What are the tax implications for indian residents investing in us stock market?

Difference Between Indian Stock Investing And US Stock Investing

Basis	US stock investing	Indian stock investing
Market volatility	The US stock market is less volatile in terms of long term investments.	The Indian stock market is considered to be comparatively more volatile.
Size and valuation	The US market is much larger in terms of both size and valuation. It is the largest stock market in the world with a market cap of $47.32 trillion	The Indian stock market is ranked 5th in the world in terms of market capitalisation, which is $3.21 trillion.
Currency of exchange	The buying and selling is done in terms of the US Dollars.	The Indian Rupee (INR) is the currency used.
Regulation	The US stock market is regulated by the US Securities and Exchange Commission (SEC).	The Securities and Exchange Board of India (SEBI) is the regulator of the Indian stock market.
Research requirement	Extensive research is required because of the large number of listed companies.	Research is more crucial as well as time consuming as not all information is easily available.
Top performing sectors	Stable sectors such as healthcare and technology are top performers.	Sectors linked with economic growth, such as power, are the top performers.
Global exposure	There is higher global exposure because of various MNCs listed on the US exchanges.	There is less global exposure as the Indian exchanges comprise mainly the domestic companies.
Portfolio diversification	There are a lot more avenues for investing because of the larger size of the US stock market.	The scope for diversification is less when compared to the US stock market.
Investment strategies	Focus should be on investing in companies with a good track record. You can also invest in new companies and capitalise on new ideas.	Focus should be on proper research before investing. Investment should be done in well-established companies.
Return on investment	Historically, the average annual return on investment has been approximately 10%.	The average annual return on investment has been around 15%, which is higher than the US stock market.
Listing requirements	More stricter listing requirements and a higher listing fee is charged.	Listing is more time consuming, as a company must be at least 3 years old before it can get listed.

Basis

US stock investing

Indian stock investing

Market volatility

The US stock market is less volatile in terms of long term investments.

The Indian stock market is considered to be comparatively more volatile.

Size and valuation

The US market is much larger in terms of both size and valuation. It is the largest stock market in the world with a market cap of $47.32 trillion

The Indian stock market is ranked 5th in the world in terms of market capitalisation, which is $3.21 trillion.

Currency of exchange

The buying and selling is done in terms of the US Dollars.

The Indian Rupee (INR) is the currency used.

Regulation

The US stock market is regulated by the US Securities and Exchange Commission (SEC).

The Securities and Exchange Board of India (SEBI) is the regulator of the Indian stock market.

Research requirement

Extensive research is required because of the large number of listed companies.

Research is more crucial as well as time consuming as not all information is easily available.

Top performing sectors

Stable sectors such as healthcare and technology are top performers.

Sectors linked with economic growth, such as power, are the top performers.

Global exposure

There is higher global exposure because of various MNCs listed on the US exchanges.

There is less global exposure as the Indian exchanges comprise mainly the domestic companies.

Portfolio diversification

There are a lot more avenues for investing because of the larger size of the US stock market.

The scope for diversification is less when compared to the US stock market.

Investment strategies

Focus should be on investing in companies with a good track record. You can also invest in new companies and capitalise on new ideas.

Focus should be on proper research before investing. Investment should be done in well-established companies.

Return on investment

Historically, the average annual return on investment has been approximately 10%.

The average annual return on investment has been around 15%, which is higher than the US stock market.

Listing requirements

More stricter listing requirements and a higher listing fee is charged.

Listing is more time consuming, as a company must be at least 3 years old before it can get listed.

As of January 2022, 55% of adults in the US regularly invest in the stock market. The US stock market holds about a 59.9% share in the value of total world equity markets. The US stock market has a whopping $47.32 trillion market cap.

You can invest in the US stock market directly by opening an overseas trading account with a domestic or foreign broker. Be mindful of the charges and differences between the two stock markets before you pick the best option to invest in US stocks from India.

When determining the tax on US stock in India, dividends paid on US stock must also be included. The amount is taxed at a flat rate of 25%. So if the company declares a $100 dividend, you get $75. Due to the tax treaty between India and the United States, this rate is lower than the regular tax rate for foreign investors in the United States.