article should be treated as tax advice. Please consult a qualified tax consultant or expert with your specific taxation situation for appropriate advice.