Fractional Shares in US Stocks: How to Buy Any Stock from ₹100 as an Indian Investor

Fractional shares allow investors to buy a portion of a US stock instead of purchasing a full share. This means you can invest in companies like Apple, Microsoft, or Amazon with as little as ₹100 or $1, regardless of the stock’s full price. You don't need to save up for a full share. You don't need to wait. You simply invest the amount you're comfortable with, and the platform allocates you the equivalent fraction of that share.

This guide explains everything you need to know about fractional shares: what they are, how they actually work behind the scenes, how Indian investors can legally buy them, what benefits and limitations exist, and how they are taxed in India.

What Are Fractional Shares?

A fractional share is ownership of less than one complete share of a stock or ETF. Instead of buying a whole unit, you purchase a proportional piece of it and in return, you get proportional ownership, proportional price movement, and (where applicable) proportional dividends.

Think of it like this: imagine a cake that costs ₹1,000. You don't need to buy the entire cake. You can pay ₹100 and get one-tenth of it. Fractional share investing works the same way, you invest a fixed rupee or dollar amount, and the platform calculates exactly what fraction of the share that buys you.

Example: Say Apple Inc. (AAPL) is trading at $200 per share. You invest $10. Your platform credits you with 0.05 shares of Apple. If Apple's price rises 10% to $220, your holding is now worth $11; a gain of $1, or 10%, exactly the same return as someone who bought a full share.

Fractional shares represent real equity ownership. The fraction you hold is recorded precisely, sometimes to six decimal places in the brokerage's internal book-entry system. Your investment moves in step with the underlying stock, up or down.

How Do Fractional Shares Work?

The process works quite differently from buying a full share on a stock exchange, and it's worth knowing why.

In the United States, brokers are licensed as broker-dealers, meaning they can act both as agents (on your behalf) and as principals (on their own account). This dual role is what makes fractional share investing possible. A US broker-dealer can purchase a whole share of Apple, hold it in their own name, and then allocate fractional ownership to multiple customers; all tracked precisely through internal book-entry records.

When you place an order to buy $10 worth of Apple, here is what happens in sequence:

For Indian investors using platforms like INDmoney, this process is handled by regulated US broker-dealers such as DriveWealth LLC and Alpaca Securities LLC, both registered with the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). These US brokers act as custodians, holding your shares and ensuring accurate record-keeping.

Custodian Protection: Your investments with DriveWealth LLC and Alpaca Securities LLC are protected by the Securities Investor Protection Corporation (SIPC) up to $500,000 per account (including up to $250,000 for cash). This is the same protection available to US investors.

Fractional Share Example: Buying ₹500 of Amazon

Let's walk through a real-money example to make this tangible for an Indian investor.

The key insight: your percentage return (gain or loss) is identical to that of someone who bought 10, 100, or 1,000 full shares of Amazon. Fractional investing doesn't offer different returns, it simply removes the capital barrier to entry.

How Indian Investors Can Buy Fractional US Shares

Indian investors can legally buy fractional shares of US stocks through a well-established regulatory route. The framework involves two key pillars: the RBI's Liberalised Remittance Scheme (LRS) and platforms regulated by the International Financial Services Centres Authority (IFSCA) at GIFT City, Gujarat.

Here is a clear breakdown of how the entire process works; from regulations to your first trade.

Step 1: Understand the Legal Framework (LRS & IFSCA)

The Reserve Bank of India's Liberalised Remittance Scheme (LRS) allows every Indian resident to remit up to $250,000 (approximately ₹2.3 crore) per financial year abroad for permitted purposes, including investing in foreign stocks, ETFs, and other securities.

Platforms like INDmoney operate within this framework, routing your INR through your bank, converting it to USD, and sending it to your US brokerage account through RBI-approved channels. There is no restriction on the number of remittances, as long as the annual limit is not exceeded.

INDmoney is also regulated by the International Financial Services Centres Authority (IFSCA) at GIFT City, Gujarat, India's first International Financial Services Centre. INDmoney holds both an IFSCA Broker-Dealer Registration and a Global Access Provider (GAP) Authorisation, allowing it to provide access to international markets.

Read about LRS in detail here.

Step 2: Open Your US Stocks Account on INDmoney

Opening a US stocks account on INDmoney is fully digital and takes about 3 minutes. You will need:

• PAN card (mandatory for LRS transactions)
• Aadhaar card (for KYC verification)
• Indian bank account details
• Mobile number and email address

Account setup process:

1. Download the INDmoney app and log in.
2. Go to the US Stocks section and select Open US Account.
3. Complete KYC verification (PAN, identity, and address confirmation).
4. Your US brokerage account is created through regulated US partners such as DriveWealth LLC or Alpaca Securities LLC.

Accounts are typically activated within minutes to a few hours.

Cost: Opening a US stocks account on INDmoney is free. There is no account opening fee, AMC, or platform fee. The main cost is the forex conversion charge charged by your bank when sending money abroad.

Step 3: Add Money to Your US Wallet

Once your account is active, you can add funds through the Add Money option in the US Stocks section.

The process works as follows:

1. Choose the USD amount you want to add.
2. The app shows the equivalent INR amount based on the exchange rate.
3. INR is debited from your linked Indian bank account.
4. The bank converts INR to USD and remits it under LRS.

Funds are usually credited to your US stocks wallet within 12-24 hours. INDmoney has integrations with major Indian banks such as HDFC Bank, ICICI Bank, Axis Bank, Federal Bank, Kotak Mahindra Bank, and IDFC First Bank, enabling faster transfers and competitive forex rates.

See how to transfer money to your US Stock account in detail here.

TCS on Remittances: As per Budget 2026, no Tax Collected at Source (TCS) applies on LRS remittances up to ₹10 lakh per financial year. For amounts above ₹10 lakh, a 20% TCS applies on the excess amount. TCS is not an additional tax. It appears in Form 26AS and can be claimed as a refund or adjusted against your total tax liability when filing your ITR.

Step 4: Buy Fractional US Stocks

Buying fractional US stocks on INDmoney is as simple as choosing an amount and confirming the purchase. Here is the step-by-step flow:

1. Open the INDmoney app and go to the US Stocks section.
2. Search for the stock you want, e.g., Apple (AAPL), Nvidia (NVDA), S&P 500 ETF (SPY), etc.
3. Tap 'Buy' and choose 'Buy in Dollars'.
4. Enter the dollar amount you wish to invest, even $1 works.
5. The app displays the exact fraction you will receive before you confirm.
6. Confirm the order. Your fractional shares appear in your portfolio.

Selling fractional shares works the same way; you can exit by specifying either the dollar amount or the fractional quantity you want to sell.

Benefits of Fractional Investing for Indians

Fractional investing unlocks several powerful advantages. These are not theoretical benefits, they directly address the most common barriers Indian investors face when trying to access global markets.

1. Access to Expensive Stocks 

The most obvious benefit is price accessibility. Without fractional shares, investing in many leading US companies required substantial capital:

Note: Share prices are indicative and change daily. The point is that fractional investing makes every stock accessible regardless of its price.

2. Instant Diversification Across Multiple Companies

With a limited budget, full shares force you to concentrate your money in one or two stocks. Fractional shares let you spread the same amount across multiple companies in a single session.

Example: With ₹10,000 (approx. $108), an Indian investor can simultaneously buy fractional shares of all the 'Magnificent Seven' US technology companies like Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla; something impossible if buying full shares, since a single share of some of these exceeds ₹40,000.

3. Dollar-Cost Averaging (DCA) Made Simple

Dollar-cost averaging is one of the most effective long-term investing strategies. It basically means investing a fixed amount at regular intervals regardless of the stock's price. When prices are high, you buy fewer fractions; when prices are low, you buy more. Over time, this smooths out the average cost of your investment and reduces the impact of market volatility.

Fractional investing makes DCA practical because you can invest any fixed rupee or dollar amount consistently, you are not constrained by share prices. Platforms like INDmoney let you set up weekly or monthly automatic SIPs (Systematic Investment Plans) in US stocks, enabling disciplined DCA effortlessly.

Limitations: What You Give Up With Fractional Shares

Fractional share investing is genuinely powerful, but it's important to understand its limitations before you start. These are not deal-breakers, but being informed helps you invest with the right expectations.

1. Voting Rights on Fractional Shares

With fractional shares, voting rights are typically not passed on to fractional investors. The whole shares are held in the broker's (custodian's) name, and voting rights generally remain with the custodian. 

For most retail investors focused on long-term wealth creation, the absence of voting rights has minimal practical impact. The financial returns of price appreciation and dividends are unaffected.

2. Dividend on Fractional Shares

While fractional shares allow you to invest in a portion of a stock, any dividends you receive are also proportional to the fraction you own.

For example, if Apple declares a dividend of $1 per share and you own 0.5 shares, you will receive $0.50 as a dividend, credited directly to your US stocks wallet on INDmoney. The payout always matches the exact fraction of the share you hold.

3. Liquidity Considerations

Unlike full shares, fractional shares cannot be transferred between brokers. If you hold 0.37 shares of Amazon with Broker A and want to move to Broker B, you would typically need to sell the fractional position first and then reinvest with the new broker. This has two implications:

• You may trigger a taxable event when selling (capital gains tax).
• You are exposed to market price risk during the transition period between selling and reinvesting.

Additionally, fractional shares generally cannot be sold directly on stock exchanges, they must be sold back through the same brokerage platform. This means your liquidity is dependent on your platform's availability and execution capabilities.

Tax Treatment of Fractional Shares for Indian Investors

Understanding the tax implications of fractional US stocks is essential for compliance. The good news is that fractional shares are taxed exactly the same as full shares, there is no separate or different tax treatment. The rules that apply to full shares of US stocks apply equally to 0.001 shares.

For Indian investors in US stocks, taxation mainly applies at two points: capital gains and dividends.

Capital Gains: You are not taxed twice because India and the US have a Double Taxation Avoidance Agreement (DTAA).

• If sold within 24 months, gains are added to your income and taxed as per your slab (STCG)
• If held for more than 24 months, gains are taxed at 12.5% (LTCG)

Dividends: The US withholds 25% before the dividend is credited. This amount can be claimed as a Foreign Tax Credit while filing your taxes in India.

In effect, you’re taxed once under Indian rules, not in both countries.

For a comprehensive breakdown you can refer to this guide on tax on us stocks.