Different Methods to Invest in the US Stock Market: A Complete Guide

Over the past few years, access to the US stock market has increased for Indian investors. It was very complicated to invest in US stocks such as Apple, Meta, Amazon, Nvidia, and Tesla from India a few years ago. However, things have changed now, and investors have several ways to get exposure to the US stock market without having to move abroad or follow a complicated international setup.

Investing in the US stock market can help investors achieve diversification beyond the Indian stock market. This also gives exposure to businesses and sectors that have limited representation in India.

Investing in the US stock market is not exactly the same as buying and selling stocks in India. Factors such as foreign exchange conversion, the Liberalised Remittance Scheme (LRS) of the RBI, dividend withholding, overseas asset reporting, and platform charges should be considered before investing in the US stock market. In this article, we will explore different methods to invest in the US stock market.

Investing Directly in US Stocks Through an International Broker

One of the simplest ways to invest in US stocks from India would be through an online brokerage firm that allows Indian residents to trade. The simple process would be:

• Open an account with an online brokerage firm that allows US stock trading by Indian residents.
• Fulfill all KYC and other requirements.
• Link or use your eligible Indian bank account.
• Remit money from India under the applicable LRS rules.
• Convert money to US dollars.
• Buy US-listed stocks or securities.
• Sell the securities, subject to applicable regulations.
• Repatriate money to India subject to applicable rules and procedures.

This method offers investors complete ownership of US-listed stocks according to the guidelines of the online brokerage firm.

One should not choose a broker just because of zero commission. It is important to consider the following factors, including:

• Brokerage or transaction charges
• Currency conversion costs
• Remittance charges
• Account maintenance charges
• Withdrawal charges
• Regulatory or exchange-related charges
• Fractional share availability
• Custodian arrangements
• Tax documentation
• Customer support

Investing in US Stocks Through an Indian Platform

Another method that is becoming more popular is using an investment platform based in India that gives access to US stocks. For the investors, this can be more comfortable because the onboarding process, interface, and customer support may be designed specifically for Indian users. Depending on the platform and structure, the investment process can involve:

• Completing KYC
• Opening an international investment account through the platform or its partner
• Putting money into the account in a legal way
• Converting INR into US Dollars
• Buying US -listed stocks

The main benefit here is convenience. Investors who are not familiar with international brokerage accounts may find an Indian investment platform easier to use.

Also Read: US Stock Market Timings for Indian Investors

Invest Through US-Focused Mutual Funds in India

You do not have to buy US stocks to get exposure to the US market. Indian mutual funds offer a way to invest in securities, including those in the United States. This is subject to the applicable regulatory framework and scheme-specific restrictions. This approach is suitable for investors who prefer the mutual fund structure.

Instead of buying individual companies, the investor buys units of a mutual fund. The fund manager then manages the portfolio as per the scheme’s investment objective. This makes investing in the US markets easier for investors who do not want to research US companies on their own.

Invest Through ETFs

Exchange-Traded Funds (ETFs) provide another way to gain exposure to the US market.

An ETF usually holds a basket of securities and trades on an exchange. Rather than buying 20 or 30 separate companies, an investor may purchase units of an ETF that follows a specific index or investment theme.

For instance, US-market ETFs may follow market indices or focus on particular sectors.

This is helpful for investors who prefer diversified exposure rather than trying to predict which individual company will perform best. However, Indian investors must differentiate between:

US-listed ETFs bought directly through a brokerage account and ETFs or funds offered in the Indian market that give international exposure.

Invest Through GIFT City / IFSC

One other alternative available to investors is investment through the International Financial Services Centre (IFSC) of India, situated at GIFT City.

The NSE International Exchange has designed a platform through which Indian retail investors can gain exposure to some global equities and ETFs via the IFSC ecosystem.

According to the NSE International Exchange, Indian retail investors can trade US stocks as depository receipts under the LRS route. Also, its material describes the trading and settlement process within the IFSC ecosystem as well as the availability of fractional shares for some instruments.

It is interesting to note that there is a provision of a financial infrastructure based in India, and not direct access to the US stock market.

However, investors should understand the exact product structure since a depository receipt is not necessarily similar to a US-listed share. The applicable fees, rights, and settlement arrangements should be checked before investing.

Invest in the US Market Through Indian Mutual Fund or Fund-of-Fund Structures

This is another indirect way, which you should be aware of, called the fund of funds structure.

A fund of funds invests in other mutual funds instead of picking up individual stocks. An Indian scheme may invest in a foreign fund, which will give you exposure to US stocks. Thus, you get exposure to the US market through a chain of investment products.

The advantage is simplicity. You can invest in the US market through your Indian mutual fund account without opening an international brokerage account. The disadvantage is that there may be multiple layers of expenses, and the fund’s ability to accept investments may depend upon regulatory limits and foreign investment capability.

As a result, one should always check the latest scheme documents before making an investment.

Direct Stocks vs Mutual Funds vs GIFT City: Key Differences

There isn't one method that is suitable for every investor. The right structure depends on what you want from international investing.

RBI's Liberalised Remittance Scheme

Understanding the Reserve Bank of India's Liberalised Remittance Scheme (LRS) is one of the most important things before investing in US stocks from India.

Under the LRS, resident individuals are permitted to remit up to USD 250,000 per financial year for permitted current and capital account transactions, subject to applicable rules and conditions. RBI material specifically includes overseas investments among permitted capital-account transactions.

The said limit is not exclusively for stock investments. Other eligible remittances during the financial year can also use up the same overall limit. So, if you have already made substantial LRS remittances for other permitted purposes, the amount available for overseas investment can be lower.

Investors should also note that banks and authorised dealers may require documentation and declarations before processing an overseas remittance.

How Are US Stocks Taxed in India?

Taxation is one of the key distinctions between investing in the Indian and US stock markets. For an Indian tax resident, income from foreign investments can have Indian tax implications.

Two common forms of income are:

• Capital gains from selling US shares
• Dividend income from US companies

The tax treatment can depend on factors such as your residential status, nature of income, holding period, applicable tax law, and relevant tax treaty provisions.

Capital Gains

When you sell US shares at a profit, the gain will be taxable in India. Under the India-US Double Taxation Avoidance Agreement (DTAA), capital gains on such shares are generally taxable in India, subject to the applicable provisions of the DTAA and domestic tax law. If you hold US stocks for 24 months or less, any profit is considered a short-term capital gain (STCG) and is added to your total income, taxed at your applicable slab rate.

If held for more than 24 months, the profit is a Long-Term Capital Gain (LTCG) and is taxed at a flat rate of 12.5% without indexation.

Note that foreign shares do not qualify for the annual ₹1.25 lakh LTCG tax exemption under Section 112A.

Dividends

Dividends paid by US companies are taxed in both jurisdictions. The US deducts a 25% withholding tax at source before paying out the dividend (provided you have a valid W-8BEN form filed with your broker).

In India, the gross dividend is added to your income and taxed at your regular tax slab rate. However, to avoid double taxation, you can claim a Foreign Tax Credit (FTC) in India for the tax withheld in the US by filing Form 67 (or Form 44 under updated procedural guidelines) alongside Schedule TR in your Income Tax Return and reporting the relevant foreign income and tax details in the applicable ITR schedules.

TCS on Overseas Remittances

TCS (Tax Collected at Source) is another point that frequently leads to confusion among investors. TCS rates on LRS remittances have undergone changes over time. According to the Union Budget 2025, the threshold for TCS on LRS remittances was increased from ₹7 lakh to ₹10 lakh.

What one must remember is that TCS is basically a mode of tax collection and not necessarily the final cost of tax on your investments. Your overall tax liability depends on your individual circumstances and the applicable tax rules. Since TCS regulations are subject to change, investors should check the prevailing rate and threshold applicable to their remittance and TCS with their authorised dealer.

Fractional Shares and Investing in the US Stock Market

One advantage of some US investment platforms and certain IFSC products is fractional investing. Imagine a stock trading at several hundred dollars per share. Buying one full share may require a relatively large amount of money.

With fractional investing, where available, an investor may be able to invest a smaller amount and own a fraction of a share. This can make it easier to access higher-priced shares with a smaller investment amount rather than waiting until you have enough money to buy whole shares.

However, check the terms carefully. Fractional shares can have different trading, transfer, and corporate-action arrangements compared with whole shares.

Things to Check Before Investing in US Stocks From India

Understand the Investment Structure: Know whether you are buying actual shares, ETFs, mutual fund units, depository receipts, or another investment product.

• Check the Total Cost: Don't focus only on brokerage. Include currency conversion, remittance charges, platform fees, and other applicable costs.
• Understand Taxation: Know how capital gains, dividends, and foreign tax withholding may affect your returns.
• Maintain Records: Keep statements, trade confirmations, dividend records, and remittance documents.
• Understand LRS: Make sure your remittance complies with the applicable RBI rules and your available LRS limit.
• Don't Ignore Currency Movements: Your return as an Indian investor is ultimately affected by the INR-USD exchange rate as well as the investment's performance.

##cFAQs

Can Indians invest in the US stock market?

Yes. Indian investors can invest in eligible US stocks through international brokers, Indian investment platforms, mutual funds, ETFs and certain IFSC-based options.

What is the minimum amount required to invest in US stocks?

There is no fixed minimum. Some platforms also offer fractional shares, allowing investors to start with smaller amounts.

What are the ways to invest in US stocks from India?

You can invest through international brokerage accounts, Indian platforms, mutual funds, ETFs, fund-of-funds and eligible GIFT City/IFSC products.

What is the LRS limit for investing in US stocks?

Under the RBI's LRS, eligible resident individuals can remit up to USD 250,000 per financial year for permitted transactions, subject to applicable rules.

Are US stocks taxable in India?

Yes. Capital gains and dividends from US investments can have tax implications in India, depending on the applicable tax rules and your circumstances.

Do I need to disclose US stocks in my ITR?

Foreign assets and income may need to be reported in your income tax return when the applicable disclosure requirements are met.

Is direct investment better than investing through mutual funds?

They serve different purposes. Direct investing offers more control, while mutual funds provide professionally managed exposure and diversification.

What should I check before investing in US stocks?

Check fees, currency conversion costs, LRS rules, taxation, reporting requirements, investment structure, and currency risk before investing.