How to Invest in US Stock Market From India

Key Highlights Indian residents can invest in shares listed on US exchanges through platforms offering international investing. The money is generally transferred under RBI’s Liberalised Remittance Scheme or LRS. A resident individual can remit up to USD 250,000 in a financial year for permitted transactions under LRS. Investing in US stocks also involves forex charges, taxes, TCS, and currency movement. You can do fractional investing as well, if the platform permits you.

You can invest in the US stock market from India using trading platforms. There are certain brokers and platforms that help you with this. This means you can invest in shares listed on stock exchanges such as the Nasdaq or the NYSE.

The process is slightly different from buying shares in India. This is where you must understand the rules. So, before you invest in US stocks from India, read this guide to find the details.

Can Indians Invest in the US Stock Market?

Yes. Resident Indians can invest in eligible US-listed shares. But they must follow the RBI and FEMA rules.

Such investments are generally made through the Liberalised Remittance Scheme. Under LRS, a resident individual can remit up to USD 250,000 during a financial year for permitted transactions.

The important thing here is that this is the overall LRS limit. It is not a separate USD 250,000 limit for US stocks alone. Other eligible overseas remittances made during the financial year are also counted under it.

So, if a part of the limit is already used, the amount that you can invest will be lower.

How to Invest in US Stock Market From India?

If you want to know how to invest in US stock market from India, start be opening trading account. For the details, follow the steps here:

1. Choose a Platform Offering US Stocks

Look for a platform. This should be one that allows you access to US-listed companies.

Check the stocks and ETFs that are listed there. Check before opening the account. Compare the charges and facilities. See which trading platform offers you the best service.

Look for a platform that offers you better details and support. Also, check how the shares will be held. Once you have found the match, open the account.

2. Complete the KYC

This is quite important and should not take more than a couple of minutes. You would need to submit the following details:

• PAN.

• Identity proof.

• Address proof.

• Bank account details.

• Other declarations required for overseas investing.

You may also be required to complete Form W-8BEN. All these things done will help you to set up your account well.

3. Transfer Money From India

To buy US stocks, you will first need to send money outside India. This should be in dollars. Before doing so, check the exchange rates.

Look for the charges as well. Once done, decide the amount that you wish to transfer for the investment.

4. Select the Stocks You Want to Buy

Once the dollars are available in your account, you can buy the shares. If you are checking how to buy US stocks from India, this is where you can select the company and place the amount you want to invest.

You may also get the option to buy fractional shares.

It means that if a share is worth USD 500, you can buy a part by investing USD 100. This is a good way to start when you have limited funds.

5. Place the Order

The final step is to place the buy order through the platform. This is where your money invested will start to work for you.

A US stock market investment from India also comes with currency movement. A US stock may gain in dollar terms, but your rupee return can be different depending on how the currency has moved during the same period.

How Much Can You Invest in US Stocks From India?

A resident individual can remit up to USD 250,000 during a financial year under LRS for permitted transactions.

But remember, this includes the other eligible remittances you may have already made under the scheme.

TCS is another point you need to consider. For applicable LRS remittances, the current threshold is Rs. 10 lakh during a financial year. A 20% TCS applies on the amount above this threshold for purposes other than education and medical treatment.

For example, if your applicable remittances during the year are Rs. 14 lakh, TCS would generally apply on Rs. 4 lakh.

The TCS collected is usually adjusted later on.

What Are the Costs of Investing in US Stocks?

The main costs when you invest in US stocks for Indians include brokerage and rates. The charges that you should know are as follows:

Knowing all these costs can help you manage your investment better. 

How Are US Stocks Taxed in India?

For US stocks investment India, the tax will be on capital gains and dividends. Here is what you should know:

1. Capital Gains

The capital gain are taxed based on the time you have hold the shares. You can understand this as follows:

• Say, you hold foreign shares for more than 24 months. Here, the gains are treated as long-term and taxed at 12.5% without indexation.

• If you sell them within 24 months, the gains are treated as short-term and taxed at your applicable tax rate.

2. Dividends

If the US company declares a dividend, tax may be withheld before the money reaches you. The dividend income may also need to be included in your taxable income in India. 

This is why it is useful to keep the dividend and tax statements provided by the platform.

Do You Need to Report US Stocks in Your ITR?

Yes. US stocks may be subject to foreign asset and income reporting requirements in India.

Depending on your tax position, details of the foreign shares, dividend income, capital gains, and foreign taxes paid may need to be reported while filing the return.

It is better to keep the records from the start. Save the investment statements, remittance details, dividend records, and sale transactions instead of trying to collect everything at the end of the year.

What Should You Check Before Investing in US Stocks?

Before investing, check the company along with the cost and additional risks that come with an overseas investment.

The key points include:

• The company’s business and financial position.

• Current stock valuation.

• Your investment period.

• Currency risk.

• Forex and platform charges.

• Tax implications.

• The amount of international exposure already in your portfolio.

When you plan to invest in the US stocks, you would need to keep an eye on these as well. Managing the risk is key here, and when you understand the factors impacting, you will be in a better position to gain good returns over time.

You still need to understand the company and see whether it fits your portfolio.

Conclusion

Understanding how Indians can invest in US stocks is mainly about knowing the right process. You start by selecting the right platform and planning your investment. Once done, you can start investing with proper planning.

But you would need a system to analyse the same. This is where you would need the support of a platform like Rupeezy. Open a trading and demat account here and get all the insights you need. Start investing with confidence and build a portfolio that grows.

FAQs

1. Can Indians Invest in US Stocks?

Yes. Indian residents can invest in eligible US-listed stocks. You can do this by opening a trading account with a platform that offers the feature.

2. How Much Can Indians Invest in US Stocks?

A resident individual can remit up to USD 250,000 in a financial year under LRS for permitted transactions. Other eligible LRS remittances also count within the same limit.

3. Can Indians Buy Fractional US Shares?

Yes. Some platforms allow fractional investing. By doing this, you can own a part of the share and earn from the same.

4. Is TCS Applicable on US Stock Investments?

Yes. TCS can apply when applicable LRS remittances cross Rs. 10 lakh during a financial year. For general investment-related remittances, 20% TCS generally applies on the amount above the threshold.

5. Are US Stocks Taxable in India?

Yes. The capital gains and dividends on US stocks are taxable in India. It will be based on nature and tenure.