You can invest in US stocks. The key thing to remember is while selling these stocks
a) You need to produce an "Alien" form to the US authorities to ensure that they dont withhold tax to you. This is to show that you would be paying tax for those profits in your home country which i assume is India. India and other governments have agreements with US for US to withhold tax amount if you do not produce this form. If you produce this form, the US authorities will not deduct any tax and notify the Indian government that such a person sold stocks here and made x money on the proceeds.
b) If you buy stocks and sell immediately it involves capital gains tax; So holding it for a longer period and selling is helpful to reduce the capital gains
-- the income that you derive out of the stocks sale in the US is considered Other income and would be added to your already taxable income.
hope this clarifies. you can check with a Chartered accountant for finer details.
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You can invest in US stocks. However US (or any foreign dividends) are taxable at slab rates the same ways as any unlisted stocks. USA withholds 30% of dividends as taxes. If you are on 30% tax slab, 30.9% taxes would be your tax rate. Deducting the US taxes (as foreign tax credit), you would owe 0.9% as taxes. If you in lower bracket the excess would have to be claimed as foreign tax credit.
Upto 2 lakh dollars could be sent to a US brokerage firm in a financial year.
Below RBI's own website on the subject: http://www.rbi.org.in/scripts/FAQView.aspx?Id=66
Advantage of US brokers is 1) No AMC; 2) Toll free calling using Skype througn any laptop/PC in India; 3) Trading after office hours / nightime (Indian night = US day time); 4) Very strict rules about Insider trading which is absent in India - recent Raj Rajarathnam case is an example; 5) More metal ETF combinations - India has not year allowed silver ETFs; 6) FII manipulation problems are absent in US, India (as everyone k