A Guide To Investing In Amazon: For Indians

Amazon.com Inc. (AMZN) is traded on multiple exchanges around the world, including India. The company's stock is listed on the NASDAQ stock exchange, and its stock symbol is AMZN.

There are a few ways for individuals in India to invest in Amazon stock. One way is to open an overseas trading account with a brokerage firm based in India that works with stockbroking companies in the US. Another way is to open a trading account directly with a foreign stockbroking company that operates in India.

Before investing in Amazon stock, individuals in India should consider the associated costs and adhere to the rules and regulations of the country's Central Bank. Additionally, it is important to note that Indian investors must transact in US dollars when buying US stocks and cannot purchase shares with Indian rupees.

Open an overseas trading account with an Indian brokerage firm

To open an overseas trading account with an Indian brokerage firm, you can follow these steps:

First, decide whether you want to go with a domestic or foreign broker. A domestic broker will act as an intermediary and execute your trades through their tie-ups with stockbrokers in the US. Some Indian brokerage firms with tie-ups to international brokers include ICICI Direct, HDFC Securities, Kotak Securities, and Axis Securities. On the other hand, you can also open an account directly with a foreign broker with a presence in India, such as Charles Schwab, Ameritrade, or Interactive Brokers.

Next, research the costs and terms associated with opening an overseas trading account. Be mindful of the charges, including brokerage and currency conversion fees, to ensure you understand all the costs involved before opening an account.

Then, submit the required documents to open the account. This may include completing the Know Your Customer (KYC) process by providing documents such as your PAN and Aadhaar Card.

Finally, transfer funds from your Indian bank account to the broker's account, keeping in mind that currency conversion is required as trades on US exchanges are made in US dollars.

By following these steps, you can open an overseas trading account with an Indian brokerage firm and start investing in Amazon stocks from India.

Open a trading account with a foreign broker operating in India

If you are an Indian resident and want to invest in Amazon, you can open a trading account with a foreign stockbroking company that operates in India. This is the second option for individuals residing in India who are looking to park their funds in the US equity market.

To do this, you will need to open an account with a foreign broker that has a presence in India. Examples of such brokers include Charles Schwab, Ameritrade, and Interactive Brokers. Before opening an account, make sure you are aware of all the associated costs.

Once you have successfully opened an account, you can start investing in shares of leading companies in the US, including Amazon. It is important to note that you will need to transact in US dollars to buy shares of US companies. You can buy US dollars from authorised currency exchange points in India.

When transferring Indian Rupees from your bank account in India to a trading account in the US, you must also consider the exchange rate. Some international brokerage firms have collaborations with top nationalised banks to help Indian investors get favourable foreign exchange rates.

Another thing to keep in mind is that Indian investors have the option to buy fractional shares of US-based companies. This means that you can buy shares in increments of less than one whole share. For example, you could buy 1.5 shares of Amazon instead of just one.

Additionally, US stocks offer dividends to shareholders, which are taxed at a rate of 25% in the US. However, the dividend you receive or choose to reinvest is taxed in India according to the income tax slab rate that is applicable. The tax retained in the US can be set off against the tax to be paid in India.

It is also important to adhere to the rules and regulations of the Central Bank of India when investing in the US equity market. According to RBI norms, Indian investors cannot remit more than $2.5 lakh in a financial year. Make sure to complete the documentation for the Liberalised Remittance Scheme (LRS) successfully.

Buy US dollars from authorised currency exchange points in India

To buy US dollars in India, you must do so from authorised currency exchange points. You can do this through a digital platform or in-person at a bank or local money changer.

Digital platforms, such as BookMyForex, offer a convenient and cost-effective way to buy US dollars. They provide live and transparent exchange rates, updated every few seconds, and allow you to place orders online 24/7. Some platforms also offer same-day delivery of US currency notes.

If you prefer a more traditional approach, you can visit a bank to exchange currency. However, this method tends to be time-consuming and may result in higher costs. Alternatively, you can opt for a local money changer, which offers competitive exchange rates without the need for a bank account. However, the process of negotiating rates can be frustrating.

It is important to note that the exchange rate between the US dollar and the Indian rupee fluctuates, so it is advisable to keep track of the current rates before making any transactions. As of November 15, 2024, 1 USD is equivalent to approximately 84.41-84.42 INR.

Additionally, when buying US dollars in India, you must adhere to the regulations set by the Central Bank of India. According to RBI norms, Indian investors cannot remit more than $2.5 lakh in a financial year, and proper documentation for the Liberalised Remittance Scheme (LRS) is required.

Open a trading account with a stockbroker registered with NSE IFSC

To invest in Amazon from India, you can open a trading account with a stockbroker registered with the NSE IFSC. Here is a detailed, step-by-step guide on how to do this:

Step 1: Find a Stockbroker Registered with NSE IFSC

Firstly, you need to find a stockbroker that is registered with the NSE IFSC. You can find an updated list of IFSC-registered brokers online, along with their contact details. It is worth noting that many of the large broking houses in India are registered with NSE IFSC, so you should have a variety of options to choose from.

Step 2: Open a Trading Account

Once you have found an IFSC-registered broker, you will need to open a trading account with them. This can often be done online through the brokerage firm's website.

Step 3: Complete the KYC Process

To open your trading account, you will need to complete the Know Your Customer (KYC) process. This involves submitting the necessary documents, such as your PAN and Aadhaar Card.

Step 4: Transfer Funds to Your Account

After successfully opening your trading account, you will need to transfer funds from your Indian bank account to your broker's account. Remember that NSE IFSC trades are conducted in US dollars, so currency conversion is mandatory. You can start trading once your funds have been transferred.

Step 5: Start Trading Amazon Stocks

With your account set up and funded, you can now start investing in Amazon stocks. It is important to note that you will not be buying actual US stocks of the company. Instead, you will be issued depository receipts, which are financial instruments that represent an equity stock listed on a foreign exchange. These depository receipts are issued by the GIFT City-based HDFC Bank IFSC Banking Unit, which buys and holds the actual US stocks on behalf of investors.

Key Points to Remember

• NSE IFSC Transaction Fees: The exchange currently charges 12 cents for every US$100 of stocks traded, or 0.12% of the transaction value.
• Brokerage and Demat Account Charges: There will be additional brokerage and demat account charges, which can vary between brokers.
• Currency Conversion Charges: Since transactions are in US dollars, your bank will charge a currency conversion fee, which can also vary.
• Taxation of Gains: There is some uncertainty regarding the taxation of gains from depository receipts. It is recommended to consult the latest guidelines to ensure compliance with tax regulations.
• Trading Hours: The NSE IFSC trading hours are 8 pm IST to 2:30 pm IST, following the timings of the NYSE (New York Stock Exchange).
• Trading Holidays: Trading holidays for NSE IFSC are based on US market holidays, with certain Indian market holidays also considered.

By following these steps and keeping the key points in mind, you can successfully open a trading account with a stockbroker registered with NSE IFSC and start investing in Amazon stocks from India.

Complete the KYC process

To complete the KYC (Know Your Customer) process, you will need to submit the necessary documents. This includes your PAN (Personal Account Number) and Aadhaar Card. The PAN card is an essential document for financial transactions in India, and the Aadhaar card is an identification card with a unique 12-digit number issued by the Unique Identification Authority of India (UIDAI).

The KYC process is a mandatory step to ensure the security and safety of both investors and brokers. It is a regulatory requirement to verify the identity and address of the investor. This process helps to prevent identity theft, financial fraud, and money laundering.

In addition to submitting the necessary documents, you may also be required to provide proof of address and income. This can be done through bank statements, utility bills, or other official documents. Make sure that the address on your proof of address matches the one provided during the account opening process.

It is important to note that the requirements for the KYC process may vary depending on the brokerage firm or platform you are using. Therefore, it is recommended to carefully review the requirements of your chosen platform and ensure that you have all the necessary documents before initiating the account opening process.

Once you have submitted the required documents, the brokerage firm will verify your information. This process may take a few days, and you will be notified once your account is successfully opened and ready for trading.

Frequently asked questions