Investing In US Stocks From India: The Beginner’s Guide

Investing in US companies like Nvidia or Apple from India is more accessible than many investors realize. While there are specific regulations to follow, the process is structured and manageable for residents in cities like Mumbai or Bengaluru. Let us explore how you can seamlessly navigate Wall Street right from home.

Is It Even Legal?

The legal framework for these investments is provided by the Reserve Bank of India through the Liberalised Remittance Scheme (LRS). Under this scheme, an individual can send up to 250,000 USD abroad every financial year for purposes including overseas investments. This limit applies to each individual, so a married couple could collectively remit up to 500,000 USD annually.

Main Ways to Invest

There are several ways to start investing in the US market, depending on what you are looking for. Many people find that using Indian apps like INDmoney or Groww is the simplest path. These platforms have partnerships with US-licensed brokers to make the experience feel familiar for everyday investors.

A significant advantage here is the ability to buy fractions of a share. Instead of paying the full price for a single expensive stock, you can put in a smaller amount, like Rs. 1,000, to own just a portion of it.

Direct Investment via Foreign Brokerages:  For those who are more experienced and moving larger sums of money, opening an account directly with a global brokerage such as ATFX might be a better fit. These platforms generally offer a wider range of trading products and direct access to international exchanges.

GIFT City Route: Another option is the GIFT City route in Gujarat. This setup allows for the direct ownership of US stocks within an Indian regulatory framework, which can sometimes simplify the compliance process.

Indirect Routes: If you prefer not to manage individual stocks, you can invest in US-focused mutual funds or ETFs managed by Indian asset management companies. these funds pool capital to invest in a diversified basket of American equities. An international equity fund might hold a basket such as industrial stocks, tech giant stocks and healthcare stocks.

The Tax Bit Nobody Loves, But Everyone Needs

Here’s where beginners often get tripped up. Handling the tax requirements is an essential part of the process that often confuses beginners. If the total amount of money you send abroad stays under ten lakh rupees in a single financial year, you won’t deal with Tax Collected at Source, or TCS. However, once you cross that ₹10 lakh threshold, the government collects 20% on any amount above that limit at the time of the transfer.

This is more of a prepaid tax credit than a permanent cost, as you can claim it back or use it to offset your final tax bill when you file your returns. For example, if you send ₹15 lakh rupees, the 20% charge applies only to the ₹5 lakh over the limit. That is money you’ll later reconcile at tax filing time.

Aside from the money sent abroad, the profits from selling your US stocks are also subject to tax in India. Generally, long-term capital gains on these assets are taxed at 12.5%, while short-term gains are added to your regular income and taxed at your applicable slab rate. Because tax regulations are subject to change, it is advisable to verify current rates with a tax professional.