One more piece that every direct investor must know before they begin.

Indian residents are required to disclose all foreign assets in their income tax return. Not just report the income earned from them, but list the assets themselves. Three schedules exist for this: Schedule FA for foreign assets, Schedule FSI for foreign source income, and Schedule TR for tax relief claimed under DTAA.

The reporting uses the calendar year, not the financial year. If you bought Microsoft shares in September 2022, you must disclose that holding in your FY23 return because you held it during calendar year 2022, even if you sold before filing.

The penalties for failing to disclose fall under the Black Money Act. This is not the usual income tax notice and interest situation. The consequences are of a different order, including the possibility of prosecution. If you hold US stocks directly and are unsure about the disclosure requirements, involving a tax advisor for at least the first filing year is worth every rupee of their fee.