How to Buy, Sell and Invest in US Stocks From India

Introduction

For many Indian investors, the dream of participating in Wall Street has always felt distant. But today, with digital platforms, simplified RBI regulations, and cross-border brokerage tie-ups, investing in US companies is easier than ever. If you’ve wondered how to buy, sell and invest in US stocks from India, this guide will take you through the entire process step by step.

Step 1: Understanding the Legal Framework

Before making your first transaction, it’s important to know the rules.

• RBI’s Liberalized Remittance Scheme (LRS): Allows Indians to remit up to USD 250,000 per year abroad for investments.
• Authorized Banks: Transfers must go through approved banks.
• Compliance: PAN, Aadhaar, and KYC documents are mandatory.

This framework ensures that your US stock investment from India remains safe and legal.

Step 2: Choosing the Right Route

Option A: International Brokers

• Open an account with a US-registered broker.
• Direct access to all US-listed equities and ETFs.
• Typically regulated by FINRA and SEC.

Pros: Full control, wide access.
Cons: Higher fees, complex remittances.

Option B: Indian Brokers Partnered With US Firms

• Open accounts with Indian platforms tied to US brokers.
• Transfer funds in INR; conversion handled automatically.

Pros: Easy onboarding, beginner-friendly.
Cons: Limited range of global stocks.

Option C: Mutual Funds and ETFs in India

• Indian AMCs offer global funds tracking US indices.
• ETFs listed on NSE and BSE replicate S&P 500 or NASDAQ.

Pros: Simplest option, no foreign transfer required.
Cons: Indirect exposure, higher fund charges.

Step 3: Funding Your Account

• Transfer funds from your Indian bank under LRS.
• Banks charge wire transfer fees (₹500–₹1,500) and forex markups (0.5–2%).
• Consolidating transfers helps reduce costs.

Step 4: Buying US Stocks

Once your account is funded:

1. Select a Stock/ETF: Choose companies like Apple, Amazon, or an index fund.
2. Fractional Investing: Buy small portions of high-value stocks.
3. Execute Trade: Place a buy order via your broker’s platform.

Step 5: Selling US Stocks

Selling is as straightforward as buying.

• Log into your brokerage platform.
• Select the stock you want to sell.
• Place a sell order; proceeds are credited to your USD balance.
• Transfer money back to India through the same bank channels.

Remember: Selling may trigger capital gains tax in India.

Step 6: Taxation Rules to Know

• Dividends: Taxed at 25% in the US before payout. Must also be declared in India, with DTAA benefits available.
• Capital Gains: Not taxed in the US, but fully taxable in India.
  • Short-term (<24 months): Taxed at slab rates.
  • Long-term (>24 months): Taxed at 20% with indexation.
• Reporting: Disclose foreign holdings in Schedule FA of ITR.

Costs to Watch Out For

• Wire Transfer Charges: Paid to banks.
• Forex Conversion Fees: Can eat into returns if frequent.
• Brokerage Fees: Vary between platforms.
• Annual Maintenance Fees: Some brokers charge yearly account costs.

Practical Example: Priya’s US Investing Journey

Priya, a 28-year-old investor, wanted exposure to US tech companies.

• She opened an account with an Indian broker partnered with a US firm.
• Transferred ₹50,000 under LRS.
• Bought fractional shares of Apple and an ETF tracking NASDAQ.
• After two years, she sold a portion of her holdings, earning returns from both stock growth and rupee depreciation.

This example shows the complete cycle — buy, hold, sell, and reinvest.

Benefits of Buying and Selling US Stocks From India

1. Global Diversification: Reduces reliance on Indian markets.
2. Dollar Hedge: Protects wealth against rupee depreciation.
3. Access to Innovation: Own shares of companies leading the world.
4. Wealth Creation: Long-term US equities historically deliver steady growth.

Risks to Keep in Mind

• Currency Fluctuations: May reduce returns in the short run.
• Market Volatility: US tech stocks can be highly volatile.
• Regulatory Changes: RBI or US policies may shift.
• Costs: Frequent buying/selling increases expenses.

Tips for Indian Investors

1. Start With ETFs: Safer than single stocks for beginners.
2. Use Fractional Shares: Test the market with small amounts.
3. Compare Brokers: Choose platforms with low forex markups.
4. Plan Long-Term: Don’t chase short-term gains.
5. Stay Tax-Compliant: Always declare global holdings in ITR.

Conclusion

So, how to buy, sell and invest in US stocks from India? The answer is simpler than ever: choose your pathway, fund your account, start with small investments, and stay compliant with RBI and tax rules.

With the right approach, Indians can confidently participate in Wall Street, diversify globally, and create wealth that goes beyond domestic opportunities.

FAQs

Q1. Can I invest in US stocks without sending money abroad?
 Yes. Indian mutual funds and ETFs that track US indices allow indirect exposure.

Q2. How much money do I need to start?
 With fractional investing, you can begin with as little as $10–$50.

Q3. Are US stocks riskier than Indian stocks?
 Not riskier, just different. They offer exposure to global leaders but come with currency and market risks.

Q4. How long should I hold US stocks?
 For maximum benefit, treat them as long-term investments (3–5 years or more).