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Trading platform Dhan has launched US stock and ETF investing through its GIFT City subsidiary, Raise IFSC. The service allows Indian investors to trade on Nasdaq and NYSE with a flat 0.25% brokerage fee and no maintenance charges. While this simplifies international investing through an IFSCA-regulated route, investors should carefully consider currency risks and tax implications before participating.
What Happened
Dhan has introduced a facility for Indian investors to trade stocks and ETFs listed on major US exchanges, including the Nasdaq and the New York Stock Exchange. This service is provided through Raise IFSC Private Limited, a wholly-owned subsidiary of Dhan located in GIFT City, Gujarat. The platform operates under the regulatory framework of the International Financial Services Centres Authority (IFSCA), which oversees financial services within India's dedicated international financial zone.
Why This Matters For Investors
For Indian investors, accessing US markets has traditionally involved complex documentation and compliance processes under the Liberalised Remittance Scheme (LRS). By routing the service through GIFT City, Dhan aims to provide a more streamlined and direct experience. The platform includes features like Systematic Investment Plans (SIPs) for US stocks and ETFs, allowing investors to make regular, smaller investments over time instead of committing a large lump sum. This can help investors manage the timing of their purchases in a volatile market.
Costs And Fees
Dhan has structured its pricing to exclude account maintenance and custody charges. Instead, the company applies a fixed brokerage fee of 0.25% on the transaction value. This flat fee approach is intended to provide transparency, allowing investors to calculate the exact cost of their trades without worrying about hidden maintenance fees or tiered pricing models.
How Investors May Read This
This launch brings Dhan into competition with several existing fintech apps that already offer access to US equities. By basing its operations in GIFT City, the platform leverages a specific regulatory environment designed for international financial services. It is worth noting that the platform currently does not support derivative trading, such as options or futures. This restriction keeps the service focused on long-term equity investing rather than speculative short-term strategies, which may be a point of consideration for advanced traders.
Tax And Currency Considerations
Investing in US securities involves factors beyond just the stock price. Dividend income from US companies is subject to withholding tax under the Double Taxation Avoidance Agreement (DTAA) between India and the US. Investors are also responsible for reporting and paying taxes on capital gains as per Indian tax laws. Additionally, there is a currency risk involved. Because the investments are held in US Dollars, fluctuations in the exchange rate between the Indian Rupee and the US Dollar will affect the returns for an Indian investor. If the Rupee gains value against the Dollar, the rupee-denominated value of the investment could fall, even if the US stock price remains unchanged.
What Investors Should Track
As Dhan rolls out this service, investors may monitor how the platform manages banking integrations for smooth fund transfers. The breadth of available ETFs and stocks, along with any future updates regarding the addition of new asset classes, will be important for those looking to build a diversified global portfolio. Staying informed about the latest tax compliance requirements for foreign investments and any changes in the regulatory stance of the IFSCA or RBI on international remittances is essential for long-term planning.