The phrase itself causes half the confusion. Readers ask us how to buy US mutual funds, and mean four different things.
At Belong, we start by fixing the vocabulary. It changes what you should actually do next.
Some want an Indian fund that holds US stocks. Others want to own US shares directly through an overseas account.
Both are reasonable. They are also taxed differently, reported differently, and carry different risks.
First, a terminology correction
A US mutual fund, strictly speaking, is a fund registered and domiciled in the United States.
Most US fund houses do not sell those schemes to investors living in India. Cross-border distribution rules make it impractical.
So the literal answer to the question is usually no. What exists instead are four workable routes to the same exposure.
Understanding the difference between them is the whole task. Our note on direct versus indirect options frames the same choice.
👉 Tip: Decide whether you want to own the fund or own the exposure. That single answer eliminates two of the four routes.
The four routes that actually exist
Route one: Indian international and feeder funds
These are SEBI-regulated rupee schemes that invest in US markets on your behalf. You buy them like any domestic fund.
No remittance, no overseas account, no foreign asset reporting. That simplicity is the appeal.
The catch is supply. Indian mutual funds share an industry-wide overseas investment ceiling, and many schemes have paused fresh subscriptions.
Our list of international mutual funds for Indians covers what this category looks like.
Route two: GIFT City outbound funds
These are dollar-denominated schemes based in India's IFSC, regulated by IFSCA rather than SEBI.
They sit outside the domestic overseas ceiling, so they have not faced the same subscription pauses.
Passive fund-of-funds tracking major US indices launched from GIFT City during 2026. You can screen what is open on the GIFT City mutual funds explorer.
For actively managed global exposure, the DSP Global Equity Fund is the established option.
The comparison in direct US stocks versus GIFT City mutual funds is worth reading before choosing.
Route three: US-listed ETFs through an overseas broker
You remit dollars under the Liberalised Remittance Scheme and buy US-listed funds directly.
You get the widest product shelf. You also take on the most paperwork and the most tax exposure.
We cover the remittance mechanics in sending money abroad for investments.
Route four: Ireland-domiciled UCITS funds
These hold the same underlying US companies but are legally domiciled in Ireland.
For an Indian resident, that domicile difference matters more than most people realise. The estate tax section below explains why.
See GIFT City versus offshore mutual funds for how offshore wrappers compare.
Larger portfolios sometimes use GIFT City alternative investment funds, where minimums and lock-ins are higher.
The process, if you use the LRS route
Only routes three and four need this. Routes one and two are simpler for most people.
Complete KYC with an authorised dealer bank or an IFSCA-licensed platform.
Submit the LRS declaration form for the purpose of your remittance.
Expect tax collected at source above an annual remittance threshold.
File Form W-8BEN so treaty dividend withholding applies instead of the default rate.
Fund the account, then buy the fund or ETF you selected.
Tax collected at source is not a final tax. It is creditable against your Indian liability when you file.
👉 Tip: Stagger your remittances across the year. Concentrating them creates an avoidable cash-flow drag.
The compliance layer nobody mentions until March
This is where residents get caught, and it has real penalties attached.
If you hold foreign assets, you must disclose them in the foreign asset schedule of your Indian return.
The obligation is disclosure, not tax. Non-disclosure is treated far more seriously than a small tax shortfall.
You will also report gains separately, and claim foreign tax credit through the prescribed form. The India-US DTAA governs what credit you can claim.
Note that Indian feeder funds and GIFT City schemes have different reporting profiles. Check yours rather than assuming.
What most guides miss: US estate tax
This is the single most overlooked risk for Indian residents holding US assets.
India's tax residents are treated as non-resident aliens by the US tax authority. That status carries a very low estate tax exemption.
US-situs assets above that threshold can face estate tax at steeply progressive rates when the holder dies.
US-situs includes directly held US shares, US-domiciled ETFs and US retirement accounts. Indian assets are not affected.
India has no estate tax treaty with the US. The DTAA covers income tax, not estate tax, so there is no treaty relief here.
Ireland has an estate tax treaty with the US. Units of an Ireland-domiciled UCITS fund are generally not treated as US-situs.
That is why route four exists. It holds the same companies without the same succession exposure.
👉 Tip: If your US holdings are growing past a modest size, get cross-border estate advice. This is not a do-it-yourself area.
Costs, and what quietly reduces your return
Currency conversion spread is usually the largest hidden cost. It is charged once on the way in and again on the way out.
Expense ratios differ sharply between passive and active structures. Over decades, compound interest magnifies small annual differences.
Dividend withholding applies to US-listed holdings. Filing the right form reduces the rate but does not remove it.
Avoid products offering leverage or requiring margin. They are a different activity from long-term global allocation.
Think about the future value of your allocation, not this quarter's move.
If you are an NRI, or planning to return
Your position is different, and easier in some ways.
As an NRI, you do not need the LRS route. You are already investing foreign currency, so remittance limits do not apply.
Inbound GIFT City schemes are open to you as well. Two examples are the Tata India Dynamic Equity Fund and the Sundaram India Mid Cap Fund.
Those are closed to residents. For regional diversification, the Edelweiss Greater China Equity Fund is another option, subject to country rules.
Planning to move back changes the picture again. Read should you exit US ETFs before moving to India.
Many returning NRIs keep a dollar base alongside GIFT City deposits while their residential status settles.
Decision clarity
If you want simplicity above all, use an Indian feeder fund and skip the paperwork.
If Indian feeder funds are closed to you, GIFT City outbound funds are the practical substitute.
If you want the widest choice, use LRS, and accept the reporting load.
If your US holdings are becoming substantial, prefer Ireland-domiciled wrappers.
If your corpus is small, the friction of LRS is rarely worth it.
Start small if you are testing the process. Our note on investing with small amounts covers that approach.
Build the Indian base first, using our mutual funds page, then add the global layer.
Mistakes we see repeatedly
Assuming Indian feeder funds are always available.
The overseas ceiling can close them without warning.
Skipping the foreign asset disclosure.
The penalty regime here is significantly harsher than most people expect.
Buying single US stocks and calling it diversification.
See US stocks versus global mutual funds.
Ignoring domicile.
Two funds holding identical companies can carry very different succession outcomes.
Watching the index daily.
You can follow global cues on the GIFT Nifty tracker without acting on them.
FAQ
Can I buy a US-domiciled mutual fund directly from India?
Generally no. Most US fund houses do not accept investors resident in India. Use an Indian feeder fund, a GIFT City scheme, or a US-listed or Ireland-domiciled ETF instead.
Do I need to report US holdings in my Indian tax return?
Yes, if you are a resident. Foreign assets must be disclosed in the relevant schedule, regardless of whether you made any gain during the year.
Is tax collected at source on LRS a real cost?
No. It is collected upfront and credited against your Indian tax liability when you file. The effect is on cash flow, not total tax.
Why would I choose an Ireland-domiciled fund over a US one?
Ireland has an estate tax treaty with the US. Units of an Irish-domiciled fund are generally not US-situs assets, which changes succession exposure.
What about primary market opportunities?
Those work differently from funds. Our IPO page and the guide to GIFT City IPOs explain that route separately.
Sources
RBI Liberalised Remittance Scheme framework and master directions.
Income Tax Department guidance on foreign asset reporting and foreign tax credit.
India-US Double Taxation Avoidance Agreement text.
IRS guidance on estate tax for non-resident aliens and US-situs property.
IFSCA (Fund Management) Regulations, 2025 and scheme disclosures.
SEBI framework on overseas investment limits for Indian mutual funds.
Limits, tax rates, thresholds and reporting forms change. Confirm current details on the RBI, Income Tax and IRS websites before acting.
Disclaimer
This article is for information only. It is not investment, tax or legal advice. Cross-border tax and succession rules are complex and personal. Please consult a qualified cross-border advisor. Belong is a SEBI-registered investment advisory platform.