Today is a special day for Indian investors. Today a big wish of his is going to be fulfilled. They will be able to invest in the shares of giant American companies like Facebook and Google from today. They are going to get an opportunity to invest directly in the shares of these companies. Its preparation was going on for a long time. It is going to start from March 3. Let us know about it in detail.
Which American companies will be allowed to invest?
Right now you will be able to invest directly in the shares of only 8 US companies. These include Amazon, Tesla, Alphabet (Google), Meta Platform (Facebook), Microsoft, Netflix, Apple and Walmart. Soon you will get the facility to invest directly in 42 leading American companies.
Through which exchange will this investment be done?
For this NSE has created a subsidiary exchange. Its name is NSE IFSC. It started on November 29, 2016. It is in the GIFT City of Gujarat. In fact, the stock exchange located in GIFT City is allowed to offer trading in securities in other currencies as well. Since 2017 NSE IFSC is providing trading facility in many other products.
Will investors be issued shares of US companies?
Shares of American companies will not be issued to investors. Instead, they will be issued NSE IFSC receipts. These will be a kind of depository receipt. Their underlying value will be that of US shares. The way you buy shares of Indian companies, you will be able to buy shares of American companies. In lieu of that, NSEIFSC receipts will be issued to you.
Do I have to open a separate demat account for this?
Yes, you need to open a demat account with NSE IFSC to invest directly in US stocks. In this demat account you will be able to keep your depository receipts. You will benefit from every corporate action related to the underlying stock in the same way as an American who invests in American shares.
How much can I invest in US stocks?
You can invest up to Rs 1.9 crore in US stocks in a year. This investment will be under the prescribed limit for the Liberalized Remittance Scheme (LRS). This limit is set by the Reserve Bank of India (RBI).
How much tax will be levied on the profit earned from investing in these shares?
Depository receipts issued against investments in US stocks are treated as foreign assets in India for income tax purposes. Therefore, the rules of short term capital gains and long term capital gains will be applicable on its profits. Short term capital gains will be taxed as per your slab. With indexation on long term capital gains, you will have to pay 20 per cent tax.
What will be the trading hours for me in US stocks?
Your timing for investing in US stocks will be completely different. You will be able to invest directly in US stocks daily (except Saturday-Sunday) from 8:30 pm to 2:30 pm the next day. Depository receipts will be credited to your demat account within two days of trading.
What do I need to do to invest in US stocks?
You have to first register yourself with an IFSCA registered trading member. For this KYC will be necessary. After this, you will have to give the necessary documents to the bank for the Liberalized Remittance Scheme (LRS). Then money will have to be transferred from your account to the account of the trading member. After this you will be able to invest directly in US stocks.
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