Planning to invest in Meta, SpaceX or Nvidia? 3 risks Indian investors must know before buying US stocks — SkimNews
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- Nifty 50 has fallen nearly 12% this year, making it one of Asia’s worst-performing indices and prompting Indian retail investors to seek AI-sector exposure in the US, South Korea and Taiwan.
- RBI has made overseas investing easier through the Liberalised Remittance Scheme, while investment platforms operating through GIFT City provide routes for Indian residents to buy US stocks.
- Google shares illustrate currency exposure: 10 shares bought at $240 when the rupee was ₹95 per dollar became worth ₹2,52,000 at $280 and ₹90 per dollar—a 10.5% gain in rupees versus 16.67% in dollars, before taxes and brokerage.
- United States offers the world’s largest stock market, but smaller or lesser-known listings can have thin trading, making it difficult to exit promptly or at the desired price and sometimes forcing discounts or longer holds.
- US regulators can change rules across entire sectors, and the source states that such policy changes can cause companies’ share prices to rise or fall.
- India taxes US-share capital gains for Indian residents at the applicable slab rate when shares are sold within 24 months and at 12.5% without indexation when sold after 24 months, plus applicable surcharge and cess; US withholding tax generally does not apply.
Why it matters: For Indian retail investors, a 16.67% dollar gain becomes 10.5% when the rupee appreciates from ₹95 to ₹90 per dollar in the example. Tax treatment then changes the final outcome: sales within 24 months are taxed at the investor’s slab rate, while longer holdings face 12.5% without indexation, plus surcharge and cess.
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