- Date : 05/08/2022
- Read: 4 mins
USA is an attractive investment zone that can be invested in from India by paying CGT and other costs through a financial firm in India.
The internet boom has made the world a smaller place as far as proximity between countries goes. Today, Indians can invest in the American share market and expand their investment horizons. From real estate to commodities, Indians’ investments have reached a huge magnitude over the years. Indians have been able to grow their wealth manifold by investing in foreign countries and enjoying the benefits that come with it.
Investments in the US stock exchange are a new concept; hence, you need to know the rules that kick in as a result. You also need to know the cost of investments so that you are able to deduct those costs to arrive at a profit through the investment value. With the support of additional earnings from investments in world-class companies, you are better able to grow your portfolio and spread your investments, giving your wealth stability.
Coupled with the permission to invest in the American stock market is the advantage of the appreciating US dollar against the Indian rupee. The Indian currency has depreciated more than 5% since last year. This means the dollar is getting stronger, thereby giving you a diversified portfolio along with portfolio appreciation. In other words, your wealth has increased 5% through the exchange mechanism.
Where to invest?
The US stock market is the best place to invest for Indians as it hosts the most wealthy and largest financial institutions in the world. The USA has the world’s largest innovative market for technology and R&D and also the most dynamic business strategies. From space to biotechnology to manufacturing, you name it and they have investments in companies selling their products. Sitting in India, one can invest in Microsoft, Zoom, Netflix, and SpaceX with ease.
Avenues of Investment in the US range from Equity Mutual Funds, Mutual Funds, Exchange Traded Funds (ETFs), etc. In order to do that, you need to know certain important rules before investing there.
Double taxation and how to avoid it.
- India and the USA have signed a Double Taxation Avoidance Treaty, whereby any taxes paid in the USA can be claimed in India and the amount will be paid back to the investor in India through an adjustment in the tax value.
- Indian investors need to pay a CGT if they earn a profit, for shares held in the long term (above 24 months) at 20%.
- If a dividend is earned from a share in the USA, there will be a flat deduction of 25% as per the tax rate.
- If you buy and sell your shares within 1 year of purchase, the income can be shown on the income tax return at the time of filing returns. The tax will be levied at the slab rates provided by the IT department.
- Indian banks charge a nominal fee for the service provided. The charges are between 0.5% and 2%, depending on the bank in question. To avoid this cost for every transaction, your prudence would be to transfer the amount together rather than be penalised for frequent transfers with costs.
Read Also: Attractive Investments in India for NRIs.
Benefits of the Liberalised Remittance Scheme
- A 5% tax on all foreign remittances above Rs. 7,00,000 will be deducted in the US. This amount can be claimed at the time of filing your returns and it will be reimbursed.
- The maximum annual limit for investment is US$ 250,000
- Liberalised Remittance Scheme is also extended to education loans, travel, and money transfers to an NRI.
- Selecting the right platform for all transactional needs in the USA and possessing the ability to offer multiple industries across segments for investment in shares and ETFs.
- Read about and watch videos of US stock market shares and investments.