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Representational image only. File
| Photo Credit: AP

 On Friday, the rupee closed at 87.18 against the U.S. dollar. File.
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Investing overseas, especially in the U.S., is not just about opening a broker account, picking a stock, clicking a ‘buy now’ button and enjoying double-digit returns.

It requires a thorough understanding of rules and regulations and tax implications of both the countries, open/hidden costs incurred and logistics behind it. It is crucial to understand how to transact legally, without landing in trouble. Let’s check this.

Legal framework

On February 4, 2004, Liberalised Remittance Scheme (LRS) was introduced with a limit of $25,000. Later, owing to the then prevailing micro- and macro-economic factors, the LRS limit was revised in stages.

Currently, as per the LRS, Indian resident individuals, including minors, can remit up to $2,50,000 per financial year for permissible transactions such as education, travel and investments including the U.S. stocks. If your total foreign remittance in a financial year exceeds ₹10 lakh, Tax Collected at Source (TCS) will apply and the rate depends upon the purpose of remittance.

Withholding tax

If you receive dividend from a U.S. stock, it is treated as foreign income and will be subject to an upfront withholding tax of 25% in the U.S.

Further, the balance 75% of the dividend income is taxable in India as per slab rates.

However, thanks to the India-U.S. Double Taxation Avoidance Agreement (DTAA), you can offset the dividend tax withheld in the U.S. against your tax liability in India, by claiming a foreign tax credit by filing Form 67. Again, it is easier said than done.

Individuals face multiple challenges while claiming DTAA benefits. For instance, exchange rates, time duration etc. viz. the fiscal year in the U.S. is different from that of India’s April-March cycle. The DTAA is a treaty between the two countries to avoid double taxation by individuals with financial dealings in both the countries.

Capital gains

The U.S. does not levy capital gains tax for Indian residents who invest in U.S. stocks, if they are considered Non-resident Aliens (NRAs) for the U.S. tax purposes. But India taxes capital gains on your U.S. stock profit. If you have held U.S. stocks for more than two years (24 months), it is considered long-term capital gains (LTCG) and will be taxed at 20% tax plus surcharge and cess.

If you have held the shares for less than 24 months, it is considered short-term capital gains and is taxed according to your income slab rate.

Disclosure, compliance

As per the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, non-disclosure of foreign assets is considered a violation and attracts a penalty of ₹10 lakh per year of default for an undisclosed foreign asset.

In extreme cases, you might have to face imprisonment of up to seven years. All foreign assets, including the U.S. stocks, must be declared in Schedule FA of the Income Tax Return (ITR) portal while filing returns.

Any non-disclosure of the U.S. stocks, be it even for a negligible amount of $1, will attract hefty penalties under the Black Money Act, 2015. Further, most people are under the impression that you should disclose details about the U.S. stock holdings only if the stocks are sold and the capital losses/gains are realised. That’s not true. It is immaterial whether you sell the stock, or you just keep accumulating stocks for long-term.

Even if you buy a single U.S. stock for just $1 or even less, it is advisable to disclose it in under Schedule FA. Further, even if you receive a dividend of $1 or even less than that, it must be disclosed.

FA non-disclosure

Suppose, let’s assume that owing to lack of awareness, you have not disclosed under Schedule FA. Against this backdrop, if your returns are already filed, the first option is voluntary disclosure via revised return (if applicable) and the second option is to file updated return (ITR-U) under Section 139(8A), applicable for the last two assessment years, but with a penalty.

In either case, it is advisable to seek the help of an experienced auditor to review past returns, fix errors and stay compliant from thereon. If a mistake of non-disclosure, whether deliberate or unintentional, has happened, early correction is safer than receiving a notice from the IT Department.

(The writer is an NISM & CRISIL-certified Wealth Manager and certified in NISM’s Research Analyst module)

Published – August 04, 2025 06:02 am IST

The India-United Kingdom Comprehensive Economic and Trade Agreement (CETA) raises several questions regarding India’s commitments in the CETA’s intellectual property chapter (Chapter 13). A problematic article in this chapter is Article 13.6, “Understandings Regarding TRIPS and Public Health Measures”, in particular its first paragraph: “The Parties recognise the preferable and optimal route to promote and ensure access to medicines is through voluntary mechanisms, such as voluntary licensing which may include technology transfer on mutually agreed terms” (http://bit.ly/46zLEzj).

India’s agreeing to this provision would result in dilution of its position on two critical issues. First, India consistently backed the use of compulsory licensing as opposed to voluntary licensing, to address high prices of patented medicines. Second, India argued that advanced countries must transfer technologies to developing countries on “favourable terms”, for their industrialisation, and also for reducing their carbon footprints.

EXPLAINED | What does the new U.K.-India trade deal entail?

Issue of pricing

High prices of patented medicines are a serious anomaly of the patent system, due to excessive rent-seeking by patentees. Compulsory licensing of patented medicines can vastly improve the affordability of high-priced medicines by facilitating the production of such medicines. This was experienced following the grant of compulsory licence to Natco Pharma in 2012 for producing an anti-cancer medicine, sorafenib tosylate. The price came down to less than ₹8,800 for a month’s treatment, from the ₹2,80,428 charged by the owner of the patent on the medicine, Bayer Corporation (http://bit.ly/4lVTc4l).

For remedying such instances of excessive rent-seeking, India’s law-makers included compulsory licensing as a key safeguard while amending the Patents Act to make it compatible with the World Trade Organization’s (WTO) Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Both Houses of the Parliament unanimously adopted this legislation after a Joint Parliamentary Committee had carefully considered its provisions (http://bit.ly/4l7Z1uh).

Also Read | India, U.K. sign trade deal, PMs launch new partnership framework

Grant of compulsory licence

India’s TRIPS-consistent Patents Act allows grant of compulsory licence to anyone interested in producing a patented product in India, three years after the grant of a patent. This licence can be granted if: reasonable requirements of the public with respect to the patented invention are not satisfied; or the patented invention is not available to the public at reasonably affordable price, or the patented invention is not “worked” in the territory of India, implying, it has not been commercially exploited in the country (http://bit.ly/4lTSBjI).

Patent rules monitor “working” requirement and, accordingly, patentees must submit the working status of their inventions. They had to do so annually until this requirement was diluted through India’s FTA with the European Free Trade Association, with India agreeing that the periodicity of reporting “shall not be less than 3 years” (http://bit.ly/4o4NCxU). This dilution, has now been reinforced through the CETA, and it takes away an important ground for issuing compulsory licences.

By backing voluntary licensing to address the problem of access to medicines, India has, de facto, given up its position as a strong votary of compulsory licensing in the WTO. A coalition of developing countries, including India earned the right to issue compulsory licences through the Doha Declaration on the TRIPS Agreement and Public Health in 2001, despite strident opposition from advanced countries. The Declaration emphasised, “each Member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted” (http://bit.ly/3IUwjiW).

Voluntary licences cannot ensure access to affordable medicines due to the weak bargaining position of domestic companies in developing countries vis-à-vis dominant pharmaceutical corporations. Médecins Sans Frontières (MSF), a medical humanitarian organisation, observed that using the terms of voluntary licences, pharmaceutical corporations can set various limitations, including to control the supply of active pharmaceutical ingredients, besides imposing restrictions on licensees. Therefore, options for getting affordable access are compromised when voluntary licences are used (http://bit.ly/3U0j6aQ). The MSF’s observations were proven when Cipla produced the anti-COVID drug, remdesivir, in India under a voluntary licence from Gilead Sciences, the owner of the patent on the medicine. The price of remdesivir fixed by Cipla for India was, in purchasing power terms, higher than that Gilead had charged in the United States.

COMMENT | The India-U.K. FTA spells a poor deal for public health

India’s demand will be affected

The CETA undermines India’s demand for technology transfer “on favourable terms” in several multilateral forums. This demand was first made through the United Nations General Assembly Resolution on the New International Economic Order (NIEO) in 1974. A key aspect of the NIEO was the call for facilitated technology transfer from advanced to developing countries to promote the industrialisation efforts of the developing countries (http://bit.ly/41ejRRl). However, despite their best efforts, little progress was seen regarding technology transfer.

The disappointment of developing countries was reflected in India’s Fourth Biennial Update Report to the United Nations Framework Convention on Climate Change in 2024: “Despite substantial national efforts and investments, barriers like slow international technology transfer and intellectual property rights (IPR) hinder the rapid adoption of [climate friendly] technologies” (http://bit.ly/3H1ITfU).

As India has compromised its long-held position that technology transfer to developing countries must be on “favourable terms”, its demand for climate-friendly technologies from advanced countries could lose its sting.

Biswajit Dhar is former Professor of Economics at the Jawaharlal Nehru University. K.M. Gopakumar is Senior Researcher and Legal Adviser, Third World Network

Published – August 04, 2025 12:48 am IST

India’s annual oil import bill could rise by $9-11 billion if the country is compelled to move away from Russian crude in response to U.S. threats of additional tariffs or penalties on Indian exports, analysts said.

India, the world’s third-largest oil consumer and importer, has reaped significant benefits by swiftly substituting market-priced oil with discounted Russian crude following Western sanctions on Moscow after its invasion of Ukraine in February 2022.

Russian oil, which accounted for less than 0.2% of India’s imports before the war, now makes up 35-40% of the country’s crude intake, helping reduce overall energy import costs, keep retail fuel prices in check, and contain inflation.

Editorial | ​Soured relations: On Trump’s 25% tariff, ‘penalty’

The influx of discounted Russian crude also enabled India to refine the oil and export petroleum products, including to countries that have imposed sanctions on direct imports from Russia. The twin strategy of Indian oil companies is posting record profits.

This is, however, now under threat after U.S. President Donald Trump announced a 25% tariff on Indian goods plus an unspecified penalty for buying Russian oil and weapons. The 25% tariff has since been notified, but the penalty is yet to be specified.

Coming within days of the European Union banning imports of refined products derived from Russian-origin crude, this presents a double whammy for Indian refiners.

Sumit Ritolia, Lead Research Analyst (Refining & Modelling) at global real-time data and analytics provider Kpler, termed this as “a squeeze from both ends”.

EU sanctions — effective from January 2026 — may force Indian refiners to segment crude intake on one side, and on the other, the U.S. tariff threat raises the possibility of secondary sanctions that would directly hit the shipping, insurance, and financing lifelines underpinning India’s Russian oil trade.

“Together, these measures sharply curtail India’s crude procurement flexibility, raise compliance risk, and introduce significant cost uncertainty,” he said.

Last fiscal, India spent over $137 billion on import of crude oil, which is refined into fuels like petrol and diesel.

For refiners like Reliance Industries Ltd and Nayara Energy — who collectively account for a bulk (more than 50% in 2025) of the 1.7–2.0 million barrels per day (bpd) of Russian crude imports into India – the challenge is acute.

While Nayara is backed by Russian oil giant Rosneft and was sanctioned by the EU last month, Reliance has been a big fuel exporter to Europe.

As one of the world’s largest diesel exporters — and with total refined product exports to Europe averaging around 200,000 bpd in 2024 and 185,000 bpd so far in 2025 — Reliance has extensively utilised discounted Russian crude to boost refining margins over the past two years, according to Kpler.

“The introduction of strict origin-tracking requirements now compels Reliance to either curtail its intake of Russian feedstock, potentially affecting cost competitiveness, or reroute Russian-linked products to non-EU markets,” Mr. Ritolia said.

However, Reliance’s dual-refinery structure — a domestic-focused unit and an export-oriented complex — offers strategic flexibility. It can allocate non-Russian crude to its export-oriented refinery and continue meeting EU compliance standards, while processing Russian barrels at the domestic unit for other markets.

Although redirecting diesel exports to Southeast Asia, Africa, or Latin America is operationally feasible, such a shift would involve narrower margins, longer voyage times, and increased demand variability, making it commercially less optimal, he said.

Kpler data shows a notable decline in India’s Russian crude imports in July (1.8 million bpd versus 2.1 million bpd in June), aligning with seasonal refinery maintenance and weaker monsoon-driven demand. However, the drop is more pronounced among state-run refiners, likely reflecting heightened compliance sensitivity amid mounting geopolitical risk.

Private refiners, who account for over 50 per cent of Russian crude intake, have also begun reducing exposure, with fresh procurement diversification underway this week as concerns over US sanctions intensify.

Mr. Ritolia said replacing Russian crude isn’t plug-and-play. The Middle East is the logical fallback, but has constraints – contractual lock-in, pricing rigidity, and a mismatch in crude quality that affects product yield and refinery configuration.

“The risk here is not just supply but profitability. Refiners will face higher feedstock costs, and in the case of complex units optimized for (Russian) Urals-like blends, even margins will be under pressure,” he said.

In the future course, Kpler believes India’s complex private refiners — backed by robust trading arms and flexible configurations — are expected to pivot toward non-Russian barrels from the Middle East, West Africa, Latin America, or even the U.S., where economics permits.

This shift, while operationally feasible, will be gradual and strategically aligned with evolving regulatory frameworks, contract structures, and margin dynamics.

However, replacing Russian barrels in full is no easy feat — logistically daunting, economically painful, and geopolitically fraught. Supply substitution may be feasible on paper, but remains fraught in practice.

“Financially, the implications are massive. Assuming a $5 per barrel discount lost across 1.8 million bpd, India could see its import bill swell by $9–11 billion annually. If global flat prices rise further due to reduced Russian availability, the cost could be higher,” it said.

This would increase fiscal strain, particularly if the government steps in to stabilize retail fuel prices. The cascading impact on inflation, currency, and monetary policy would be difficult to ignore.

Union Minister Nitin Gadkari addressing at a programme in Mangalagiri on August 2, 2025.
| Photo Credit: Special arrangement

Union Minister Nitin Gadkari addressing at a programme in Mangalagiri on August 2, 2025.
| Photo Credit: Special arrangement

The story so far: On July 30, U.S. President Donald Trump announced 25% tariffs on imports from India “plus a penalty”. While this puts to rest months of speculation over what the tariffs would be on Indian imports into the U.S., it opens up fresh uncertainties with respect to a potential bilateral trade agreement between India and the U.S.

What did Mr. Trump announce?

Taking to social media, Mr. Trump cited India’s tariff and non-tariff measures on trade, and its dealing with Russia on energy and military equipment, as the main reasons behind imposing the 25% tariffs and the penalty. There is no clarity yet on what the penalty will look like, but Mr. Trump has in the past threatened a 10% additional tariff on BRICS countries. If this comes to pass, then effective tariffs on Indian imports would be 35%. There is also a legislation in the U.S. in the process of being passed that could see an additional 500% tariff on India, China, and Brazil for their dealings with Russia.

What does it mean for India?

Tariffs are paid by importers. Therefore, tariffs on Indian imports would be paid by those in the U.S. that are importing Indian goods. That is, Indian goods will become more expensive for them. Therein lies the true problem for India.

On a macro level, the tariffs and the impact they will have on Indian exports are expected to only lower India’s GDP by 0.2%, according to research by the Bank of Baroda. So, if India’s growth forecast had been 6.6%, then these tariffs — if they are imposed — could lower growth to 6.4%. However, the issue arises in individual sectors. According to the Bank of Baroda, sectors such as garments, precious stones, auto parts, leather products, and electronics (although their inclusion is uncertain) could face the pinch and would have to rework their strategies. “The issue really is that some of the competing nations like Vietnam (20%), Korea (15%) and Indonesia (19%) have lower tariffs compared with India,” the Bank of Baroda added in its research note.

How did things come to such a pass?

While most trade deals are negotiated over years, Prime Minister Narendra Modi and Mr. Trump in February 2025 announced that they would conclude the first tranche of a trade deal by fall. To put this in perspective, the recently-signed Comprehensive Economic and Trade Agreement between India and the U.K. took about three years to negotiate.

What made the announcement by Mr. Modi and Mr. Trump notable was that it came before the latter’s big moves on reciprocal tariffs, which is what pushed other countries to start negotiating with the U.S. The announcement was thus a strong and positive commitment towards strengthening ties between the two countries. But then, on April 2, Mr. Trump announced his Liberation Day reciprocal tariffs. These included a 10% baseline tariff for all countries, and additional tariffs on a country-by-country case. For India, this total was 26%. However, just a week later, Mr. Trump announced a 90-day pause on these tariffs so that bilateral deals could be struck so as to reduce the U.S.’s trade deficit with most of its trading partners. The 90-day pause was to end in July, but Mr. Trump extended it to August 1.

What are the points of friction?

It’s hard to pinpoint any single recent development that has soured relations, but there have been several points of friction between the two countries in the past few months. The matter of India’s tariffs and non-tariff barriers has been something Mr. Trump has been highlighting since his first term as President. It was no surprise that he would take up the issue in his second term.

​Soured relations: The Hindu editorial on Trump’s 25% tariff, ‘penalty’

Mr. Trump has brought up India’s engagement with Russia, too, saying countries like India are partly financing Russia’s war with Ukraine. India, however, has reiterated that it will secure its national and energy security, and if that means buying cheap Russian oil, then that is what it would do. Russia currently accounts for about 35-40% of India’s oil imports, making it a significant partner. In addition, India has remained adamant about keeping core parts of its agriculture and dairy sectors out of trade deals, including with the U.S. This has upset negotiators on the U.S. side, but it is a ‘red line’ India will not cross. Opening up these sectors would expose India’s relatively low-productivity farmers to global competition, which will likely have devastating impacts on their livelihoods.

Then, there is the fact that Mr. Trump has repeatedly stated that it was him, and his trade talks, that encouraged India and Pakistan to agree to a ceasefire following the launch of Operation Sindoor by India. The fact that the Indian government has refuted it has only further angered Mr. Trump. Mr. Trump’s claims have irked the Indian establishment as well, since it has provided the Opposition a means to attack the government.

India has informed the World Trade Organization that it reserves the right to impose additional tariffs on imports from the U.S. to retaliate against its higher tariffs on items like steel, aluminium, and automobiles.

Taking these things together, Mr. Trump’s tariff announcement comes as a confirmation that at least one, if not all of these factors, worked toward souring relations.

Will India continue paying these tariffs?

Although there has been a lot of talk about a ‘mini-deal’ between India and the U.S. to walk back the reciprocal tariffs, Indian officials have been cagey about the date for such a deal. The tariff announcement by Mr. Trump confirms that such a deal is not coming.

However, the two sides have been remarkably consistent about their commitment of having some sort of trade deal finalised by the fall 2025 deadline. So far, negotiators from the two sides have met in New Delhi and Washington five times, including the first meeting in March where the Terms of Reference for the negotiations were finalised. The team from the U.S. will visit India in late August to take forward the talks. Things have, however, become trickier for Indian negotiators because Mr. Trump has now directly linked India’s dealings with Russia to India’s trade relationship with the U.S.

The tariffs will come into effect soon. According to an Executive Order dated July 31, Mr. Trump said that his duties on India and other countries would come into effect “7 days after the date of this order”.

What about deals with other countries?

Over the last month, Mr. Trump has concluded deals with the U.K., Indonesia, the Philippines, Japan, the EU, and South Korea. The deal with the U.K. does not specify a general tariff level, but it will see British car exports to the U.S. attract a 10% tariff, down from the earlier 27.5% and a removal of tariffs on aerospace exports to the U.S. Japan negotiated lower tariffs of 15% for its exports to the U.S., the same as the EU.

Published – August 03, 2025 02:50 am IST