Why have these brokerages registered with Gift City?
GIFT City is the route through which Indian investors can buy foreign stocks. As more Indians look to invest overseas in stocks like SpaceX, Apple, Nvidia and Tesla, large brokerages are setting up operations in GIFT City that will allow them to offer this service to their customers.
Have these brokerages started the service, and how can I start investing?Most of these brokerages are in different stages of launching the service. Some will offer it directly, while others will do so through a Global Access Provider (GAP), a company registered in GIFT City that provides access to overseas markets.
Once the service is available, investors can open an account through their broker’s app or website by completing the online KYC process. They can then transfer money from their Indian bank account under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS), which allows resident Indians to remit up to $250,000 a financial year for permitted purposes, including overseas investments. Banks also levy a foreign exchange conversion fee. Once the funds are credited, investors can start buying foreign stocks.
Is it open for all and whats the minimum investment requirement?All Indian residents can invest if they meet the KYC requirements. NRIs can also invest through GIFT City. There is no high minimum investment requirement.Thanks to fractional investing, an investor can start with as little as $1, instead of having to buy a full share, which for many US stocks can run into hundreds of dollars, according to Dhan. The availability of fractional investing may vary across platforms.What are the charges on such trading and investments?Brokerages or Global Access Providers (GAPs) typically charge brokerage of around 25 basis points, said Yogesh Darji, Managing Director, HDFC Securities IFSC. Investors also incur foreign exchange conversion charges levied by banks, which are generally in the range of 1-1.5% per transaction.
What is the advantage of investing through the GIFT City route instead of other platforms?The biggest difference is the regulatory framework. GIFT City oversees the companies offering these services and sets the rules they must follow. Beyond that, there is unlikely to be a major difference for investors. Some domestic platforms operate through entities regulated in overseas markets.
When I buy shares overseas, do I own them? Where are they held?Investors are the beneficial owners of the shares, which means they own the investment and are entitled to dividends and other benefits. The shares are typically held in custody by the broker or platform on the investor’s behalf.
How are gains from selling shares or dividends through GIFT City taxed?The tax treatment depends on whether you are a resident Indian or an NRI, according to Nehal Sampat, partner, Price Waterhouse & Co.
Investments made under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS) are also subject to Tax Collected at Source (TCS) at 20%. However, trades executed on GIFT City exchanges do not attract Securities Transaction Tax (STT).
