• Investment decisions on foreign stocks

I had been working in US since 2013. In Dec-2019, i moved to India permanently and will be in 'Resident but Not Ordinarily Resident' status until March 2021.

I work for an US employer for the past 10 years (2009-till date), and receive company stock directly in a US stock brokerage account. Invested my US salary to buy other company stocks during my tenure in USA. Even after i shifted to India I still hold these stocks (my company and other public stocks) in my foreign stock account.

1. Is there a limit on how much amount is invested outside India. None of the money was moved from India to US (since there is a limit of 250k USD/year).
2. Can I still buy/sell stocks in the foreign account.
3. Does residency status have an impact while buying/selling foreign shares.

Thanks,
Shakthi
Asked 5 years ago in Taxation

5 answers received in 2 hours.

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12 Answers

1. There is no such limits for investments to be made in foreign stocks.

2. Yes you can still do the trading.

3 . The SEBI or RBI do not put any restrictions . 

You will be though liable to pay Income Tax at the prevailing rate in India. 

Devajyoti Barman
Advocate, Kolkata
23656 Answers
537 Consultations

1) If you're not going to invest directly from Indian account to Foreign Account, then you can buy/sell in the foreign account. (But if there are any changes in your account from India to US) then rule gets changes. See below.

 

2) Yes, Please see below.

 

All new amendments are applicable from 1st April 2020.

 

Taxation in Indian for RNOR (Resident and Not Ordinarily Resident) :

  • Income received or deemed to be received in India
  • Income which accrues or arises or is deemed to accrue or arise in India
  • Income which accrues or arises outside India from Business controlled in India or profession set up in Inida or other Income.

Ganesh Kadam
Advocate, Pune
13008 Answers
267 Consultations

1. As per RBI. this limit is USD 250,000 for resident Indian , otherwise there is no limit in your case. 

2. Since, you already returned Indian , hence your foreign account cannot continue as per section 13 of the FEMA . and further you cannot buy/sell stocks in foreign account.

3. Yes

Mohammed Shahzad
Advocate, Delhi
15821 Answers
242 Consultations

Dear Sir,

There are certain restrictions of such investments as mentioned by you. So, you are suggested to contact the concerned department of the company as also the Indian Consulate in this regard to find the more details, procedures and processes involved. 

Ganesh Singh
Advocate, New Delhi
7169 Answers
16 Consultations

There is no limit in investment of fofs in foreign countries but when it comes for real estate and direct income, shares etc is $250000 per financial year you can remit through liberalised remittance scheme

Prashant Nayak
Advocate, Mumbai
34569 Answers
249 Consultations

Your United state investments will be intact and there is no limit however you will have to declare in your income tax return the investment you have and any income from those investment that has to be text in US to your income tax return to avoid double taxation India and United States have double taxation avoidance treaty so that you can take credit of any tax paid in United state in your Indian income tax return

Vimlesh Prasad Mishra
Advocate, Lucknow
6851 Answers
23 Consultations

There are two ways to invest in US stocks, either you have a brokerage account and invest in US stocks or invest in US focused International mutual funds in India e.g. ICICI, Franklin, etc. RBI allows investment of residents through both routes.

  1. For investing through brokerage firms, you are allowed to invest under the LRS (Liberalized Remittance Scheme) i.e. upto $250,000 per year per person. For direct investments in US equities, there are certain brokerage firms that do offer investment in US. 
  2. For investments in US focused mutual funds in India, there is no limit for India residents as investments are made in India. You can invest in International mutual funds or International Fund of Funds and invest in INR in India only.

 

Anilesh Tewari
Advocate, New Delhi
18103 Answers
377 Consultations

1. No, in this case there would be no limit. 

2. Yes.

3. No.

Rahul Jatain
Advocate, Rohtak
5365 Answers
4 Consultations

1. Since you have not invested through Indian account,  the question of limitations do not arise.  Investment through LRS  shall be restricted to USD 2,50,000.

2. You can continue the trading activity in India also.

3.  Except for the levy of income tax, there may not be any other restrictions. 

 

T Kalaiselvan
Advocate, Vellore
90058 Answers
2499 Consultations

1. No limit..

2.You can buy/sell stocks. 

3.income from foreign investments would generally be liable to tax in India. In case of non residents, such income is not liable to tax as long as it is not directly received in India.

Mohammed Mujeeb
Advocate, Hyderabad
19337 Answers
32 Consultations

1. No there is no limit on investment of money outside India Till you pay income tax on profits earned from trading. 

2. Yes you can still trade in foriegn account.

3. No residential status diesnt have impact on buying and selling of foriegn shares.  

Mohit Kapoor
Advocate, Rohtak
10686 Answers
7 Consultations

It is better for you to consult a practising Chartered Accountant, as these queries relate more to financial matters than legal. You may please read the relevant circulars and notifications on the RBI's website on these topics.

Swaminathan Neelakantan
Advocate, Coimbatore
3071 Answers
20 Consultations

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