Tax on investing directly in US Stocks/ETF vs MF

I know If we invest in any International ETFs like MON100 or MAFANG or Mutual Funds it will be taxed in the same manner as debt funds @ applicable slab rates.

But if we invest directly through a foreign broker into US stocks or ETFs then :point_down:

Which will save more tax in long term - Investing directly through foreign brokers like Interactive Brokers or investing through International FoF/ETF like MON100 or MAFANG?

Let’s say I’m investing 7L every year and it gives me 20% CAGR for next 10 years.

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Since you have already shared the taxation applicable in both the scenarios,
what information do you NOT have,
that you cannot calculate the applicable taxes for both the scenarios? :thinking:

taxation is applicable when you sell any investment? In this case, the above tax rules are current, who knows what rules will be applicable after ten years. I chose ten years as investment is going to be locked in for 10 Years.

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I’m just confirming my info is correct :sweat_smile:

In scenario 1, I’ll have to pay 30% of 14805292 = 4441587

In scenario 2, I’ll have to pay 20% of 14805292 = 2961058

Scenario 2 saves more tax. (4441587 - 2961058 = 1480529)

Ofcourse tax rules can change in future. But I’ve seen that they always mention that it will apply to people investing after a certain date.

Napkin-math checks out. Roughly.

  • Don’t forget to add cess and surcharge as per tax-slab (not just 30%?)
  • Don’t forget to apply indexation (effective LTCG-tax will not be as high as 20%)

Also, please do the math and plan for the stagnant / capital-loss scenarios as well
as that is more likely over the coming decade. :slight_smile: