How to Invest in US Stocks From India (Step-by-Step)

How to Invest in US Stocks From India? (Step-by-Step Guide for Indian Investors)

Hey there! If you're an Indian resident looking to dip your toes into the US stock market, you're not alone. It's a smart way to diversify beyond local options.

Thanks to the RBI's Liberalised Remittance Scheme (LRS), you can legally remit up to USD 250,000 per financial year for things like buying foreign stocks.

This opens doors to giants like Apple, Amazon, and Nvidia, plus potential perks from currency shifts. In this guide, you'll learn why it makes sense, how to get started, and where to invest in US stocks from India without the hassle.

Why Should Indians Invest in US Stocks?

Let's talk about why this could be a good move for your portfolio. The US market offers opportunities that complement what we have back home.

Key Reasons to Invest in US Markets

• Global diversification: Spreading your investments beyond India helps reduce risks tied to just one economy—think of it as not putting all your eggs in one basket.
• Access to top innovators: Get in on companies leading in tech, AI, EVs, and more, like Microsoft or Tesla, which aren't as readily available on Indian exchanges.
• Strong historical performance: Indices like the S&P 500 and Nasdaq have shown solid long-term growth, often outpacing many emerging markets.
• Currency advantages: With the rupee tending to depreciate against the dollar over time, your returns in INR could get a boost when you bring money back.

Is It Legal to Invest in US Stocks From India?

Absolutely, it's above board, as long as you follow the rules.

RBI’s Liberalised Remittance Scheme (LRS) Basics

• The LRS lets resident Indians send up to USD 250,000 abroad each financial year (April to March) for approved uses, including buying foreign securities.
• It's for individuals only (not companies or HUFs), and you need a PAN, Aadhaar-linked bank account, and proper KYC.
• Use authorized banks for remittances, and specify the right purpose code to avoid any hiccups.

Ways to Invest in US Stocks From India

You have options: Go direct for hands-on control or indirect for simplicity. Each has its own costs, taxes, and ease factor.

Direct Investing in US Stocks (International Brokerage Route)

This is where you buy shares or ETFs straight from US exchanges.

• Set up an account with Indian platforms that partner with US brokers, like INDmoney, Vested Finance, Winvesta, or Fi Money.
• Or use global ones that accept Indians, funding via LRS.
• Pick individual stocks (e.g., Google, Meta) or ETFs (like those tracking the S&P 500).
• Many allow fractional shares, so you can start with as little as USD 1.

Indirect Investing (From India, Without Opening a US Account)

No need for overseas accounts here, everything stays in INR.

• International mutual funds: These are fund-of-funds that invest in US or global equities.
• Indian ETFs: Buy ones listed on NSE/BSE that mirror US indices, like Nasdaq 100 or S&P 500 ETFs.
• GIFT City funds: Based in Gujarat's IFSC, these offer global exposure with easier remittance rules in some cases.

Direct vs Indirect Investing in US Stocks From India

Wondering which route fits you? Here's a quick comparison to help decide.

Step-by-Step: How to Invest Directly in US Stocks From India

Ready to go direct? Here's how to make it happen smoothly.

Step 1 – Choose the Right Platform

• Compare on fees (brokerage, FX markup, account maintenance), stock/ETF variety, and user-friendliness.
• Look for apps with good reviews, like those offering zero brokerage on trades.

Step 2 – Complete KYC and Open a US Investing Account

• Submit PAN, address proof, bank details—it's mostly digital and quick.
• Platforms handle the tie-up with US brokers for you.

Step 3 – Fund Your Account Under LRS

• Transfer money from your Indian bank to the overseas account using LRS—keep under the USD 250,000 limit.
• Watch for TCS: 20% on amounts over ₹10 lakh, but you can claim it back in taxes.

Step 4 – Buy US Stocks or ETFs

• Search by ticker (e.g., AAPL for Apple), and place orders—market or limit.
• Set up recurring investments if the app allows.

Step 5 – Track, Rebalance, and Withdraw

• Keep an eye on performance, US news, and INR-USD rates.
• When selling, withdraw back to India, factor in FX costs.

Key Things to Know Before Investing in US Stocks From India

Don't jump in blind; here are some essentials.

Currency Risk and INR–USD Fluctuations

• Your gains depend on stock performance plus exchange rates—a falling rupee helps, but a stronger one could eat into returns.

Costs and Charges You Must Consider

• Bank fees for remittances, FX spreads (0.5-1% markup), brokerage, and potential custody charges.
• TCS on large remittances, plus any platform fees.

Regulatory Compliance (RBI, SEBI, and Foreign Rules)

• Stick to LRS limits; no margin trading or derivatives for Indians in US markets.
• Ensure your platform is compliant, and report foreign assets in your ITR.

Taxation on US Stocks for Indian Residents

Taxes can seem tricky, but here's the breakdown. Always consult a pro, as rules evolve.

Tax on Dividends From US Stocks

• US withholds 25% at source (thanks to India-US DTAA), file Form W-8BEN to get this rate.
• In India, dividends are taxed at your slab rate, but you claim credit for the US tax via Form 67.

Capital Gains Tax on Selling US Stocks

• Short-term (held <24 months): Taxed at your income slab (up to 30%+).
• Long-term (>24 months): Flat 12.5% without indexation; no ₹1.25 lakh exemption like Indian stocks.
• Use official INR conversion rates for reporting.

Tax on Indirect Routes (Funds/ETFs in India)

• Follows Indian fund rules: Equity-oriented ones get favorable LTCG/STCG rates.
• Disclaimer: Tax laws change; get advice from a certified expert.

Pros and Cons of Investing in US Stocks From India

Let's weigh it out honestly.

Advantages

• Diversification boost: Balance your portfolio with global exposure.
• Access to growth sectors: Tap into AI, tech, and innovation not as dominant in India.
• Potential currency wins: Long-term rupee weakness could amplify returns.

Disadvantages and Risks

• Currency volatility: It can swing against you in short terms.
• Higher costs: Remittances and fees add up compared to domestic investing.
• Complexity: More paperwork for taxes, reporting, and compliance.

Who Should Consider Investing in US Stocks From India?

This isn't for everyone, but it suits:

• Long-term investors with a solid Indian base, aiming for 10-30% global allocation.
• Folks eyeing US-specific themes like tech or EVs.
• Those okay with handling currency swings and extra admin.

Disclaimer:

This content is for educational and informational purposes only and does not constitute investment, financial, or tax advice. Investments in US stocks involve market risk, currency risk, and regulatory considerations. Rules under RBI’s Liberalised Remittance Scheme (LRS) and tax laws may change over time. Always consult a SEBI-registered financial advisor or tax professional before investing. Past performance and examples mentioned do not guarantee future returns.