How to Invest in the US Stock Market from India: 2025 A Comprehensive Guide.

Investing in the US stock market offers Indian investors a unique opportunity to diversify their portfolios and tap into the growth of some of the world's most renowned companies. This guide provides a detailed overview of how to invest in US stocks from India, covering various methods, platforms, tax implications, and more.

Understanding the US Stock Market.

The US stock market is home to major exchanges like the New York Stock Exchange (NYSE) and NASDAQ. These platforms list some of the most influential companies globally, such as Apple, Amazon, and Tesla. For Indian investors, accessing these markets has become increasingly straightforward through various investment avenues.

Methods to Invest in US Stocks from India

Direct Investment in US Stocks

Investors can directly purchase shares of US companies. This approach provides ownership of individual stocks and requires setting up an overseas trading account.

Indirect Investment via Mutual Funds and ETFs

For those seeking diversification without selecting individual stocks, mutual funds and Exchange-Traded Funds (ETFs) offer exposure to a broad range of US companies. These funds pool money from multiple investors to invest in a diversified portfolio of US stocks.

Top Platforms to Invest in US Stocks from India

Several platforms facilitate US stock investments for Indian residents:

INDmoney: Offers direct investment options with a user-friendly interface. Investors can start with as little as $1 and access a wide range of US stocks and ETFs.

Motilal Oswal: Provides fractional investing, allowing investors to buy parts of high-priced US stocks. The process is fully digital, making it accessible for beginners.

Kuvera: Partners with Vested to offer investments in over 1,000 US stocks and ETFs. The platform supports fractional ownership and provides tools to track US market performance.

HDFC Securities: Enables Indian investors to open US market accounts and invest in US stocks. The platform emphasizes diversification and long-term investment strategies.

Tax Implicationsn Investors for India.

Investing in US stocks has specific tax considerations:

Capital Gains Tax: Long-term capital gains (holding period over 24 months) are taxed at 20% with indexation benefits. Short-term gains are taxed according to the individual's income tax slab.

Dividend Tax: Dividends received from US companies are subject to a 25% withholding tax in the US. However, under the Double Taxation Avoidance Agreement (DTAA), this can be offset against Indian tax liabilities.

Tax Collected at Source (TCS): A 5% TCS is levied on remittances exceeding Rs 7 lakh under the Liberalized Remittance Scheme (LRS). This amount can be claimed as a refund when filing income tax returns.

Regulatory Framework: Liberalized Remittance Scheme (LRS).

The Reserve Bank of India (RBI) allows Indian residents to remit up to $250,000 per financial year for various purposes, including investments. This scheme facilitates the transfer of funds to overseas accounts for investing in US stocks.

Benefits of Investing in US Stocks.

Diversification: Exposure to different economic sectors and markets reduces portfolio risk.

Growth Potential: Access to high-growth companies in technology, healthcare, and other sectors.

Currency Diversification: Investments in US dollars can act as a hedge against currency fluctuations.

Risks to Consider

Currency Risk: Fluctuations in the exchange rate between the Indian Rupee and US Dollar can impact returns.

Market Volatility: The US stock market can experience significant volatility, affecting short-term investments.

Regulatory Changes: Changes in US or Indian regulations can impact investment returns.

Best Mutual Funds and ETFs for Exposure to US Markets.

While direct investment in US stocks is popular, mutual funds and ETFs offer a diversified approach:Franklin India Feeder – Franklin U.S. Opportunities Fund: Provides exposure to US companies across various sectors.

ICICI Prudential US Bluechip Equity Fund: Focuses on large-cap US companies with strong growth potential.

Nippon India US Equity Opportunities Fund: Invests in US companies with high growth prospects.

Note: As per recent regulations, some fund houses have stopped accepting fresh deposits into these US-centric schemes. It's essential to check the current status before investing.

Best Apps to Buy US Stocks in India.

Vested Finance: Offers a platform for investing in US stocks and ETFs with fractional ownership options.

Groww: Provides a user-friendly interface for investing in US stocks, along with educational resources for beginners.

Upstox: Allows investors to trade in US stocks through partnerships with international brokers.

Conclusion

Investing in US stocks from India is a viable option for diversifying investment portfolios and tapping into global growth opportunities. By understanding the methods, platforms, tax implications, and associated risks, investors can make informed decisions that align with their financial goals.

FAQs

Q1: Can Indian investors directly buy US stocks?

Yes, through platforms like INDmoney, Motilal Oswal, and Kuvera, Indian investors can directly purchase US stocks.

Q2: What is the minimum investment required?

Minimum investment amounts vary by platform. For instance, INDmoney allows investments starting from $1.

Q3: Are there any tax benefits for investing in US stocks?

While dividends are subject to a 25% withholding tax in the US, the DTAA allows Indian investors to offset this against their Indian tax liabilities.

Q4: How can I transfer funds to invest in US stocks?

Funds can be transferred using the Liberalized Remittance Scheme (LRS), allowing remittances up to $250,000 per financial year.

Q5: Are there any risks associated with investing in US stocks?

Yes, risks include currency fluctuations, market volatility, and regulatory changes in both the US and India.