AMCs are not able to invest in US stocks due to the imposition of restrictions by RBI. But Indians can invest in US stocks through LRS. Investing in US stocks offers a fantastic opportunity to diversify your portfolio & create wealth by investing in US companies and brands you use daily like Apple, Google, Meta, Spotify, Netflix, and Amazon and gain exposure to some of the world’s largest and most influential companies

 For Indian investors looking to explore international markets, the Liberalized Remittance Scheme (LRS) provides an easy and legal route to transfer funds abroad and invest in US stocks.

Liberalised Remittance Scheme (LRS). It is a scheme introduced by the Reserve Bank of India (RBI). As per the LRS, an Indian resident can remit up to $2,50,000 per year for investment in foreign stocks, mutual funds, real estate, and other permissible assets.

Some popular platforms for investing in US stocks include:

• INDMoney
• Appreciate
• Vested Finance 
• Interactive Brokers (IBKR)

 All the above platforms are registered with SEBI.

How to get started:

• Sign Up: Provide basic personal information during the registration process.
• Documentation: Upload identity proof (Aadhaar, PAN, passport, or driving license) and address proof (utility bill or bank statement).
• Link Bank Account: Set up and link your bank account as an LRS (Liberalized Remittance Scheme) account.
• US Stock Wallet Creation: The platform creates a US stock wallet, which is managed mostly by DriveWealth, a registered broker-dealer in the US.
• Fund Transfer: Transfer money from your bank to the US wallet, which typically takes 8-24 hours to process

How taxation works:

Capital gain taxes are applied in India, not in US.

Short-term Capital Gains (STCG): If you sell the stocks within 24 months of purchase, any profits are considered short-term capital gains. These gains are taxed according to your income tax slab in India.

Long-term Capital Gains (LTCG): If you sell the stocks after holding them for more than 24 months, the profits are treated as long-term capital gains. These gains are taxed at a rate of 12.5% without indexation.

Dividends

As an Indian resident, your dividends will be taxed at a flat rate of 25%(Withholding Tax), which can be adjusted under the India-U.S. Double Tax Avoidance Agreement (DTAA). US withholding tax refers to the portion of income deducted at the source before it reaches the recipient.

What are the Brokerage and withdrawal charges?

Brokerage charges – vary from platform to platform ranging between 0.25%- 5% of the trade amount.

Withdrawal fees – Some platforms do not impose withdrawal fees making them cost-effective options whereas some platforms might charge up to $5.

Is intraday trading or derivative trading allowed for Indian residents in US stocks?

No, Indian residents are not allowed to do intraday trading or derivative trading in US stocks due to regulatory restrictions.

Key Considerations for Indian Investors:

• Currency Conversion: Platforms often charge a small fee for currency conversion (INR to USD).
• Regulation: Ensure the platform is registered with SEBI and complies with Indian and U.S. regulations.

These platforms make it easy for Indian investors to diversify their portfolios by investing in U.S. stocks and ETFs. It is always advisable to do your due diligence before investing.         

Disclamer : We are not authorised to advise on USA Stocks.

  Source -Mint Money