Answering if Can We Do Intraday Trading in US Market From India: The U.S. market is the largest stock market in the world. It consists of some of the largest companies in the world. Investing in these stocks allows individuals to diversify their portfolios beyond the Indian stock market.
You must now be asking yourself “Can we do intraday trading in US market from India?” which can help you take leverage of the global events. In this article, we will discuss if we can execute intraday trades in the US market from India.
Can we do intraday trading in US market from India?
No, we can not do intraday trading in the US market from India
According to the Liberalised Remittance Scheme (LRS), the transactions in the nature of remittance for margins or margin calls to overseas exchanges/ overseas counterparty are not allowed.
But there are other ways in which individuals can invest in US stocks from India.
Ways to invest in the US market from India?
Individuals can invest in the US market from India in the following ways:
Through direct investments
One can invest directly in the US market in the following ways:
1. By opening an overseas account through a domestic broker
You can invest in the US market by opening an overseas trading account with domestic brokers who have tie-ups with stock brokers in the US. These stock brokers act as intermediaries and execute your trades.
However, these brokers will have certain disadvantages like the number of trades you can take, high brokerage charges, and currency conversion charges.
2. By opening an overseas account directly with a foreign broker
You can open your trading account directly with a foreign broker who has a presence in India. These brokers include Charles Schwab, Ameritrade, and Interactive brokers.
It is important for an individual to understand the various charges the brokerages have before opening the accounts.
Through indirect investments
Here is how you can invest in the US market without opening an overseas trading account:
1. By investing in Mutual Funds
There are several mutual funds that invest in the US market. You can invest in these mutual funds to get exposure to the US market.
The major benefit of investing through a mutual fund is that you do require to deposit a minimum amount of money.
2. By investing in Exchange-Traded Funds (ETF)
Another way of investing in the US market is through ETFs. One can invest in the US ETF directly through a domestic or international broker or invest in an Indian ETF of international indices.
3. Investing through modern apps
Many start-ups have come up with different apps that allow Indian individuals to invest in the US stock market.
Maximum amount you can invest in US stocks
The Liberalized Revenue Scheme (LRS) released by the Reserve Bank of India states that an Indian Resident can invest upto $250000 dollars per year without any special permission.
Different charges involved while investing in the US stocks
Here is a list of Different types of charges involved while investing in US stocks:
1. Tax Collected at Source
Upon the remittance of the amount above Rs 7 lakhs, a tax collected at the source of 5% will be levied which can be claimed as a refund by the taxpayer while filing returns.
2. Tax on Capital Gains & Dividends
While there is no tax on capital gains on investments in the US, investors are liable to pay tax on the capital gains in India.
The dividends are taxed at 25% for Indian citizens in the US. Investors can claim credit for taxes paid abroad owing to the Double Tax Avoidance Agreement. This is done so that they don’t have to pay the tax on the same income twice.
3. Bank Charges
The investors will incur foreign exchange conversion fees and transfer fees from the bank while investing in the US market.
4. Foreign Exchange Rate
The difference between the exchange rates during purchase and withdrawal can have an influence on the cost and the number of units allotted.
In this article, we covered “Can we do intraday trading in US market from India”. Ways to invest in the US market, the maximum limit to invest and the charges incurred while investing in the US market.
Since the US is globally the biggest economy, it has a noticeable influence on the Indian Stock market, Thus, investors can benefit from allocating some funds to the US market.
But, investing in the international market comes with its pros and cons. Hence, an investor should consider all the financial aspects and invest accordingly.
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