How to buy US Treasury Bonds from India (2026)

Bonds pay far more than they did at the start of the decade. At the onset of 2022, a six-month US Treasury bill yielded 0.22%. Yields have since eased from their peak, with the Federal Reserve cutting three times in the second half of 2025 and holding the target range at 3.50% to 3.75% since, but Treasuries still pay considerably more than in 2022. Check the live yield for your chosen maturity before committing.

While Americans can easily buy Treasury securities through TreasuryDirect.gov, it is not as straightforward for Indian investors. The good news is that it is still possible to invest in US Treasuries from India through different products.

This article will provide a step-by-step guide on how Indian investors can invest in US Treasury Bonds, including T-bills and T-notes, through the secondary market or ETFs. We also cover the RBI and tax rules you have to work within, because those determine how you fund the investment and what it ends up costing you.

What are US Treasury Bonds?

US Treasury Bonds are debt securities issued by the United States Department of the Treasury to finance government operations and pay for public services. They are backed by the full faith and credit of the US government, which places them among the highest credit quality investments available.

Treasury bonds have a fixed interest rate and a maturity date ranging from a few months to thirty years. They are sold at auction and can be purchased by individuals, corporations, and foreign governments. In the US, interest earned on Treasury securities is exempt from state and local taxes, though it remains subject to federal tax for US taxpayers.

Treasury Bonds vs Treasury Notes vs Treasury Bills

Treasury Bonds, Treasury Notes, and Treasury Bills are all debt securities issued by the US Department of the Treasury, but they differ in maturity dates and interest rates.

• Treasury Bills (T-bills) have the shortest maturity date, typically less than one year, and are sold at a discount to their face value. They are short-term instruments and are often used as a government funding source.
• Treasury Notes (T-notes) have a maturity date of 2 to 10 years and pay interest every six months.
• Treasury Bonds (T-bonds) have the longest maturity date, ranging from 10 to 30 years, and pay interest every six months. They are often used as a long-term holding.

Which of the three pays most is not fixed. It depends on the shape of the yield curve at the time, and shorter maturities have at points in recent years yielded more than longer ones.

Before you invest: the RBI rules you need to know

Buying a foreign security from India is not just a matter of choosing a broker. Under FEMA, every overseas investment by an Indian resident has to be routed through the Reserve Bank of India’s Liberalised Remittance Scheme (LRS). Three practical consequences follow.

There is an annual ceiling. Each resident individual, including minors, can remit up to USD 250,000 per financial year. The limit is cumulative across every LRS purpose combined, so overseas education fees, foreign travel and property purchases all draw on the same allowance. Each family member with their own PAN has an independent limit.

You can only fund by bank wire. UPI, credit cards and debit cards cannot be used to fund an overseas brokerage account.

TCS applies above ₹10 lakh. Tax Collected at Source of 20% applies to LRS remittances for investment purposes on the amount above ₹10 lakh in a financial year, a threshold raised from the earlier ₹7 lakh. The threshold is aggregated across all your banks, so splitting remittances between institutions does not avoid it. TCS is not a permanent cost: it is credited against your PAN, appears in Form 26AS and is adjusted against your tax liability when you file, with any excess refunded. It does, however, tie up cash in the meantime. To remit ₹20 lakh you need to arrange ₹22 lakh.

One further point on brokers. Interactive Brokers operates a SEBI-registered Indian entity, Interactive Brokers India Pvt. Ltd., which is for trading on the NSE and BSE. To buy US Treasuries or US-listed ETFs you need an account with one of the group’s global entities, funded from India under LRS. These are separate accounts and the distinction catches out a lot of first-time investors.

How to buy US Treasury Bonds from India

As an American citizen, you can invest directly in US Treasury securities through TreasuryDirect.gov. As an Indian resident, you are not eligible to participate in TreasuryDirect.gov. In essence, your options are limited to purchasing bonds on the secondary market or through bond exchange-traded funds (ETFs).

Please note that some brokers do not support these products, so below we will focus on Interactive Brokers, an online broker founded in 1978 which offers one of the widest bond selections available to non-US investors.

Option 1: buy US Treasury Bonds in the secondary market

Interactive Brokers (IBKR) provides the opportunity to invest in T-Bills and Treasury Bonds in the secondary market. Treasury investments are highly liquid and feature low spreads. Additionally, the commission per trade is 0.002% of the Face Value (minimum of $5).

Interactive Brokers offers a vast universe of over 1 million bonds, including US government securities, corporate bonds, and more. You can use their Bond Search tool (“Bond Scanner”) to search availability by maturity, yield, and interest rate and compare prices against other brokers.

However, since these are considered “complex instruments”, you must ask IBKR for trading permission for bonds in your account settings.

One advantage of holding Treasuries directly rather than through a fund: interest paid on US Treasury securities to non-resident aliens is generally exempt from US withholding tax under the portfolio interest exemption. Fund distributions are treated differently depending on how the fund designates them, so confirm the position with a tax adviser before assuming either way.

Here’s an example of a US bond on IBKR’s Web platform (Web Portal):

Option 2: Buy US Treasury Bond ETFs

When selecting a Government Bond ETF, it’s crucial to evaluate both the risk and return it offers. Yield-to-maturity represents the anticipated return on investment. Duration, conversely, indicates how sensitive the fund is to changes in interest rates: a duration of 17 means a one percentage point rise in rates would cut the price by roughly 17%.

If you are an Interactive Brokers user, you have the option to purchase a variety of bond ETFs, tracking short-term and long-term bonds alike. Some notable examples include:

1. iShares 1-3 Year Treasury Bond ETF (SHY):

Summary of the characteristics of SHY ETF (factsheet):

• Expense ratio: 0.15% (per annum)
• Benchmark: ICE US Treasury 1-3 Year Index
• Holdings: 126
• Weighted Average Maturity: ~2 years
• Effective Duration: ~1.90
• Currency: USD
• Domicile: United States

2. Vanguard Intermediate-Term Treasury ETF (VGIT):

Summary of the characteristics of VGIT ETF (factsheet):

• Expense ratio: 0.04% (per annum)
• Benchmark: Bloomberg US Treasury 3-10 Year Index
• Holdings: 105
• Weighted Average Maturity: ~5.6 years
• Effective Duration: ~5.2 years
• Currency: USD
• Domicile: United States

3. iShares 20+ Year Treasury Bond ETF (TLT):

Summary of the characteristics of TLT ETF (Factsheet):

• Expense ratio: 0.15% (per annum)
• Benchmark: ICE US Treasury 20+ Year Index
• Holdings: 42
• Weighted Average Maturity: ~25.50 years
• Effective Duration: ~17.40 years
• Currency: USD
• Domicile: United States

Note the duration figure on TLT. It is a long-dated fund and its price moves a great deal when rates move, which surprises investors who assume any government bond fund behaves like a cash substitute.

All three of these ETFs are unhedged to the Indian Rupee (INR), so by investing through them you are accepting currency risk. If your account balance is in INR and you invest in USD, you will also have to convert your money and the broker will charge a currency conversion fee.

There is one further consideration specific to these funds. All three are domiciled in the United States, which makes them US-situs assets for estate tax purposes. See the tax section below.

Tax and reporting for Indian investors

Indian residents are taxed on worldwide income, so gains and income from US Treasuries have to be reported in India regardless of where the money sits.

Capital gains. Gains on foreign securities are taxed in India, with the rate depending on the holding period. Confirm the current treatment for debt instruments specifically with a tax professional, as the rules for foreign debt differ from those for listed Indian equity and have been amended in recent budgets.

US estate tax. This is the point most often overlooked. The US taxes “US-situs assets” held by non-resident aliens, and US-listed stocks and US-domiciled ETFs qualify. The exemption for non-resident aliens is only USD 60,000, against roughly USD 14 million for US citizens, with rates running from 18% up to 40% above that. Most retail portfolios sit below the threshold, but if you are building a substantial position, UCITS ETFs domiciled in Ireland or Luxembourg do not carry the same exposure and are worth comparing.

Schedule FA. Foreign assets, including overseas brokerage accounts and the holdings inside them, must be disclosed in Schedule FA of your Income Tax Return. Non-disclosure carries penalties under the Black Money Act, and these are severe relative to the sums usually involved.

Withholding and foreign tax credit. Filing a W-8BEN with your broker lets you claim the reduced rate available under the India-US tax treaty on US dividends. Where US tax has been withheld, Form 67 must be filed with or before your ITR to claim a foreign tax credit.

None of the above is tax advice, and individual circumstances differ. Speak to a qualified cross-border tax adviser before investing.

Pros and cons of investing in US Treasury Bonds from India

Bottom line

Investing in US Treasuries from India is possible and reasonably straightforward once the paperwork is in place. Using a platform like Interactive Brokers, investors can access the US Treasury market and purchase Treasury Bonds and T-Bills on the secondary market. A Government Bond ETF is the simpler route and gives exposure across a range of maturities in a single holding.

The three things to settle before you start are the ones that sit outside the investment itself: the LRS route and its USD 250,000 annual cap, the 20% TCS above ₹10 lakh, and the Schedule FA reporting obligation that follows. If your position is likely to grow past USD 60,000, compare Irish-domiciled UCITS Treasury ETFs against the US-domiciled funds above before choosing, because the estate tax treatment differs materially.

Then consider the investment risks themselves: currency movements between USD and INR, and interest rate risk, which is far larger on a long-dated fund like TLT than on a short-dated one like SHY. Checking the yield-to-maturity and duration of any bond ETF will tell you most of what you need to know about both the return you can expect and the risk you are taking to get it.