US Stocks| Budget 2026 should cut LRS TCS and offer multi-year clarity on global investing: Nikhil Advani of LGT Wealth

With Indian investors showing growing interest in US stocks and global markets, Budget 2026 has an opportunity to remove key regulatory and tax hurdles that limit overseas investing, according to LGT Wealth India.

Nikhil Advani, MD – International Business at LGT Wealth India, says restoring tax collected at source (TCS) on overseas remittances to 5% and providing multi-year policy clarity on global investment rules could significantly improve liquidity, reduce operational ambiguity and encourage systematic global diversification.

He adds that predictable regulations and aligned tax treatment with domestic equities are essential to make international investing smoother and more attractive for Indian households. Edited Excerpts –


Q) Amid geopolitical concerns, can Budget 2026 further simplify the Liberalised Remittance Scheme (LRS) to make global investing smoother for Indian investors?
A) Yes. One impactful step would be to restore TCS on overseas remittances to 5%, from the current 20%. Lower TCS will not change eventual tax liability, but it will improve liquidity position and compliance efficiency for households, especially when remittances are for regulated financial investments.

Streamlining documentation, reducing operational ambiguity for banks, and providing stable multi-year guidance would further help Indian investors access global opportunities smoothly while ensuring robust regulatory oversight.

Q) Should Budget 2026 provide clearer long-term guidance on overseas investment rules to reduce policy uncertainty?
A) Greater long-term clarity on overseas investment rules would significantly reduce policy uncertainty for both investors and intermediaries. Today, the pace of regulatory updates across LRS, ODI and global investment frameworks often creates interpretational challenges, even when the intent is sound.

Providing a multi‑year roadmap, rather than piecemeal circulars, would give households, wealth managers, and product manufacturers the confidence to plan global allocations more efficiently.

Equally important is harmonised guidance across RBI, SEBI, CBDT and IFSCA. This will ensure consistency, reduce operational ambiguity, and strengthen compliance quality. In essence, predictability and coordination are what the ecosystem need most.

Q) How can Budget 2026 rationalise the tax treatment of overseas equity and ETF investments to improve post-tax returns?
A) Currently, short term capital gains (STCG) on overseas equities and ETFs held for less than 24 months is taxed at the investor’s income tax slab rate. To improve post‑tax outcomes, Budget 2026 could simply align the tax treatment of global equities and ETFs with domestic at 12.5% long-term and 20% short-term.

The current differential tax treatment often confuses investors and distorts allocation decisions.

A unified capital gains framework would create neutrality between India and international markets, encourage systematic global diversification, and make compliance significantly simpler for both investors and distributors, all without materially impacting tax revenues.

Q) Should global diversification be positioned as a core part of Indian household asset allocation? What is the ideal allocation for investors?
A) Absolutely! Global diversification must be a core part of Indian household portfolios. While we are positive on India as an investment destination, international investing is necessary to access world class innovation, to reduce home country bias, to provide a hedge against a depreciating Rupee, and to create a corpus to meet future offshore needs such as foreign education or overseas real estate.

In 2025, the Indian equity market delivered a 9% Rupee return. If you take into consideration 6% Rupee depreciation that year, Indian market return in dollar terms worked out to a mere 3%.

The All Country World Index (ACWI) which has 65% exposure to the US and the balance 35% exposure to other global equity markets such as Europe and Japan delivered a 22% return during the same period. Adding a global ETF like ACWI to the India portfolio would have given a higher total return to Indian investors.

Ideal allocation varies by risk profile, but a 20% structural global allocation is suggested. This will take time to achieve owing to LRS limit of $ 250,000 per annum.

However, wealthy Indian families can have a larger exposure to the international markets by investing in GIFT City funds through their corporate entities, via the OPI route. Through our GIFT City branch, LGT is well positioned to cater to both individual and corporate clients via our GIFT City equity and fixed income funds.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)