new Delhi. One way to diversify your investment portfolio is by investing in foreign markets. Investing in foreign markets helps investors deal with volatility. This is because it is not necessary that when there is a fall in the domestic market, the foreign market will also be falling. Another advantage of this is that it provides relief from the risk of currency fluctuations. The investor gets the return on investment in dollars. When the rupee depreciates, the value of investment in foreign currency increases. This gives you a double benefit.
Indians can invest in the stock markets of many countries. But most Indians prefer to invest in the New York Stock Exchange and Nasdaq (NASDAQ). This is because these are the largest stock markets. By opening a brokerage account through a domestic or foreign brokerage, any Indian can invest in shares of companies like Apple, Tesla, Starbucks and Meta. Any Indian investor can himself invest 2.5 lakh dollars per year in the foreign stock market. There is no limit for investment through Mutual Funds.
Also read: Indian Railways: Trains will talk to air on Howrah and Mumbai routes, preparing to run trains at this speed
How To Invest in Foreign Markets
Any investor can invest in foreign stock markets like domestic stock markets. Investing in foreign markets can also be done in 2 ways. The investor can invest in them through mutual funds. One can buy directly from the foreign stock exchanges. There are many types of funds in mutual funds, which offer investment abroad. There are many international mutual funds in India. The special thing about these mutual funds is that you can invest in Indian currency only and you do not have to get into the hassle of forex exchange nor do you have to pay forex exchange charges. How much can an investor invest through mutual funds?
How much is the tax (Tax on Foreign Equity Investment)
It is important to know the tax rules before investing in foreign markets. It is important to understand that how much and how will be taxed on the earnings there. Vested Finance, an investment advisor registered with the US Securities and Exchange Commission (SEC), says that if the stock is held for more than 24 months, it will be sold at a rate of 20 percent. Long term capital gains tax will be levied and some surcharges and fees will also have to be paid.
This limit is 36 months for ETFs. If the sale is made before 24 months, then short term capital gains will be charged as per your income tax slab. Not only this, dividends are taxed at the rate of 25 percent in the US. Only after deducting the brokerage gives the remaining 75 percent of the amount to the investor. However, dividends paid at the time of filing tax in India can be taken credit of tax.
no special tax
Sujit Bangar, founder of the online portal Taxbuddy.com, says that there is no fixed tax rate etc. for investing in equities in America or any other country. Foreign holdings are also an asset like gold, which is taxed as per rules. If we keep foreign assets with us here, it is necessary that they are bought from such funds, the information of which has been given by us in the income tax return.
Also read: Now Kotadar will make India digital too, online facilities will be available at ration shops
What if the shares are inherited?
What happens if someone has inherited foreign shares? In response to this question, Bangar says that if an Indian invests in foreign assets through global funds, etc., then inheritance tax or estate duty is not to be paid on such investment. If a person buys shares in the US in his personal capacity, then he has to pay Inherits Tax after his death. But, even in such cases, he can take credit in India on the tax paid in America because India and America have an agreement on this.
Tags: investment, Personal finance, stock market
Read Article in हिन्दी