Bringing the Money Back: Repatriation, Form 67, and Foreign Tax Credit on US Investment Gains

This guide is for a resident Indian who sent money abroad under LRS, invested it in US stocks, and now wants to understand the tax rules and bring proceeds back to an Indian bank account. If you're an NRI instead -- repatriating funds from an NRE, NRO, or FCNR account back to your country of residence -- that's a different legal regime with its own rules; see this site's dedicated FEMA repatriation guide for NRIs instead.

The distinction matters because the two situations are taxed under completely different logic: an NRI's Indian-sourced income has its own TDS and repatriation rules under FEMA, while a resident Indian's foreign investment gains are simply part of their global income, taxed under ordinary Indian income tax law the same way any other capital gain would be.

A common misconception: some investors assume that as long as sale proceeds stay in the US brokerage account, there's nothing to declare in India yet. That's not correct. As an Indian tax resident, you're taxed on your global income as it's realised -- the moment you sell a US stock at a gain, that gain is taxable in India for that financial year, whether the money physically returns to an Indian bank account, stays invested in the US brokerage, or gets reinvested in a different US stock. "Repatriation" in this guide's title refers to the optional, separate step of moving money back to India -- it is not what triggers the tax event.

Foreign shares -- including US-listed stocks and ETFs -- are not treated the same way as Indian-listed equity under Indian tax law, but they do have a long-term/short-term distinction, and it's easy to find outdated information stating otherwise. Following the Finance Act 2024's unification of capital gains rules (effective for sales on or after 23 July 2024): if you hold a US stock for 24 months or less before selling, the gain is short-term and taxed at your ordinary income tax slab rate. If you hold it for more than 24 months, the gain is long-term and taxed at a flat 12.5%, with no indexation benefit available.

This is a meaningfully different rule from Indian-listed equity, which gets long-term treatment after just 12 months. It's also different from the old pre-2024 regime, under which foreign shares held long-term got 20% with indexation -- if you're reading older material (including, until this correction, some content elsewhere on this site), you may see that outdated figure. Always check the sale date against 23 July 2024 when working out which rule applies to a specific holding.

Separately from capital gains, US companies withhold tax (25% for an individual investor, under the India-US DTAA) on dividends they pay you. India taxes the same gross dividend as your income at your slab rate -- so without relief, you'd effectively be taxed twice on it. The India-US DTAA lets you claim a Foreign Tax Credit (FTC) for the US tax already withheld, reducing what you owe in India by the amount already paid abroad.

To claim it: file Form 67 on the income tax e-filing portal, declaring the foreign income and tax paid, and do this on or before the due date of your ITR -- typically July 31 for most individual filers without an audit requirement. This sequencing matters a great deal: filing Form 67 even one day after your ITR due date forfeits the credit for that year entirely, regardless of whether you were otherwise entitled to it. Then report the gross foreign income and the credit in Schedule FSI (Foreign Source Income) and Schedule TR (Tax Relief) of your ITR itself.

Keep the TCS certificate (Form 27D) from your remitting bank separate from this process -- TCS is a credit against your overall Indian tax liability for money you sent out, claimed automatically when you file your return using your PAN; the Foreign Tax Credit via Form 67 is a distinct credit for tax the US withheld on income it paid you. They solve different problems and both may apply to the same investor in the same year.

There's no separate RBI permission needed to bring back your own remitted-and-invested funds or their proceeds -- you're simply moving your own money, previously sent abroad under LRS, back to your own Indian bank account. In practice, you initiate a wire from your US brokerage (or the Indian platform you used) back to your Indian bank account, and the receiving Indian bank may ask for basic source-of-funds documentation -- your original remittance record and broker statements are usually sufficient.

There's no requirement to bring the money back within any particular timeframe, and no requirement to bring it back at all if you'd rather keep reinvesting it abroad within your LRS limit for future years. Whether or when you repatriate is a personal cash-flow decision, separate from the tax obligation on the gain itself, which is due for the year the gain was realised regardless.

(1) Total up your realised gains for the year and check each holding's purchase date against the 24-month mark to classify short-term vs long-term correctly, (2) total up gross dividends received and the US tax withheld on them, (3) file Form 67 before your ITR due date if claiming Foreign Tax Credit -- not after, (4) report foreign assets in Schedule FA regardless of whether you sold anything that year, and (5) keep your TCS certificates (Form 27D), broker statements, and dividend records organised together -- you'll need all of them, and they answer different questions on the return.