Investing in US stocks from India is a good idea for Indian investors as it diversifies your portfolio. It gives you an experience beyond Sensex and Nifty 50. You can invest in the US stock market by complying with the RBI’s LRS scheme (Liberalized Remittance Scheme). You are required to have a brokerage account to invest in US stocks.
As per the LRS, an Indian resident can invest a maximum of USD 250,000 per year per person. If you invest more than USD 250,000 in the US stock market, you will be charged an expense fee depending on your invested amount. To invest you can open a US brokerage account in India with the help of a broker or directly using stock market applications. The brokerage entities charge a small amount of fee depending on different rates and different structures. Your brokerage account also includes a conversion fee for converting USD currency to INR.
When you invest in the US stock market, you are liable to pay two types of taxes: taxes on investment gains and taxes on dividends. The taxes on investment depend on the amount of the investment you hold. The rate will be approx 20%. On the other hand, taxes on the dividend are flat 25%.
You can also invest in the MNCs directly instead of investing the money in local Indian subsidiaries. On average, people who invest in local subsidiaries pay 3 times higher multiples than investors investing directly in a parent company. While investing, make sure that your investments are less than or equal to USD 250,000 per year as an individual.
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