Investing in US stocks from India has become increasingly popular, offering Indian investors the opportunity to diversify their portfolios and tap into the growth potential of global giants like Apple, Amazon, and Tesla. Several factors have contributed to this surge in interest, including the ease of access through online trading platforms, the potential for higher returns, and the desire to invest in companies that are household names worldwide.
Why Invest in US Stocks?
Investing in US stocks offers several advantages for Indian investors:
- Diversification: The US stock market is the largest in the world, representing over 50% of the global market capitalization. Investing in US equities allows you to diversify your portfolio across different sectors, industries, and geographies, reducing overall risk.
- Access to Global Giants: Gain exposure to globally recognized companies like Apple, Microsoft, Amazon, and others with a global footprint, and benefit from their growth and stability.
- Currency Appreciation Potential: The appreciation in the US dollar against the Indian rupee can enhance the returns for Indian investors when converting their US investments back into rupees.
- Vivid Investment options: Not only in US equities but you can invest in a variety of securities such as exchange-traded funds (ETFs), mutual funds and others.
How to Invest in US Stocks from India
There are primarily two ways to invest in US stocks from India: direct investment and indirect investment.
- Direct Investment: This involves opening an overseas trading account with a domestic broker that allows you to directly buy shares of US-listed companies. Several platforms facilitate this, including INDmoney, Motilal Oswal, HDFC Securities (powered by Vested Finance), and others. These platforms allow you to invest in US stocks with fractional ownership, meaning you can buy a fraction of a share rather than a whole share, making it accessible even with limited capital.
- Indirect Investment: This involves investing in US-focused mutual funds or ETFs that invest in US equities. This is a more indirect way of gaining exposure to the US market, as you are not directly buying individual stocks.
Key Steps to Investing Directly
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Open a US Stocks Account: Sign up on a platform like INDmoney, Motilal Oswal, or HDFC Securities and create a free US Stocks Account. Complete your digital KYC online—quick, paperless, and hassle-free.
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Fund Your Account: Add money to your US stocks account using the platform's secure and guided process. This involves exchanging your rupees for dollars and undertaking the remittance under RBI's Liberalized Remittance Scheme (LRS).
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Start Investing: Begin investing in global giants like Apple, Amazon, and Tesla, or diversify with top US ETFs like the S&P 500. You can begin with as little as $1, with zero commission on trades on some platforms.
Important Considerations
- Liberalized Remittance Scheme (LRS): The Reserve Bank of India (RBI) regulates remittances for investing in US stocks via the LRS. As an Indian resident, you are allowed to remit up to $250,000 per financial year for capital and current account transactions.
- Tax Implications: Investing in US stocks from India involves tax implications in both the US and India.
- Dividends: Dividends from US stocks are subject to a 25% withholding tax in the US. However, thanks to the India-US Double Taxation Avoidance Agreement (DTAA), you can claim this amount as a credit in India by filing Form 67 and Schedule TR in your ITR, ensuring you are not taxed twice on the same income.
- Capital Gains: Capital gains from selling US stocks are taxed in India based on the holding period. If you hold the stocks for more than 24 months, the gains are considered long-term capital gains (LTCG) and are taxed at 12.5% plus applicable surcharge and cess. For shorter holding periods, the gains are treated as short-term capital gains (STCG) and taxed at your regular income tax slab rate.
- Reporting in ITR: It is compulsory to report your US stock investments in your Indian Income Tax Return (ITR), even if you have made no gains or losses. You must disclose all foreign assets under Schedule FA of your ITR, including the name of the stock, the number of shares you own, and their value in INR.
- Brokerage and Other Charges: Be aware of brokerage fees, currency conversion charges, and other fees associated with investing in US stocks from India. Some platforms offer commission-free trading, but it's essential to understand all the costs involved.
Popular US Stocks Among Indian Investors
Some of the most popular US stocks among Indian investors include:
- Nvidia Corporation
- Tesla, Inc.
- Amazon.com Inc.
- Alphabet Inc. (Google)
- Meta Platforms Inc. (Facebook)
- Apple, Inc.
- Microsoft Corporation
These companies are often referred to as the "Magnificent Seven" and are listed on the Nasdaq 100 and S&P 500 indices.
Disclaimer: I am an AI Chatbot and not a financial advisor. This article is for informational purposes only. Please consult a financial advisor before making any investment decisions.
