Investing in US stocks offers Indian investors the opportunity to diversify their portfolio and expand beyond their investment options from the domestic market, and gain access to worldwide brands listed on international exchanges. It also provides access to USD-linked assets, which can be used to balance the currency risk over time. With the rise in global connectivity and a regulated path of investments, many investors are today asking the question, Can I invest in U.S. stocks from India, and explore overseas markets for long-term growth and diversification opportunities.
Key Takeaways
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Resident Indians can make foreign investment under the LRS of up to USD 2,50,000 a year.
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US dividends are subject to 25% withholding tax (reduced rate via Form W-8BEN).
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US stock is classified as long-term assets with a 24-month holding period.
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TCS of up to ₹10 lakh of LRS remittance is nil (0). Amounts above that attract 20% TCS (adjustable in ITR).
Can Indians Invest in US Stocks?
Yes, the Indian residents are legally allowed to invest in US stocks, subject to regulations issued by the Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA). Such investments are allowed under the Liberalised Remittance Scheme (LRS), which permits people to send funds abroad for investing purposes.
Under LRS, resident Indians can invest up to USD 2,50,000 per financial year in foreign equities, ETFs and other permitted instruments. These investments need to be conducted through authorised banking channels, which would be compliant platforms for investing overseas.
There are no restrictions on holding or selling foreign shares as long as they were purchased through proper LRS remittances and reported correctly. However, if someone holds overseas investments without reporting them, it may lead to compliance issues under FEMA and income-tax rules.
Therefore, people who are subject to eligibility and documentation requirements can legally invest in U.S. stocks from India and still be on the right side of the law as per the Indian foreign exchange and tax regulations.
RBI Rules and Liberalised Remittance Scheme (LRS)
The RBI (Reserve Bank of India) has allowed investments in overseas destinations by resident individuals under the Liberalised Remittance Scheme (LRS). Under this framework, individuals can remit up to USD 2,50,000 per financial year for permitted purposes, including investments in foreign equities, ETFs, and mutual funds.
The LRS cap is cumulative. This means the same USD 2,50,000 limit applies to all purposes combined, such as travel, education, gifts, and overseas investments in a financial year.
Remittances must be made through an authorised dealer bank with PAN-based reporting and valid documentation. Form A2 needs to be submitted at the bank during remittance, and certain overseas assets may require disclosure in income-tax filings if applicable.
Staying within the cap and conforming to norms of reporting complies with regulations of U.S. stock investment from India under RBI and FEMA guidelines.
Different Ways to Invest in US Stocks From India
Indian investors have multiple opportunities to invest in US equity markets based on their investment preference, risk appetite, ease of execution, etc. Understanding how to invest in the US stock market from India is helpful when it comes to choosing the most appropriate method.
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Direct investment in US stocks - Investors can buy shares of U.S.-listed companies directly on global investing platforms connected to Indian brokers or offshore brokerage accounts. This method provides full ownership of stocks and flexibility in building a portfolio.
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US Exchange-Traded Funds (ETFs) - US ETFs are an option to give you exposure to a basket of stocks, such as the S&P 500 or Nasdaq-100. They reduce risks of single stocks, and are good for investors who want diversified exposure with less volatility.
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International Mutual Funds - International mutual funds/ETF FoF are rupee-denominated. Hence, they do not require direct LRS remittance because they invest abroad via Indian fund structures (different tax treatment).
For example: Motilal Oswal S&P 500 ETF FoF (SEBI-approved, no LRS needed)
Each route has a difference in cost, control and tax treatment. Evaluating how to invest in the US stock market from India from these options assists investors in aligning their investments abroad with long-term financial objectives.
Also Read: Equity Market
How to Invest in US Stocks Directly (Step-by-Step)?
Indian investors can buy stocks in the US directly with the help of a structured process through authorised platforms. Knowing how to invest in U.S. stocks from India is useful to ensure compliance with regulations and operations.
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Account Opening: Opt for a broker registered with the SEBI in India or an overseas one that provides access to investing in the US, and open an investing account abroad.
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KYC Completion: Complete KYC by submitting PAN, address proof, bank details, and tax documents like form W-8BEN, etc.
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Fund Transfer: Remitances using authorised banks under the Liberalised Remittance Scheme within the limit of USD 2,50,000 per year.
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Platform Access: Once funded, access the US exchanges using the broker's trading interface. Keep documentation to demonstrate compliance (A2, bank remittance receipts, W-8BEN).
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Placing Trades: Select stocks in the US market to buy or sell, and track stocks in your portfolio.
Following these steps will help individuals to invest in U.S. stocks from India efficiently, while keeping in mind the RBI and FEMA guidelines.
Documents Required to Invest in US Stocks
Investing in US stocks from India requires Indian investors to submit certain documents according to Indian and international regulations. Most platforms ask for a normal identity, address, and tax-related documents as part of onboarding.
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PAN card: Mandatory in tax reporting and connecting foreign investments under Indian regulations.
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Aadhaar card: It is optional. Mostly used as proof of identity and address in the process of KYC verification.
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Form A2: Remittance purpose declaration.
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Passport: Required to establish residency status, and for compliance with overseas investment
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Bank account details: Indian bank account details are required for funds remittance under LRS and refund, if any. Helps to prove who owns the bank account and details.
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Tax declaration (W-8BEN): Required in order to confirm non-US residency and for tax withholding.
Likewise, submitting these documents is typically a one-time process. Most platforms that offer the best app to invest in us stocks from India provide complete digital verification, a facility that has made it simpler and faster to invest overseas using the stocks.
How Currency Conversion Works in US Investing?
When Indian investors purchase stocks in the USA, Indian currencies (INR) must be converted into US dollars (USD). Understanding this process is so important to determine the true cost of investment when you invest in U.S. stocks from India.
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INR–USD conversion: The amount which is to be invested is converted at the prevailing rate of forex on the day of remittance, which may vary on a daily basis.
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Forex charges: Banks and platforms may charge a fee, often called a forex markup or fee for the conversion, typically in the form of a percentage over the value of the conversion.
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Remittance costs: Additional charges like bank transfer charges and GST on forex services could be charged.
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Impact on returns: Currency movement can have some impact on final returns, as it may also result in a gain or loss due to changes in the value of the currency.
Minimum Investment Required for US Stocks
There is no fixed minimum amount needed to be invested in US stocks because the entry barriers have come down considerably over the past few years. Many global investing platforms started to allow investors to make near investments with small initial amounts, which now opens easy investing opportunities abroad for an Indian investor.
One essential enabler is fractional share investing, which enables investors to purchase an equity in a US stock together, in contrast to owning an entire share of it as a sole owner. This means that you can access high-priced stocks at a lower capital outlay. For example, instead of purchasing a single full share, the investors can invest a lesser amount as per their budget.
Entry-level investing also depends on minimum funding requirements per platform and remittance charges, if any. Some platforms let one start investing with a few thousand rupees in currency conversion. Understanding how to invest in us stocks from India assists investors in planning the initial capital expenditure, cost management and gradually build the exposure of the US equities in investors.
Taxation on US Stock Investments for Indians
Taxation is a key point to consider while making overseas investments. Understanding the tax rules ensures the correctness while undertaking U.S. stock investment from India.
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Capital gains tax:
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Short-term capital gains (STCG): stock held ≤24 months > taxed at slab rate.
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Long-term capital gains (LTCG): placed at 12.5% flat for US equities held >24 months.
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Dividend tax:
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25% withholding tax in the US after W-8BEN.
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India taxes dividends at a slab rate.
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Credit for US tax paid available under DTAA.
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DTAA benefit: India and the US have an agreement for Double Taxation Avoidance (DTAA). The tax paid in the US can be claimed as a credit in India, so that it reduces double taxation.
How are Dividends From U.S. stocks taxed?
When the Indian residents receive dividends on US stocks, the income is first taxed in the United States by a withholding tax mechanism. Generally, dividends are taxed at a 30% withholding tax, which drops to 25% if a form W-8BEN can be provided, which verifies non-US residency. This form is mandatory for Indians who invest in U.S. stocks from India to avoid higher tax deduction.
Dividends received after US withholding are also to be reported in India and are taxed according to the relevant income tax slab of the investor. However, there is a relief available to them under the India-USA double taxation avoidance agreement, and investors can claim an amount of tax already paid in the US as a tax paid in India. Proper documentation and reporting ensure a smooth compliance when people invest in U.S. stocks from India and receive dividend income.
Risks Involved in Investing in US Stocks
While investing abroad provides investors with diversification, there are also some risks that should be considered carefully. How to invest in the US stock market from India is to be aware of possible challenges aside from returns.
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Market risk: US stock prices are affected by the performance of corporations, economic data, and interest rate changes, resulting in volatility of prices.
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Currency risk: Fluctuations in the INR USD exchange rate can affect returns because gains or losses can be realised due to currency fluctuations in addition to stock returns.
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Geopolitical risk: Global changes, trade wars, or US government regulation changes can have an impact on the stability of markets and investor sentiment.
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Regulatory differences: Overseas markets have different laws and disclosure norms, which investors need to know about.
Being aware of these things helps an investor have realistic expectations to approach how to invest in the US stock market from India and better risk management.
US Stocks vs Indian Stocks: Key Differences
Indian investors frequently compare domestic equities to US stocks to get an understanding of diversification benefits, operational differences, and compliance requirements. Knowing these distinctions aids in answering questions such as can I invest in us stocks from india in dealing with expectations with trading, taxation, and regulation.
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Aspect |
US stocks |
Indian stocks |
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Market Hours |
Operate during US market hours, normally evening to late night IST |
Trade in Indian Market hours, daytime IST |
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Regulatory Authority |
Regulated by the SEC and US exchanges |
Regulated by securities and exchange board of India and Indian exchange |
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Tax Treatment |
LTCG 12.5%, dividends taxed (US withholding + India). |
LTCG 10% over ₹1 lakh (with STT), dividend tax generally 10% DDT now abolished, but TDS under section 194 at 10% sometimes. |
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Currency Exposure |
Returns impacted by INR–USD exchange rate |
No currency risk for Indian investors |
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Market Size & Access |
Global companies with high liquidity |
Strong domestic focus with local exposure |
These differences determine risk, returns and suitability depending on investor goals.
Who Should Invest in US Stocks?
Investing in US equities is a good investment for certain types of investors, depending on each investor's goals, risk tolerance, and investment time horizon. Evaluating the suitability is important before starting a US stock investment from India.
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Long-term investors: Individuals with a long-term perspective may be able to benefit from exposure to international firms and long-term economic growth trends.
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Diversification seekers: Investors seeking diversification of geographically and sector-wise can invest in US stocks, which have a better geographical spread and sector-wise diversification.
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High-risk tolerance investors: Those who are comfortable with the volatility of equity and short-term fluctuations, however, may find overseas stocks appropriate.
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Dollar exposure planners: Investors who would like to have exposure to the US dollar can use US equities as a hedging tool against the rupee depreciation.
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Experienced investors: Individuals with prior experience in equity investing and knowledge of the various global markets are more prepared than others to deal with overseas investments.
Also Read: How the Stock Market Works?
Common Mistakes to Avoid While Investing in US Stocks
Investment in foreign markets involves careful preparation and being aware of the most frequent traps. Understanding how to invest in U.S. stocks from India also involves knowing what the mistakes may impact returns and compliance.
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Overtrading: Frequent buying and selling may drive transaction costs up, resulting in impulsive decisions based on short-term market movements.
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Ignoring forex impact: Currency fluctuations between the INR and USD may have a big impact on returns, even if the stock does well.
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Poor diversification: Concentrating investments in a few US stocks/sectors increases portfolio risk.
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Overlooking tax rules: Failing to consider capital gains tax and tax on dividends may lead to compliance problems.
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Chasing popular stocks: Investing on the basis of trends or hype without doing research can expose investors to unnecessary volatility.
Conclusion
Investing in US equities enables Indian investors to invest in global companies and to diversify portfolios outside of only national markets. Understanding regulations, taxation, the effect of currency, and methods for investing in the business is a must when it comes to making informed decisions. With the right attitude, planning, documentation, and risk awareness, investors can confidently enter the market overseas. Knowing how to invest in U.S. stocks from India helps virtually align the global exposure with the long-term financial goals while remaining compliant with the applicable rules
