Investing in foreign, particularly US stocks has been in my radar ever since I started earning and got into stock market. Back in 2010s, the process to open a demat account was complicated, more so if it was with an international broker. On top of that, foreign equity investment was treated as debt back then and taxation was not favourable to investors - especially since long term meant holding for three years. I had posted a query in the AIFW Facebook group and I remember getting advice that for smaller ticket sizes foreign holdings won’t offer a huge income boost. With limited surplus in hand, I decided to stick to domestic investments and they have held up reasonably well so far.

However, international investing is something I always wanted to try and with the launch of GIFT City, I learnt that it’s going to be easier! I have been on a wait since then and the interest surged again with the news of Dhan launching US Stocks last week. Soon came the news of other brokers like Zerodha getting the approvals too. Since I don’t have an account with Dhan (I am a huge fan of what Pravin Jadhav aka P J has accomplished there in this short time frame) I started my research about should I wait for Zerodha (my current broker) to launch their offering or get a Dhan account.

While researching the charges, I realised there’s more to charges than just the brokerage. Most of us are used to zero brokerage in India from discount brokers and we know that percentage based charges eat into our returns. To an extent I was aware of Forex charges but there’s more to it. One cannot and must not ignore compliance and taxes when it comes to money and the devil lies in the details!

Here’s everything I pieced together, in the order I’d want someone to explain it to me.

What Does a ₹10,000 Monthly Investment Actually Cost?

The realistic cost for a ₹10,000 monthly investment sits closer to ₹75 to ₹145 total per transaction through a broker like Dhan. Here’s the breakdown:

Brokerage and regulatory charges (~₹30)

• Dhan brokerage (0.25%): ₹25.00
• IGST (18% on brokerage): ₹4.50
• IFSCA turnover fee (0.005%): ₹0.50
• SEC and FINRA fees: ₹0 on buy (these only apply when you sell — ~₹2.20 on a ₹10,000 sell)

Banking and Forex costs (variable)

Dhan waives the platform fund-transfer fee for anything above $100, so there’s no fixed processing penalty. What remains is the forex markup on the INR-to-USD conversion. The exact spread isn’t a published flat number — it varies with market conditions and the partner bank. However, the actual number would be shown on the app before hitting confirm.

The bottom line: brokerage and regulatory fees are a fixed ₹30 per buy. The forex conversion cost on top is the variable part. The ₹200–₹300 per transaction figures you’ll see quoted elsewhere apply to traditional retail bank SWIFT wire transfers, which carry flat fees of ₹500 to ₹1,000 per transaction on top of their own forex markup.

LRS and TCS: The Money Leaving India

Any money sent abroad for investment goes through the RBI’s Liberalised Remittance Scheme (LRS), with a cap of USD 250,000 per person per financial year, covering travel, education, gifts, and investments combined.

Cross ₹10 lakh in total remittances in a year and 20% TCS (tax collected at source) kicks in on the amount above that. Budget 2026 reduced TCS on education and medical to 2% but left investment remittances unchanged at 20%.

The 20% sounds alarming but it’s not a permanent cost — it’s an advance that gets adjusted against your annual tax liability when you file. If you’re owed more back than you owe in tax, it comes back as a refund. The only real pain is that your money is locked up with the government until you file.

Worth noting: GIFT City doesn’t exempt you from any of this. The route lowers trading friction and brokerage costs — it doesn’t change your LRS compliance obligations at all.

Dividends and Form 67

US dividends are withheld at source. The default for foreigners is 30%. File Form W-8BEN with your broker and the India-US treaty drops it to 25%.

In India, you then declare the dividend income at your slab rate and claim a Foreign Tax Credit via Form 67 to avoid double taxation. One catch: the credit is the lower of US tax paid and Indian tax due, with no carry-forward. So if your income slab is below 25%, the excess withheld is simply gone.

Capital Gains

The US doesn’t tax non-resident aliens on capital gains — good news. India does, based on holding period:

• More than 24 months: Long-term at a flat 12.5%, no indexation
• 24 months or less: Short-term at your slab rate

Holding foreign assets also means you must file ITR-2 or ITR-3 — not ITR-1 or ITR-4.

There’s a subtlety here that trips people up: India calculates your gain in rupees, not dollars. Both your buy price and sell price get converted to INR at the exchange rate on the respective dates. So if the rupee depreciates significantly between when you bought and when you sold, you could have a taxable gain in India even if you broke even in dollar terms. The forex movement is baked into your cost basis.

Schedule FA: The Declaration You Cannot Skip

Every foreign holding — accounts, shares, RSUs, ETFs — must be declared in Schedule FA of your tax return. A few things worth knowing: it runs on a calendar year (January to December), not the Indian financial year. It’s required even if you earned nothing and sold nothing — it’s a disclosure obligation, not a tax trigger. And ignoring it isn’t a minor slip; it falls under the Black Money Act with penalties up to ₹10 lakh per year.

The Estate Tax Trap

This one is genuinely alarming the first time you encounter it.

If you die holding US-situs assets (assets located or deemed to be located in the US) above USD 60,000 (~₹56.59L at the time of writing), the US government levies an estate tax of up to 40% on everything above that threshold before assets can be transferred to your legal heirs. US stocks are US-situs assets. US-domiciled ETFs like VOO, SPY, and QQQ are US-situs assets. The Indian broker makes no difference — the IRS looks at the underlying asset.

Two clean solutions exist:

1. Irish-domiciled UCITS ETFs: Buy an Irish ETF (which is an Irish corporation that holds the underlying US stocks) instead of a US-listed ETF. You legally own shares in an Irish entity, which means the IRS cannot touch it for estate tax.
2. Indian feeder funds: You own fund units registered in India — not US shares directly — so the exposure is not US-situs and doesn’t even fall under LRS.

Irish-Domiciled ETFs: Better in Two Ways

Irish-domiciled ETFs solve two structural leakages that US-listed ETFs cannot:

1. Estate tax: As explained above, the Irish domicile completely protects your family from US inheritance tax exposure.

2. Dividend withholding tax: Ireland has a tax treaty with the US that reduces dividend withholding to 15% at the fund level, versus the 30% a US-domiciled fund faces. More importantly, most Irish ETFs come in “Accumulating” versions (denoted as Acc). Instead of distributing dividends to your account — which creates an immediate tax event in your ITR — the fund automatically reinvests dividends directly into the NAV. Your money compounds tax-deferred until you actually sell.

Popular Irish-domiciled options tracking the S&P 500 include CSPX and VUAA, both listed on the London Stock Exchange.

But No Irish Version for Individual Stocks

If you’re thinking about buying individual stocks like NVIDIA, Apple, or Tesla — there is no “Irish-domiciled” version of them. The Irish domicile advantage applies strictly to funds (ETFs and mutual funds).

When you buy a US stock directly, you are buying a direct US-situs asset. Everything discussed above applies fully:

• The $60,000 estate tax threshold applies to your total direct US stock holdings.
• Dividend withholding is 25% (with Form W-8BEN filed; 30% without), and every dividend is an immediate tax event — there’s no automatic reinvestment the way an accumulating ETF handles it.

A common approach: use Irish-domiciled ETFs like CSPX for your index core (S&P 500 / Nasdaq), and keep direct stock holdings (individual names like NVIDIA) comfortably below the $60,000 threshold so estate tax isn’t a concern.

Should You Wait for Zerodha and others, or Open Dhan Now?

Since I already use Zerodha for my domestic portfolio, this was the central question for me. Switching brokers for international stocks later is not a seamless process like transferring domestic shares.

There’s an interesting wrinkle here: both Dhan and Zerodha appear to be using ViewTrade as their US-side execution and custody partner. The Dhan AMA on Reddit confirmed that transfers out are possible, but the process and charges depend on which platform you’re moving to. If both platforms share the same underlying custodian, switching may be closer to an administrative re-registration than a full broker-to-broker transfer — but until Dhan publishes a formal transfer process, the exact friction is unconfirmed.

The option that’s clearly painful regardless is liquidating and re-depositing — selling on Dhan triggers a capital gains event on any profit, and you pay the forex conversion markup twice: once converting USD back to INR, and again converting INR back to USD on Zerodha.

The practical conclusion: If you want to start today, the shared ViewTrade layer makes Dhan a less permanent commitment than it first appears — though until the transfer process is documented, that’s not confirmed. If you’d rather wait a couple of months, Zerodha’s launch may also bring the possibility of routing into Irish UCITS ETFs, which would let you build a tax-optimised structure from day one. That might also unlock some price competition.

What Happens If Something Goes Wrong?

This is the question most people don’t ask until they need the answer.

One thing that came up in a Dhan AMA was the regulatory layer behind GIFT City — and it’s worth understanding before you pick any platform. A common assumption is that SEBI oversees this. It doesn’t. GIFT City / IFSC is governed by IFSCA (International Financial Services Centres Authority), a separate Indian statutory regulator. Different from SEBI, but still very much an Indian regulator with Indian grievance redressal mechanisms you can actually reach.

Compare that to the older route that apps like INDmoney or Vested use. There, your brokerage relationship sits directly with a US broker-dealer under SEC and FINRA jurisdiction. SIPC protection exists at the US end, which is a genuine safeguard — but if a dispute arises, your recourse is with American regulators. Practically speaking, that’s a difficult conversation to have from India.

The GIFT City route flips that dynamic. Dhan’s IFSC subsidiary (Raise IFSC, an India INX member) sits as an India-regulated entity between you and the US infrastructure. The US-end safeguards don’t disappear — ViewTrade on the execution and custody side is SEC-registered and FINRA/SIPC covered — but you now have an Indian regulatory wrapper on top, with dispute redressal you can pursue locally.

On the GIFT City route you own real shares, not receipts or synthetic instruments. An actual fractional US share is purchased in your name when you buy. Your P&L is the stock moving, not a contract tracking it.

A natural follow-up question is what happens if Dhan itself shuts down. The answer from their own AMA: client assets are held segregated from the broker’s own assets. Your shares are not Dhan’s property and not ViewTrade’s property - they are yours. They cannot be used to pay anyone’s creditors and do not disappear if the company winds down. The custody structure (Raise IFSC as broker, ViewTrade as custodian, you as beneficial owner) means the shares exist independently of Dhan’s fate as a business.

What About Interactive Brokers (IBKR)?

IBKR is considered the gold standard for serious long-term global investors. It gives you direct access to the London Stock Exchange and European exchanges, meaning you can freely buy accumulating Irish UCITS ETFs like CSPX or VUAA. It also offers genuine interbank forex rates with a small transparent conversion fee, versus the variable markup embedded in rates from retail brokers, and institutional-grade flat-rate commissions.

One thing worth clarifying first: IBKR does have a SEBI-regulated Indian entity, but that entity is specifically for trading on the NSE. Buying US stocks or Irish ETFs goes through the international account, which sits under US regulation (SEC/FINRA/SIPC) with no Indian regulatory wrapper — and needs to be funded via international wire transfer.

That’s where the catch lies. Most major Indian banks — HDFC, ICICI, SBI — charge ₹500 to ₹1,000 as a flat outward remittance fee, plus their forex markup, plus there’s often a correspondent bank fee deducted on the US side before funds reach IBKR. On a ₹10,000 monthly investment, that’s a significant chunk gone before a single share is bought.

The math improves considerably if you pick your bank carefully. If you’re serious about IBKR, it’s worth checking current rates with your specific bank, or considering whether opening a separate account at a low-fee remittance bank makes sense for the purpose. There is also scope for negotiation here - get in touch with your dedicated relationship manager.

What makes IBKR worth the effort for the right investor is asset access. The international account opens up the London Stock Exchange and European exchanges, meaning you can buy accumulating Irish UCITS ETFs like CSPX or VUAA directly — the estate-tax-safe, dividend-reinvesting structure the GIFT City route doesn’t currently offer. For building a large, long-term index portfolio with that tax efficiency, IBKR with a low-cost remittance bank is a serious option.

For a ₹10,000 monthly SIP using a standard bank, the GIFT City route still wins on pure friction.

Disclaimer: None of this is financial or tax advice. Please do your own research and consult a professional for your specific situation.