US Stocks: Detailed FAQ
Last updated: 28 Jan, 2021 | 07:14 am
US Stocks FAQs
1.What is the price for opening a US stocks account?
It is FREE.
2. What are the requirements for opening a US Stocks account?
You need to be investment-ready by completing your :
(i) risk profile, risk tolerance (ii) Bank account verification etc (iii) Other details required by our broker partner Drivewealth
3. How long does it take to open a US Stocks account?
It takes less than 3 minutes.
4. What are the details required to become investment-ready?
To become investment ready, information required by the user:
- Basic information (Name, Address, Date of Birth, Nationality, marital status, etc.)
- Investor Profile Information (Income, Networth, Risk tolerance)
5. Who is Drivewealth?
Our partner DriveWealth, LLC, a member of FINRA (Financial Industry Regulatory Authority) and SIPC (Securities Investor Protection Corporation). Drivewealth is a licensed carrying and self-clearing broker based out of the United States registered in all 50 states offering digital brokerage solutions to broker-dealers, advisors, and online partners worldwide.
6. How safe is my money?
DriveWealth, is a member of the SIPC (Securities Investor Protection Corporation) which protects securities and cash in your Account up to USD500,000 of which USD250,000 may be in cash.
A non U.S. citizen with an account at a brokerage firm that is a member of SIPC is treated the same as a resident or citizen of the United States with an account at a brokerage firm that is a member of SIPC.
Please note - SIPC does not protect against the decline in value of your securities. For more information - https://www.sipc.org/
7. I already use DriveWealth directly or via some other platform. How can I link this to the INDmoney App?
If you already have a US stocks account with Drivewealth via some other platform, you can transfer your shares to your new US Stocks account on INDmoney platform for FREE by simply filling and signing an internal transfer of assets form which usually takes not more than 1 day to process. A digitally filled and signed form is accepted as well. Please get in touch with your mapped advisor for help on the same.
8. How do I transfer money into my US Stocks account?
Sending money to your US Stocks account is regulated by RBI and is done as per LRS (Liberalised Remittance Scheme). There are two routes to wiring money to your US Stocks account.
(i) Digital Mode: Currently this is offered in India via ICICI, HDFC, IDFC and Kotak Bank. Transferring money will involve adding Drivewealth as a payment beneficiary via respective net banking portals and send money to Drivewealth.
(ii) Non Digital Mode: This involves filling and signing a Money remittance form (Called an A2 form) and submitting the same to your bank. Once your US Stocks account is created, our team will email you a filled form which you will need to sign. We will also provide assistance with having the form dropped off to the bank.
Please avoid any other method to fund your account and in case of any confusion reach out to us at email@example.com.
9. What are the charges for transferring money to my US Stocks account?
Transaction charges may vary depending on the bank. Typically, ICICI bank charges ₹1000 per transaction + GST for this service.
10. How much time does it take to send money to your US Stocks account?
(i) Digital Mode: The digital mode of transfer takes 3-5 business days post completion of the transaction to reflect in your US Stocks account.
(ii) Physical Mode: This involves filling and submitting a form post which the bank processes the payment. The entire process could take 5-7 business days for the funds to reflect in your US Stocks account.
11. What is the transfer limit of remittance sent abroad?
Limits prescribed by the RBI are $250k (Rs 1.9 Cr approx) per year. Most banks also have a daily limit of $25k per day and $50k per month.
These limits include remittance abroad for all purposes such as - Travel (loading currency into a travel card) , Education, Investment abroad, Business, etc.
12. Can I create a joint US Stocks account?
Currently creating a joint US Stocks account is not supported.
13. What is 5% Tax Collected at Source (TCS) on my fund transfers abroad?
As per the Finance Act of 2020, funds sent abroad under LRS is subject to 5% Tax Collected at Source (TCS) with effect from October 1st, 2020. TCS will be levied at 5% for foreign remittance amount in excess of ₹7 Lakh in a financial year.
Any remittance made before 1st October, 2020 is not subject to TCS, i.e. no retrospective deduction of tax. However,any remittances made on or after 1st April, 2020 will be included while counting the overall ₹7 Lakh exemption.
The TCS paid may be uses as a credit against final tax payable on income earned in the tax return.
14. Can I fund my US Stocks account using someone else's bank account?
No, you should only fund your US Stocks account from your own bank account. Please avoid sending funds from your relatives or friends bank accounts because as per RBI regulations the funds must be transferred from the investors bank account only.
15. Can I fund my account using Transferwise?
No, you are only allowed to transfer funds via a bank for the purpose of investing in US stocks.
Buying and Selling :
1. What is the process for Buying and Selling :
Once funds are successfully transferred, you can buy and sell stocks and ETFs right on the IND platform. Browse through our catalogue to select stocks and ETFs or reach out to your wealth manager to get a customised investment proposal.
2. Is there a minimum investment amount?
You can invest as low as $0.01 (75 paise). Your US stocks account also allows you to purchase fractional shares!
2.1 What are fractional shares?
A fractional share is a part of one share i.e. less than one full share. You don't need to buy 1 full share in a stock to be a shareholder, You can buy just a fraction of the share. In fact you can buy up to 0.00000001 of a share (up to the eighth decimal)
2.2 What are ETFs?
ETFs (Exchange Traded Funds) are securities that involve collection or basket of securities such as stocks as underlying to invest in various industry sectors. ETFs are similar to mutual funds, however they are listed on exchanges and trade throughout the day like an ordinary stock.
There are over 2300 ETFs in the US market with over $4 Trillion of assets under management. Companies such as Vanguard, Blackrock and Invesco are large providers of ETFs
3. How can I place a large order? Example : I want to buy shares more than $100000
A large order can be facilitated by your "Family Office" team at INDmoney App. Please reach out to your Family Office team to learn more about the process. This service is only open for our premium INDwealth clients.
4. What are the trading hours for the U.S. stock exchange?
For retail investors, markets are open from
- 7:00 PM to 1:30 AM IST during 14th March 2021 to 7th November 2021 (9:30 AM to 4:00 PM EDT).
- 8:00 PM to 2:30 AM IST during 8th November 2021 to 13th March 2022 (9:30 AM to 4:00 PM EST).
5. What happens if I place an order out of market hours?
Any orders placed outside of US market hours will be queued and executed automatically as soon as the markets open in the next trading session.
6. Can I cancel an existing order?
Any order that is unfulfilled or not yet executed, can be cancelled from the "Transactions" section in your US stocks Investment section.
7. Can I modify an order?
An order request cannot be modified currently. To make any changes a user can cancel the existing order and place a new one.
8. Is intra-day trading allowed (Can I buy then sell the same stock on the same day)?
Yes, if a user buys a stock X today then he can sell the same stock today to make an intraday profit/loss.
9. Is Short Selling allowed (Sale of stock prior to purchase)?
Selling of a security prior to its purchase is not allowed. A user can only sell a security which is held by him.
10. What is the clearing and settlement procedure for purchase and sale of stocks
The clearing and settlement time for a purchase or sale transaction of stocks is T+2 business days. Once the amount is settled into your Stock trading account, you can have the same wired to your linked bank account in India. The amount withdrawn takes 5-10 days to reflect in your account.
11. Can I purchase a stock from the proceeds of a sale made yesterday?
Yes, you can make a new investment with the unsettled funds.
12. What is the procedure to withdraw funds from my US Stocks account?
It is very simple. Once you sell your shares, the same gets settled in your US stocks account with a settlement period of T+2. Post that simply click on the withdraw button in the app to withdraw funds from your US Stocks account or write to firstname.lastname@example.org to process your withdrawal.
12. Can I add my existing US stocks portfolio?
Existing Drivewealth account:
If you already have a US stocks account with Drivewealth via some other platform, you can transfer your shares to your new US Stocks account on INDmoney platform for FREE. Please reach out to email@example.com to initiate this process.
Account with other brokers:
If you have a US stocks account with another broker, you can transfer your holdings via ACATS (Automated Customer Account Transfer Service) by instructing your existing broker to transfer your holdings and cash balance to your Drivewealth Account. There is no incoming fee but your existing broker might charge you a fee for this transfer, typically between $25 and $75 (varies for different brokers). You can reach out to firstname.lastname@example.org to help you out with this.
Fees and Tax related information about your US stocks account
1. What are the charges for trading?
Absolutely FREE! Zero charges for Buying and Selling!
2. What are the charges to withdraw funds from my US Stocks account?
Withdrawing funds from your US stocks account back to your Indian bank account carries a charge of $20 per transaction.
Withdrawing funds from your US stocks account into a US bank account carries a charge of $25. (Only possible if you had originally transferred money to your US Stocks account from a US Bank account)
Withdrawing funds from your US stocks account into a US bank account via ACH (Automated Clearing House) method carries a charge of $0.25 per transaction.
3. What is the ACH (Automated Clearing House) method of withdrawing funds?
If you have transferred funds to your US stocks account from a US bank, you can opt to withdraw your funds back into the US bank. Most cost effective way to do this would be to opt for a transfer via ACH.
The ACH method allows transfer of funds domestically, between bank accounts in the U.S. This method takes longer with 2-3 business days to transfer funds but is charged at only $0.25 ( Rs 19) per transaction.
4. How long does it take to receive funds in your Indian Bank Account after placing a withdrawal request?
It will take 5-10 days for the funds to reflect in your bank account in India after placing a withdrawal request.
5. How are dividends from U.S. stocks taxed?
Dividends are taxed at source at a rate of 25%. So the money you receive in your US stocks account as a result of dividend payment will be post deduction of tax.
You can however offset this tax deducted in your yearly income tax filings in India and get a full credit of the same. We handle all formalities to enable this tax credit when you create a US Stocks account. You will automatically receive a pre-filled form and help from your family office during tax filing.
6. How are capital gains on the sale of U.S. stocks taxed?
Capital gains are taxed only in India. Due to the Double Taxation Avoidance Agreement (DTAA) between India and US there is no tax on capital gains deducted in the US for Indian residents.
If you sell a security after holding it for less than 24 months and realize a gain, it is classified as a Short Term Capital Gain (STCG) and is taxed at your applicable slab rates plus applicable surcharge and education cess.
If you sell a security after holding it for more than 24 months and realize a gain, it is classified as a Long Term Capital Gain (LTCG) and is taxed at 20% plus applicable surcharge and education cess.