Guide to Invest in U.S. Stocks from India: All You Should Know

For Indian investors who want to diversify their portfolios or catch the growth wave of world-class companies like Apple, Amazon, or Tesla, a rare and attractive option has benefited: Investing in U.S. stocks. The Reserve Bank of India (RBI) has also made such investments more accessible by allowing them under the Liberalized Remittance Scheme (LRS). Here’s a step-by-step approach to invest in U.S. stocks from India.

Why Invest in U.S. Stocks: Benefits

1. Global Diversification:

Investing in U.S. stocks is one good way to diversify away from the Indian market and own a piece of the largest economy in the world. “And it also enables investors to participate in growth areas like technology, health care and clean energy.”

2. Currency Advantage:

As the U.S. investments are dollar denominated, Indian investors benefit indirectly from the construction of the appreciation in the U.S. dollar against the Indian rupee.

3. Access to Leading Companies:

The U.S. markets have the most dominant and profitable companies, and they have opened up for Indian investors to invest and benefit from their success.

Getting Started: The Process

1. How to Choose an Investment Platform

Investment in U.S stocks from India can be done through different platforms. Here are some notable ones:

• Vested Finance:

Unlimited access to 5,000+ U.S. stocks and ETFs Vested also provides curated portfolio (called Vests) for novice investors to get started.

• INDmoney:

Some of the most popular features that make INDmoney stand out include its easy to use interface and zero-commission trading, real-time stock tracking & financial advisory.

• Appreciate:

While it's primarily focused on U.S. stock investing, it's a complete global allocation tool as well as it includes portfolio management capabilities.

Account creation and KYC compliance

Still, these platforms are simple to set up an account with. Here’s what you need to do:

• Submit your PAN card, address proof, tax identification number (TIN) and other relevant documents.

• KYC (Know Your Customer) verification is mandatory to continue trading or using a specific service in adherence to regulatory requirements.

After verifying your account, you’re ready to start investing.

How to Finance Your U.S. Stock Wallet

The LRS of the RBI allows Indian residents to remit up to $250,000 for investment in one financial year outside India. Move money into the account for U.S. stocks:

• Then pay from indian bank account to buy on investment platfrom.

• Only if absolutely necessary, wire transfer services may be used but this includes additional charges.

All remittances must be properly documented for compliance in addition to taxation purposes.

Private Landowners and Capital Gains Taxes on U.S. Stocks

Understanding the tax implications is critical to maximizing your returns and avoiding penalties.

1. Capital Gains Tax

Short Term Capital Gains — Profit from sale of stocks within 24 months of purchase is added to the income and taxed at the income tax slab.

Long-Term Gains: 20 per cent with indexation for equity held for more than 24 months.

2. Tax on Dividends

Dividends earned from U.S. stocks are taxed at 25% in the U.S. You are liable to pay India tax on your income in the U.S., but Indian tax law, following the provisions of the Double Taxation Avoidance Agreement (DTAA) between India and the U.S, allows you to claim a tax credit for taxes paid in the U.S. against your Indian tax liability.

Key Considerations

1. Currency Fluctuations:

Even if dollar appreciation is a positive thing, the short-term fluctuations in the dollar impact returns.

2. Regulatory Compliance:

Investors will have to adhere to the LRS limits and also keep a record of all such transactions.

3. Platform Fees:

Look into the fees that platforms charge, such as transaction fees, withdrawal fees and currency conversion rates.

Conclusion

Investing in us stocks is a great road map for Indian investors for global diversification & Creation of wealth. From Vested Financing to INDmoney and Appreciate, cross-border investing has never been easier. Recognizing the different rules, tax treatment, and the risks associated with investment — can help make better decisions and help optimize your journey here.

While keeping up with the investments may be a task for many, there is plenty of opportunities for both novices and seasoned professionals to invest in the global economy today.