A Step-by-Step Guide to Investing in International Stocks
Navigate RBI regulations, tax implications, and platform costs for global portfolio diversification.
1Regulatory Framework for Remittances
Indian residents can invest up to $250,000 annually in overseas stocks and ETFs under the Reserve Bank of India’s Liberalised Remittance Scheme. Investors utilize regulated platforms or direct bank remittances to move funds abroad. This framework covers permitted purposes including foreign securities, international education, and travel expenses for Indian citizens.
2Accessing Global Markets via GAP
The IFSCA introduced the Global Access Provider framework in August 2025, specifically for GIFT City entities. Platforms like Upstox and Groww operate under this regulated channel to facilitate international market access. Accounts are established in the investor's name with US-based brokers, ensuring compliance with SEC and FINRA regulatory standards.
3Managing Costs and Forex Fees
Direct bank transfers often incur high conversion fees between 1.5% and 2%. Platform partnerships with banks can reduce these costs to a range of 0.5% to 1.5%. Investors must also account for brokerage fees, which vary by provider, such as Upstox’s 0.25% charge or Groww’s flat $1 per order.
4Taxation and Compliance Requirements
US dividends are subject to a 25% tax deducted at source, which can be claimed as a Foreign Tax Credit in India. Capital gains follow domestic rules, with a 24-month threshold for long-term status. Investors must disclose all foreign assets and trading accounts in Schedule FA of their annual income-tax returns.
5Investor Protection and Security
Accounts are covered by the Securities Investor Protection Corporation up to $500,000, including a $250,000 cash limit, if a US broker fails. This protection mirrors coverage provided to US citizens but does not extend to losses resulting from stock price declines. Assets are held electronically within the US depository system.
6Tax Collected at Source Rules
Tax Collected at Source applies to LRS remittances exceeding ₹10 lakh per financial year. For amounts above this threshold, a 20% TCS is levied, which investors can claim back or adjust during the filing of their income tax returns. No TCS is applicable on remittances totaling ₹10 lakh or less annually.
7Strategic Asset Allocation Advice
Experts suggest that beginners prioritize international ETFs tracking broad indices like the S&P 500 or Nasdaq 100 rather than picking individual stocks. Direct stock picking is recommended primarily for investors with significant portfolio sizes exceeding ₹2 crore and the ability to manage higher risk levels associated with volatile foreign equity markets.
8Navigating Market Entry Challenges
While international exposure offers diversification, investors must balance brokerage costs, forex mark-ups, and complex tax filings. Since domestic mutual funds often exhaust their overseas investment limits, international ETFs provide a viable alternative. Investors should carefully compare platform fee structures to ensure their chosen strategy remains cost-efficient for their specific portfolio.
Original article: mint - money — A Step-by-Step Guide to Investing in International Stocks