to invest in securities of foreign companies listed on the exchanges of their respective countries. As per a recent rbi circular, an Indian citizen can remit a maximum of $75,000 in a fiscal for investments in international capital markets. Once the funds are remitted to a foreign broking house, investor can trade directly with the foreign broker.
Unlike the Indian market, where shares bought are transferred into one's demat account within three days (T+2), in foreign markets, they will be with the trader's pool account and the same will be reflect on the clients trading account immediately after buying. However, margin trading and short selling will not be allowed with a foreign broking house.
Both the dividend earned and capital gains are subject to tax laws of the respective laws of land. But it is adjusted against the tax liability in India if there is a treaty between the two countries. As overseas investments are made in foreign currency, the gain/loss will be subject to the movement of the home and investing currencies.
* The writer is associate professor in finance and accounting,