10 things to consider before buying US stocks

Ten things worth settling before the money leaves India, rather than at filing time when the options have narrowed. None of these is a reason not to invest. All of them are cheaper to handle in advance.

One. Your remaining LRS allowance, across all banks

USD 250,000 per individual per financial year, and no bank can see your total. Keep your own record. Exceeding the limit is a contravention rather than a rejected transaction.

Two. The cash flow effect of TCS

Twenty per cent above ten lakh rupees of remittance for the year, cumulative across every purpose and every bank. Recoverable against your tax liability, and gone from your account in the meantime. On a large remittance, plan for the gap.

Three. The twenty four month threshold

Foreign shares are not listed securities for Indian tax purposes. Sell inside twenty four months and the gain is short term, taxed at your slab rate. Above it, twelve and a half per cent, and the annual exemption on Indian long term equity gains does not apply here.

Four. Form W-8BEN, before your first dividend

This is the form that establishes your Indian tax residence with your broker and secures the treaty rate of US withholding instead of the higher default. Submit it at account opening. It does not fix a dividend already paid.

Five. Form 67, and the deadline

Foreign tax credit for the US tax withheld requires Form 67, filed within the prescribed time, along with Schedules FSI and TR in your return. Miss it and the same income is taxed in both countries with no relief. This is the most commonly missed step.

Six. Schedule FA, every year, for the calendar year

Every foreign holding disclosed for as long as you hold it, reported for the calendar year ending 31 December rather than the financial year. Whether or not you sold. Whether or not you owe tax. Ten lakh rupees per assessment year is the penalty for failing.

Seven. Your residential status

Schedule FA applies to a resident and ordinarily resident. If your status is changing, because you are moving abroad or returning to India, the year in which it changes determines what you must disclose. Establish it before you assume.

Eight. US estate tax

US-situs assets held by a non-resident alien face US estate tax above a low threshold at a high rate, and India has no estate tax treaty with the United States. Your heirs inherit the problem. For a substantial direct holding this deserves specific advice, and it is the item on this list most likely to be entirely new to you.

Nine. The full cost of getting money there and back

• Currency conversion spread, on both legs
• Bank remittance charges per transfer
• Platform and brokerage fees
• Custody or account maintenance charges
• Repatriation cost when you bring money home

Several small remittances multiply the fixed costs. Fewer, larger transfers usually cost less in total, though they interact with the TCS threshold.

Ten. Your record keeping, from the first day

Purchase dates and costs in dollars and in rupees at the applicable rate, dividend statements, withholding certificates, annual statements, and the remittance documents. Foreign brokers are far harder to retrieve historical statements from than Indian ones, and a filing three years from now depends on paperwork you either kept or did not.

Everything on this list is manageable. It is manageable in advance and expensive to fix afterwards, which is the only real argument for reading a list like this before rather than after.