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How much can Indian investors buy International or foreign stocks?

Indian brokers such as HDFC Securities, Motilal Oswal, and Geojit, as well as fintech platforms such as Stockal, offer comprehensive US investment services. While you may invest a lot of money in US stocks, keep in mind that the Reserve Bank of India has set a limit of $250,000 for Indian residents.

The Reserve Bank of India (RBI) authorises an individual Indian citizen to send $250,000 every financial year to the United States. With the current rate of exchange. This sum turns out to be in the billions of rupees. If you have two family members, you can invest a total of $250,000 ($500,000).

Prepare to pay a lot of money: You will be dealing with foreign currencies if you want to invest in other countries. If you want to invest in the US stock market, you must now pay fees and brokerage in US dollars.

Direct Investment In US Stocks

Process of Investing in Foreign Stocks:

The first step is to register for an account online once you’ve found the best brokerage account in India for buying US stocks. It’s a straightforward, and quick procedure.

Step 1: To invest in the international stock market, you must first open a trading account with a brokerage firm that offers abroad trading services. There are only a few well-known brokerage firms that offer foreign trading services.

Step 2: Submit a separate account opening form with all required information, as well as know your customer (KYC) papers.

Step 3:You must transfer funds to the local equity broker’s overseas partner, through whom the service is supplied.

Step 4: Submit LRS application and declaration forms.

Step 5: Fill Form A2 (That is available with your broker)

Step 6: Sign a declaration form under the Foreign Exchange Management Act (FEMA).

Authorization form for the specified bank branch to act as an approved dealer.

You can now use an internet marketplace to buy and sell international equities.

Investing through Mutual Funds

Investing in international funds (funds of funds) has a set of benefits. For starters, you don’t need a Demat account or a trading account. Two, investing is simple since the investor does not need to open an international account or be concerned about currency fluctuations. Three, you won’t have to worry about exceeding your investment limit because there is an annual limit if you invest directly through the LRS.

This is the simplest way to invest in international equities. The most significant benefit of investing in mutual funds is that you do not need to open an international account. Investing in mutual funds/ETFs is also less expensive than investing directly in foreign stock markets.

Investing through ETFs

A Demat and trading account are required for ETFs. The simplest and most straightforward approach is to invest in companies based outside of India through feeder or funds of funds. In this route, they also offer index funds that invest in foreign indexes such as the S&P 500, NASDAQ, Russell, Dow Jones, and so on. You can also invest in gold, commodities, technology, energy, and resources funds, which are all differentiated by geography. Because many mutual funds already have different themes, an investor does not need to be concerned. It’s as simple as investing in any domestic mutual fund.

Tax Implication for these investments

This profit will be taxed in India. In the United States, no taxes will be withheld. The amount of taxes you must pay in India is determined on the length of time you retain the investment. The long-term capital gain threshold is 24 months, at a rate of 20% with an indexation advantage. Capital gains are deemed short-term if you sell a stock in less than 24 months and are taxed according to your income tax bracket. Dividends, unlike investment profits, will be taxed at a fixed rate of 25% in the United States. Fortunately, the United States and India have a Double Taxation Avoidance Agreement (DTAA) that permits taxpayers to deduct income tax paid in the United States. The 25% tax you already paid in the United States is available as a Foreign Tax Credit, which you can use to offset the income tax you owe in India.

Conclusion

There are online platforms that allow you to invest directly in overseas stocks, but keep in mind that it is not always straightforward due to a variety of factors. For starters, all of these stocks are valued in US dollars. The dollar becomes exceedingly expensive when converted into Indian rupees.

The Income Tax Department’s e-filing site (www.incometax.gov.in) was introduced on June 7, 2021. Since then, taxpayers and experts have experienced malfunctions and problems with the platform. However, between April 1st and August 30th, 2021, the Central Board of Direct Taxes (CBDT) provides refunds of over Rs. 67,401 crore to over 23.99 lakh taxpayers. In all, Rs. 16,373 crore in income tax refunds and Rs. 51,029 crore in corporate tax refunds has been given in 22,61,918 cases.

Several problems have been reported by taxpayers since the introduction of the new portal, however notwithstanding the struggles, over 8.83 crore individual taxpayers have checked in until September 7, 2021, with a daily average of over 15.55 lakh. In September 2021, the number of ITRs submitted climbed to 3.2 lakh per day, with 1.19 crore ITRs filed for the fiscal year 2021-22. About 76.2 lakh taxpayers have used the portal’s online service to file their income tax returns. Whereas over 94.88 lakh ITRs have also been e-verified out of which 7.07 lakh ITRs have been processed so far.

Taxpayers have been allowed to witness approximately 8.74 lakh Notices issued by the Department under the Faceless Assessment/Appeal/Penalty processes, out of which almost 2.61 lakh fixes have been made successfully, according to a statement released by the Finance Ministry. On a daily basis in September 2021, an average of 8,285 Notices for e-proceedings was issued and 5,889 responses were submitted.

Approximately 10.60 lakh statutory forms have been filed, comprising 7.86 lakh TDS reports, 1.03 lakh submission of Form 10A, 0.87 lakh submission of Form 10E for pay arrears, and 0.10 lakh submission of Form 35 for appeals. 66.44 lakh taxpayers have linked their Aadhaar numbers to their PAN numbers, and over 14.59 lakh e-PANs have been issued. In September 2021, over 0.50 lakh taxpayers took advantage of these two services on a daily basis despite the glitches on the new Income Tax Portal, according to the statement.

New Deadline For Income Tax Return Filing For The Assessment Year 2021-2022

According to an official memorandum issued on September 9, 2021, the Central Board of Direct Taxes (CBDT) has declared to further extend the due dates for filing Income Tax Returns for the Assessment Year 2021- 22 under the Income-tax Act, 1961 (the “Act”), based on hardships disclosed by taxpayers and other stakeholders in filing Income Tax Returns and various reports of audit for the Assessment Year 2021- 22 under the Income-tax Act, 1961.

1. The due date of furnishing of Return of Income for the Assessment Year 2021-22, which was 31st July, 2021 under sub-section (1) of section 139 of the Act, as extended to 30th September, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st December, 2021;
2. The due date of furnishing of Report of Audit under any provision of the Act for the Previous Year 2020-21, which is 30th September, 2021, as extended to 31st October 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 15th January, 2022;
3. The due date of furnishing Report from an Accountant by persons entering into international transaction or specified domestic transaction under section 92E of the Act for the Previous Year 2020-21, which is 31st October, 2021, as extended to 30th November, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st January, 2022;
4. The due date of furnishing of Return of Income for the Assessment Year 2021-22, which is 31st October, 2021 under sub-section (1) of section 139 of the Act, as extended to 30th November, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 15th February, 2022;
5. The due date of furnishing of Return of Income for the Assessment Year 2021-22, which is 30th November, 2021 under sub-section (1) of section 139 of the Act, as extended to 31st December, 2021 vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 28th February, 2022;
6. The due date of furnishing of belated/revised Return of Income for the Assessment Year 2021-22, which is 31st December, 2021 under sub-section (4)/sub-section (5) of section 139 of the Act, as extended to 31st January, 2022, vide Circular No.9/2021 dated 20.05.2021, is hereby further extended to 31st March, 2022.