Capital gains from US stocks are taxed in India based on how long you hold the stock before selling it. This holding period determines whether the gains are classified as LTCG (Long-Term Capital Gains) or STCG (Short-Term Capital Gains), and each has a different tax treatment:

• Long-Term Capital Gains (LTCG): These apply if you hold the US stock for more than 24 months. The good news is that LTCG on US stocks benefits from a lower tax rate in India. You’ll pay a flat 20% tax on the LTCG amount plus any applicable surcharge and cess (additional taxes). However, it’s important to note that India doesn’t allow indexation for LTCG on US stocks, which means you can’t adjust the purchase price for inflation.

• Short-Term Capital Gains (STCG): If you hold the US stock for less than 24 months, any profits from selling it are considered STCG. These are taxed less favorably. The STCG tax rate is based on your income tax slab in India. So, depending on your overall income, you could be taxed at a higher rate than LTCG.
Here is the summerise table to understand capital gain tax:

Holding Period Over 24 months Less than 24 months

Capital Gains Type Long-Term (LTCG) Short-Term (STCG)

Tax Rate 20% + surcharge & cess (no indexation) Your income tax slab rate

.