Discount brokerage Zerodha earlier this week launched US stock investing, providing an opportunity for Indian investors looking to diversify their investments beyond the domestic market.
Zerodha launched its US stock investing facility in beta mode on its Kite platform, allowing retail investors to invest directly in US-listed stocks such as Meta, Amazon, Google, and Microsoft, as well as exchange-traded funds (ETFs) through their existing accounts.
The service provides access to up to 2,000 US-listed companies and around 1,000 ETFs, with fractional investments starting at $1. The facility is routed through BSE-owned India INX Global Access at GIFT City, Gujarat.
The US stock market is the largest in the world by a wide margin. With a total market capitalisation exceeding $80.40 trillion, US-listed equities account for roughly 44% to 46% of global market value, making the US market larger than the next nine largest stock markets combined.
How to invest in US stocks through Zerodha
Any resident Indian with an individual Zerodha account can invest in US stocks through the platform. Existing customers can activate the US stocks segment through their Zerodha account.
Once activated, US stocks and ETFs are available under the international tab on the Kite platform, where users can search for securities, place orders, and track their global holdings, much as they do with Indian stocks.
Brokerage charges and trading rules
Zerodha charges brokerage of 0.1% of the trade value on both buy and sell orders, subject to a minimum of $0.01 and a maximum of $10. An additional 18% charge also applies.
The platform supports only delivery-based (CNC) orders for US stocks. Intraday trading, Margin Trading Facility (MTF), and futures and options (F&O) trading are not available.
How are US stock investments taxed in India?
For resident Indian investors, capital gains from US stock investments are generally taxable in India under applicable tax rules and the India-US Double Taxation Avoidance Agreement (DTAA). In general, such investors do not pay capital gains tax in the US, subject to applicable exceptions and conditions.
Long-term capital gains on investments held for more than 24 months are taxed at 12.5%, while short-term capital gains are taxed at the investor’s applicable income-tax slab rate.
Dividends are subject to a 25% tax in the US under the applicable treaty provisions. Investors may be eligible to claim a foreign tax credit in India for taxes paid in the US, subject to applicable conditions, to avoid double taxation on the same income.
Why should Indian investors consider US stocks?
While the Indian stock market offers numerous investment opportunities, the US stock market provides access to global growth opportunities, established companies, diversification, and some of the world’s leading corporations.
The US is home to major companies such as Apple, Netflix, Tesla, Meta, Amazon, and Alphabet, Google’s parent company. These businesses dominate several industries and influence global markets.
Fractional investing can also make US stocks more accessible to Indian investors. It allows investors to own a portion of a share instead of purchasing an entire share, making it easier to invest in high-priced US stocks with smaller amounts of money.
Disclaimer: We advise investors to check with certified experts before making any investment decisions.
