Buying a stock from India is not the same as buying an Indian stock. It includes a -border transfer of money a foreign brokerage account and some tax and reporting requirements that are not part of investing within the country.
The rules are clear. The RBIs Liberalised Remittance Scheme (LRS) allows people who live in India to send up to $250,000 each year for investments outside the country including buying stocks. The ways to reach these markets have grown in years with GIFT City platforms now providing a safe way to buy stocks from the US, Europe and Asia.
the three main routes
GIFT City IFSC platforms. These platforms, run under the International Financial Services Centres Authority (IFSCA) let Indian people buy stocks through accounts in GIFT City. Upstox, Dhan, INDmoney, Vested and NSE IX Global Access all provide this access. The money comes in rupees changes to dollars or the needed currency and the trades happen on the exchange.
Indian brokers with connections. Brokers like ICICI Direct, HDFC Securities, Axis Securities and some discount brokers have links to NASDAQ and NYSE through partnerships with registered brokers. The process is similar to trading: open an account for international trading do the KYC send dollars under LRS and then buy.
Global investing apps. Apps such as Vested Finance, INDmoney and Koshex work with brokers to offer online sign-up and the chance to buy small parts of a stock. The minimum amount can be as low as $1.
What markets are available
The available market is the US. US stocks and ETFs are on all platforms. The choices include companies like Apple, Microsoft and Nvidia as well as broad ETFs like VOO and QQQ and special funds.
European and Asian markets are not as easy to reach but are available through some platforms. The amount of choices and how easily they can be sold is less and converting between currencies adds costs.
GIFT City has made it easier to access exchanges. The platforms now cover than 150 international exchanges, including London, Tokyo and Hong Kong.
The step-by-step process
Step 1: Pick a platform. Finish the KYC process. Open an investment account in GIFT City. The documents needed are PAN, Aadhaar, a passport for checking where you live and bank details. A W-8BEN form shows that you are not a US person for US investments.
Step 2: Send money under LRS. Transfer rupees from a bank in India to the brokerage account. The bank changes the rupees to the currency and adds a forex spread of 0.5% to 1.5%. Form A2 is. The purpose code shows that the transfer is for an overseas investment.
Step 3: Pick the stock. Place the trade. Look at the list of stocks on the platform. Place a market order or a limit order. Fractional investing lets the investor tell how money to spend instead of how many shares to buy.
Step 4: Keep track of the investment. Save tax papers. The stock appears in the account. Dividends are added based on the amount owned. The platform gives the trade confirmations and statements needed for the ITR.
The costs involved
Forex spread. The bank adds a cost to the rate they use. This is usually between 0.5% and 1.5%. This is the cost that can be controlled.
Brokerage. Different platforms have fees. Dhan charges 0.25% of the trade value. Tickertape starts at 0.15%. Some platforms do not charge anything for some trades.
TCS. When the total amount sent under LRS goes over ₹10 lakh in a year 20% TCS is added to the extra. It can be used to reduce the tax or get a refund but it takes money out of your account.
The tax rules
Foreign stocks are considered securities under Indian tax rules.
Capital gains. If the stock is held for than 24 months the gain is taxed at 12.5% without considering inflation. If the stock is held for 24 months or less the gain is added to the income. Taxed at the persons tax rate. The ₹1.25 lakh exemption for long-term gains does not apply because that is for certain Indian stocks.
Dividends. The country where the stock is based takes some tax. India also taxes the dividend at the persons rate. Form 67 helps take credit for the tax already paid in the country but the credit is limited to the lower of the two taxes.
Schedule FA. People who live in India and are normally residents must write down all assets in Schedule FA of the ITR. This includes foreign stock holdings. The rule is the same even if no shares were sold or no dividends were received.
What retail investors should know
The ways to buy stocks are there and they are legal. The challenge is not in buying. It is in the tax. Reporting steps that come after.
The important things to get right are the 24-month period for long-term gains filing Form 67 for tax credits on dividends and reporting foreign stock holdings in the ITR. These things decide the tax result and are the parts people often forget.
For someone starting with an amount buying a broad foreign ETF is better than buying a single stock. The ETF gives variety. Has the same tax treatment. Once the person is used to the process they can add stocks.
Frequently Asked Questions
1. Can Indian people buy stocks legally?
Yes. Under the RBIs Liberalised Remittance Scheme, a person who lives in India can send up to $250,000 each year for investments outside the country including buying stocks.
2. What is the best place to buy stocks from India?
GIFT City platforms that are controlled by IFSCA are the reliable and cost-effective way. Upstox, Dhan, INDmoney, Vested and NSE IX Global Access are all available. The choice depends on the market the costs and how easy the interface’s
3. What is the time needed to get long-term capital gains on stocks?
24 months. Foreign stocks are treated as securities under Indian tax law. Gains after 24 months are taxed at 12.5% without considering inflation. Gains before 24 months are added to the persons income. Taxed at their rate.
4. How do dividends from stocks get taxed?
The country where the stock is based takes some tax. India also taxes the dividend at the persons rate. Form 67 helps take credit for the tax already paid in the country but the credit is limited to the lower of the two taxes.
5. Do I have to talk about foreign stock holdings, in the ITR?
Yes. People who live in India and are normally residents must list all assets in Schedule FA of the ITR. This includes foreign stock holdings even if no shares were sold or no dividends were received.
