Investing in India from the USA: A Quick-Start Guide

The India-USA DTAA caps interest income (NRO deposits) at 15% -- comfortably below India's flat 31.2% domestic NRO TDS rate, so claiming it with a Tax Residency Certificate and Form 10F is worth doing. Dividends are the counterintuitive exception: the treaty's individual-investor dividend rate is 25%, HIGHER than India's own 20.8% domestic rate, because the lower 15% treaty rate applies only to a company holding 10%+ of the Indian company's stock -- not an ordinary retail investor. For plain dividend income, India's domestic rate already beats the treaty rate.

US-resident NRIs face one restriction other NRIs generally do not: since FATCA (the US Foreign Account Tax Compliance Act) came into force, a number of Indian mutual fund houses stopped or restricted onboarding fresh US-resident NRI investors, due to the ongoing reporting burden it places on them. Several have since resumed, usually with an offline application route or an extra FATCA declaration -- check the AMC Eligibility Checker on this site for which fund houses currently accept US NRIs before you pick one.

The standard NRE (foreign income, tax-free) plus NRO (India-sourced income, taxable) account combination applies regardless of country. What is USA-specific is your OWN reporting obligation back home: as a US taxpayer, Indian financial assets above certain thresholds generally need to be reported to the IRS (FBAR/FATCA Form 8938 territory) -- that is a US tax compliance question outside the scope of an India-focused site, but worth planning for alongside your Indian-side paperwork.