Summary:
Curious about how to invest in US stock market from India? This beginner's guide shows how Indian investors can buy US stocks, ETFs, and indices legally.
Indian investors can tap into the U.S. stock market either directly through an overseas trading account connected or indirectly via U.S.-focused mutual funds, exchange-traded funds (ETFs), or Fund of Funds (FoFs).
Key points to note include the LRS remittance cap of $250,000 per year, applicable tax implications including dividend withholding and capital gains treatment, and the choice between user-friendly brokerage apps and traditional stock platforms.
Let's explore each aspect in detail, with guidance tailored to Indian market conditions in 2025.
1. Opening a Brokerage Account
Indian residents can open an overseas trading account through brokers who partner with U.S. exchanges or directly with global brokers.
Additionally, some app-based platforms enable investment in over 5,000 U.S. stocks and ETFs. However, under the Liberalised Remittance Scheme, each Indian resident can remit up to $250,000 per financial year for overseas investments.
Please note that remittances exceeding ₹10 lakh would attract a 20% TCS (Tax Collected at Source), which can be claimed back against income tax obligations.
2. Indirect Routes: Mutual Funds, ETFs, and FoFs
For investors preferring not to manage overseas accounts, indirect investment is an effective strategy. Funds of Funds (FoFs) allocate capital to U.S. mutual funds that follow indices such as the S&P 500 or Nasdaq.
Alternatively, platforms also offer India-listed ETFs that mirror ticker indices such as the S&P 500 or Nasdaq, providing seamless access and simplified tax and remittance compliance.
1. Dividend Taxation
Companies' dividends are subject to a 25% withholding tax. However, under the India-U.S. Double Taxation Avoidance Agreement (DTAA), Indian investors can claim a tax credit for this deduction when filing their Indian returns.
2. Capital Gains Treatment
Short-Term Capital Gains (STCG): Stocks held for less than 24 months are taxed per your applicable income tax slab.
Long-Term Capital Gains (LTCG): If held for over 24 months, profits are taxed at 12.5% along with additional surcharges, not adjusted for inflation.
3. Regulatory Compliance
Ensure your remittance adheres to the LRS limit. Certain institutions offer comprehensive solutions that facilitate U.S. investments through platforms while ensuring full compliance.
1. Decide Between Direct vs Indirect Exposure
Direct investing suits investors focused on specific U.S. blue-chip or niche stocks. Indirect routes are effective for easier and varied access with reduced compliance issues.
2. Start Small and Use SIP Structures
Many platforms let you start investing with amounts as low as $1 via fractional shares or SIPs. This approach helps mitigate currency and market timing risks.
3. Diversify and Set Goals
Allocate your global exposure based on goals (capital appreciation, USD hedge, international diversification). Consider weighting 20-30% in global equities, aligning with global benchmark allocations.
4. Monitor Tax and Currency Movements
Given USD-INR volatility and tax nuances, plan for tax filings at the year's end, factor in dividend withholding, and leverage DTAA benefits.
Currency Risk: USD value may fluctuate, affecting investment returns in INR terms.
Lower Liquidity: Some U.S. stocks may have lower liquidity for retail accounts.
Higher Fees: Be alert for currency conversion fees, brokerage charges, and platform commissions.
Tax Complexity: GST, TCS, dividends, and capital gains need thoughtful analysis.
Macro Sensitivity: U.S. markets respond sharply to Fed policy, earnings, and geopolitical events.
1. Can I Invest Directly in U.S. Stocks From India?
Yes, Indian residents can invest directly in top U.S. stocks through platforms. These allow you to open an overseas trading account under the Liberalised Remittance Scheme (LRS), with a limit of $250,000 per financial year.
2. What Is the Minimum Amount Needed to Start Investing in U.S. Stocks From India?
You can start with as little as $1 (around ₹85) using fractional investing platforms. It makes it easy for beginners to own shares of high-priced U.S. stocks such as Amazon or Google.
3. Which Is the Safest Way for Beginners in India to Invest in the US Stock Market?
For beginners, indirect routes such as Fund of Funds (FoFs) or India-listed US ETFs are safest. They offer diversification, minimal paperwork, and regulatory ease while still providing exposure to U.S. markets.
In conclusion, investing in the U.S. stock market from India is now easier than ever. Whether through direct accounts, app-driven fractional investing, or ETFs and mutual funds, you can diversify your portfolio and tap into global companies.
The key lies in understanding LRS compliance, tax obligations, and deployment of a strategy aligned with your risk appetite and goals.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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