Investing in Global Securities from India

Investing in US Stocks via Shree Naman Securities and Finance Global Investing Platform (GIP) and Associated Tax Implications for Indian Residents

Date: May 30, 2025

Subject: Overview of the Shree Naman Securities and Finance Global Investing Platform (GIP) and key tax considerations for Indian residents investing in US stocks.

Sources:

• "All notes 30/5/2025" (Shree Naman Securities Reference Document)

• "Global Investing Platform (GIP) | SNSF"

• "Indian investors' guide to tax on US stocks in India"

Executive Summary:

This briefing document provides an overview of the Shree Naman Securities and Finance Global Investing Platform (GIP) and outlines the essential tax implications for Indian residents investing in US stocks through such platforms. SNSF GIP is presented as a secure and reliable online platform offering Indian residents access to foreign markets, including the US. The "Indian investors' guide to tax on US stocks in India" highlights the crucial aspects of taxation, including dividend taxation, capital gains computation, and the benefits and limitations of the India-US Double Taxation Avoidance Agreement (DTAA). It emphasizes the importance of understanding tax regulations and compliance for optimizing investment returns.

Key Themes and Important Ideas/Facts:

1. Shree Naman Securities and Finance Global Investing Platform (GIP):

• Purpose: SNSF GIP is designed to enable Indian residents to invest in foreign markets, including the United States, United Kingdom, Germany, and France.

• Technology: The platform is powered by INX GA's cloud-based technology, emphasizing security, reliability, and robustness.

• Market Access: GIP provides access to investing in world-renowned companies (e.g., Apple, Alphabet, Microsoft, Tesla, JP Morgan, Goldman Sachs) and offers the option to invest in US ETFs.

• Global Reach: The platform claims access to "over 135 markets and 33 countries," with access to "135+ Global Exchanges with real time price quotes."

• Diverse Products: Investors can access "30,000 Global Stocks + 40,000 ETFs, Mutual Funds and Bonds."

• User Experience: GIP is described as an "easy-to-use platform that prioritizes efficient order execution and an intuitive UI."

• Support and Services: SNSF GIP is "dedicated to providing our clients with exceptional support." Benefits include seamless investing, access to leading corporations, reliable and secure experience, US ETF options, and "Dedicated support from our professional team."

• Customer Service: SNSF emphasizes "Customer Service is at the heart of what we do," aiming to "go the extra mile."

• Trust: SNSF has been "synonymous with Trust" for the last 30 years, treating client information with "utmost confidentiality."

• Value Creation: SNSF strives to "create value for our Customers" through "avant garde services, research, insights or any other service."

• Process: The process for getting started involves visiting the account opening page, loading the account with funds, opening an account online, familiarizing oneself with the platform, ensuring the bank account is with an empanelled bank (ICICI, HDFC, and Kotak), and beginning to invest.

• Getting Started Options: GIP offers curated investment portfolios through "InteractiveAdvisors" for passive investors in US markets and "Thematic Baskets" to understand sector performance.

• Additional Benefits: Benefits mentioned include Stock Lending, SIPC Insurance up to $500,000, Lower Remittance Fees with some banks, No Charges (implied for certain services), Access to Fundamental and Technical Analysis tools, Completely Digital, and Access to Bloomberg TV.

• Pricing: Industry-leading pricing is offered, with U.S. Equities & ETFs priced at "$0.90 per Order." Deposits are free, and the first withdrawal per calendar month is free, with a $12 charge for subsequent withdrawals in the same month.

• Contact Information: Contact details for Shree Naman Securities and Finance Pvt. Ltd. are provided, including address, phone, website, and email.

• Regulatory Compliance: Relevant registration numbers (NSE, CDS, BSE, CDSL) and SEBI registration number are listed.

• Investor Awareness: Important notes regarding IPO subscriptions, KYC being a one-time exercise, and grievance contact information are included.

2. Taxation of US Stocks for Indian Investors:

• Growing Trend: Indian investments in US stocks have seen significant growth, making tax compliance crucial.

• Dual Taxation: US stock investments trigger tax obligations in both the US and India.

• India-US Double Taxation Avoidance Agreement (DTAA): This agreement prevents paying taxes twice on the same income.

• Dividend Taxation:US applies a 25% withholding tax on dividend payments to Indian investors.

• You can claim credit for US taxes paid against your Indian tax liability by filing Form 67 and Schedule TR.

• The gross dividend amount must be reported in Indian income, and tax liability is based on the applicable slab rate.

• Capital Gains Computation:Holding Period: Stocks held for more than 24 months qualify as Long-Term Capital Gains (LTCG). Shorter holding periods result in Short-Term Capital Gains (STCG).

• Tax Rates (Budget 2024 Changes):LTCG (holdings over 24 months) is taxed at 12.5% plus applicable surcharge and cess (effective July 23, 2024).

• STCG is taxed at your income slab rate.

• Cost Basis: Includes purchase price in rupees, brokerage fees, foreign exchange charges, and other transaction costs.

• Currency Conversion Impact: Currency fluctuations significantly affect gains or losses. Gains from currency appreciation (weakening rupee) are taxable.

• Exchange Rate for Calculation: Taken from the last day of the preceding month for both purchase and sale dates.

• Regulatory Bodies: SEC and FINRA oversee US stock investments.

• Recent Changes (Budget 2024): Reduced LTCG tax to 12.5%, removed indexation benefits while maintaining parity with Indian equity taxation, and added a 20% TCS for annual remittances above Rs. 7 lakh.

• Tax Filing Requirements:Mandatory Reporting: Indian income tax law mandates reporting all foreign assets and income. Resident Indians must file returns if they hold foreign assets, regardless of income level.

• Required Forms: Schedule FA (declaring foreign assets), Schedule FSI (reporting foreign-sourced income), Schedule TR (claiming tax treaty benefits), and Form 67 (claiming foreign tax credits).

• Currency Conversion for Reporting: All values must be converted to Indian currency using the telegraphic transfer buying rate.

• Reporting Period: For US investments, consider the accounting period from January to December.

• Documentation: Detailed records of all transactions, including purchase dates, sale proceeds, dividend receipts, peak and closing values of investments, gross interest, and total proceeds from sales, are essential.

• Tax Optimization Strategies:Timing Investments: Planning exits near the 24-month mark to benefit from lower LTCG rates.

• Portfolio Structuring: Balancing short-term and long-term holdings, considering currency exposure, and meticulously tracking cost basis.

• Loss Harvesting: Offsetting gains with losses. Capital losses can be carried forward for eight fiscal years in India. (Consult a CA before implementing, especially regarding quick buybacks).

• Common Challenges and Solutions:Double Taxation: Mitigated by the DTAA and claiming tax credits. Proper documentation is key.

• Currency Conversion Fees: Include trading commission fees, currency conversion charges (typically 0.75%), exchange process fees, and custody fees. Consolidating trades and strategic currency conversions can minimize costs.

• Compliance Bottlenecks: Streamlined by tracking exchange rates carefully, maintaining detailed records, monitoring currency fluctuations, and using digital platforms that automate calculations.

• RBI's Liberalised Remittance Scheme (LRS): Allows Indian residents to invest up to USD 250,000 annually in foreign assets.

• Disclaimer: The provided tax information is general and not tax advice. Tax laws can change, and consulting a qualified tax professional for personalized guidance is always recommended.

Quotes from Original Sources:

• GIP Platform: "SNSF Global Investing Platform (GIP) is an exceptional online investing platform that enables investing in foreign markets, including the United States (U.S.), United Kingdom (U.K.), Germany, France, and other global markets."

• Technology: "Our platform is powered by INX GA's cutting-edge cloud-based technology, providing a secure, reliable, and robust investing platform."

• Market Access: "Investing in foreign markets through GIP offers Indian residents great opportunities to be part of the global financial market. Our platform provides access to invest in world-renowned companies such as Apple, Alphabet (Google), Microsoft, Tesla, JP Morgan, Goldman Sachs, and many more."

• Customer Service: "At SNSF, Customer Service is at the heart of what we do. We will go the extra mile to ensure that our Customer is never left feeling lost."

• Trust: "For the last 30 years, SNSF has been synonymous with Trust. We treat our Client's information with the utmost confidentiality."

• Taxation Trend: "Did you know that Indian investments in US stocks grew by over 200% in 2020-21, making tax compliance more crucial than ever?"

• DTAA Purpose: "The tax framework for US stocks follows specific agreements between India and the United States. Your investments are protected by the India-US Double Taxation Avoidance Agreement (DTAA), which prevents you from paying taxes twice on the same income."

• Dividend Withholding Tax: "The US applies a 25% withholding tax on dividend payments to Indian investors."

• LTCG Tax Rate: "Starting July 23, 2024, LTCG will be taxed at 12.5% plus applicable surcharge and cess."

• Currency Impact: "Currency fluctuations can significantly affect your gains or losses."

• Mandatory Reporting: "Remember that resident Indians must file returns if they hold foreign assets, regardless of their income level."

• Loss Harvesting: "Tax-loss harvesting helps reduce your tax liability by offsetting gains with losses."

• LRS Limit: "The RBI's Liberalised Remittance Scheme (LRS) allows you to invest up to USD 250,000 annually in foreign assets."

Conclusion:

Shree Naman Securities and Finance's Global Investing Platform (GIP) offers a comprehensive solution for Indian residents looking to diversify their portfolios by investing in US and other global markets. However, navigating the tax landscape associated with these investments is critical. Understanding the India-US DTAA, dividend withholding tax, capital gains calculations based on holding periods, and the recent tax regulation changes are essential for informed decision-making and compliance. Proper documentation, timely filing of required forms, and considering tax optimization strategies can significantly impact the overall return on investment. While platforms like GIP offer digital solutions to simplify compliance, consulting a qualified tax professional is highly recommended for personalized guidance.