For Indian investors looking to expand their investment portfolio and explore opportunities in global markets, investing in foreign stocks can offer a compelling avenue. One such stock that has captured the attention of investors worldwide is Elon Musk-led Tesla Inc. TSLA, the renowned electric vehicle and clean energy company.
As Tesla continues to dominate the electric vehicle market and possibly shape the future of sustainable transportation, interest in the company, its eccentric CEO and its share price continue to be on a steady rise. So, if you are someone who has been on that bandwagon, you’ve arrived at just the right place.
In this comprehensive guide, we’ll walk you through the process of buying Tesla shares in India, providing valuable insights and steps to help you navigate the intricacies of international investing.
Tesla: The Company
Tesla, founded in 2003 by Martin Eberhard and Marc Tarpenning, has revolutionised the automotive industry with its electric vehicles and advancements in clean energy. The company is known for its flagship electric vehicles like the Tesla Model S, Model 3, Model X, and Model Y. Tesla’s commitment to sustainability and its vision for a future powered by renewable energy have garnered significant attention worldwide.
Musk, Tesla’s CEO, has played a pivotal role in the company’s success and market perception. Musk’s vision for sustainable transportation and renewable energy has been a driving force behind Tesla’s mission. His charismatic leadership and innovative mindset have captivated investors and the public alike.
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Before investing in any company, you must familiarise yourself with its financials. Here are the company’s numbers for the past four years.
|Dec. 31, 2022
|Dec. 31, 2021
|Dec. 31, 2020
|Dec. 31, 2019
As evident from the table, the company’s earnings and revenue have been on a consistent uptick. But, one should note that while the company’s financials are important there are several other things an investor should keep in mind before investing in Tesla shares.
Factors Affecting Tesla Share Price
- Electric Vehicle Market Trends: The overall growth and adoption of electric vehicles worldwide can have an impact on Tesla’s share price. Positive developments and increased demand for electric vehicles tend to drive investor confidence in Tesla and potentially lead to an uptick in the Tesla share price.
- Production and Delivery Numbers: Tesla’s ability to meet production and delivery targets is closely watched by investors. Meeting or exceeding expectations in terms of vehicle production and deliveries can positively impact the Tesla share price, while falling short may have a negative effect.
- Financial Performance: Tesla’s quarterly financial results play a significant role in shaping investor sentiment. Strong revenue growth, profitability, and positive cash flow can contribute to a positive perception of the company’s prospects and potentially drive the Tesla share price higher.
- Regulatory Environment: Changes in government policies, regulations, or incentives related to electric vehicles and clean energy can impact Tesla’s share price. Supportive policies and incentives can create a favourable environment for Tesla’s growth, while adverse regulatory changes might lead to increased volatility. The company has faced a whole host of challenges because of such regulatory reasons in India.
- Competition in the Electric Vehicle Market: The electric vehicle market is becoming increasingly competitive, with several established automakers and new entrants vying for market share. Investors closely monitor Tesla’s ability to maintain its competitive edge, innovation, and market leadership, which can affect the company’s share price.
- Elon Musk’s Influence: Elon Musk’s public persona and statements have historically had an impact on Tesla’s share price. Musk’s tweets or public comments about Tesla, the electric vehicle industry, or other related topics have been known to create volatility in the stock market.
How To Buy Tesla Shares In India
Opening a Foreign Trading Account
To start investing in Tesla shares in India, you’ll need to open an overseas trading account in India. Some popular brokerage firms in India that offer access to international markets include:
- HDFC Securities: One of the country’s leading brokerage firms that provide trading access to global stock exchanges.
- Kotak Securities: It is another well-known brokerage firm that allows investors to trade in international stocks, including Tesla.
- ICICI Direct: ICICI Direct offers a range of investment options, including international stock trading services.
Choose a brokerage firm that aligns with your requirements, offers competitive fees, and provides a user-friendly trading platform. Follow the brokerage firm’s instructions and provide the necessary documentation to open your demat account.
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Tax And Charges
Before we start investing, one should remember that investing in foreign stocks would attract a lot of fees and taxes. This will be above the cost of the actual Tesla share price. Now let’s get into the charges and taxes you will be required to pay.
Tax Collected at Source
Under the RBI’s Liberalised Remittance Scheme (LRS), a 5% Tax Collected at Source (TCS) is imposed on all remittances exceeding Rs 7 lakh. This tax is applicable only to the amount exceeding ₹7 lakh, not the entire sum. For example, if the amount is ₹12 lakhs then tax will be applicable on only the ₹5 lakh. If eligible, the TCS can be claimed as a refund when the taxpayer files an Income Tax Return.
However, with the recent changes made by the government under the Finance Act 2023, this will go up significantly. From July 1, 2023, you will be charged a 20% TCS on these investments. Also, the threshold of ₹7 lakhs has been removed, so if you invest ₹12 lakhs after June 30, TCS would be charged for the entire amount and not just ₹5 lakhs.
Capital Gains & Dividend Tax
For Indian citizens, dividends from US stocks are subject to a 25% tax rate. However, thanks to the Double Tax Avoidance Agreement (DTAA), investors can receive a tax credit for taxes paid abroad, ensuring they are not taxed twice on the same income. In the US, there is no capital gains tax on your investments. However, you are required to pay taxes on capital gains in India.
Brokerage firms impose fees for buying and selling shares. This differs from broker to broker and is more often than not higher for investing in foreign stocks.
Most banks charge fees for foreign exchange conversion and transfers. Additionally, there may be a one-time account setup fee. Total banking charges are usually around 4% to 5% of your total investment amount including commission and GST.
Foreign Exchange Rate
The foreign exchange rate at the time of purchase or withdrawal can impact costs and the number of units allocated.
As you can see from the long list, buying Tesla shares in India would not be a cheap affair, so do make sure that you have done the proper research. Another thing to keep in mind is that there is a cap of $250,000 (around ₹2 crore) per year for Indian Citizens for such expenses.
Monitoring Your Investment
After purchasing Tesla shares, it’s important to monitor your investment regularly. Stay updated on Tesla’s financial performance, news, and market trends that could affect the Tesla share price. You can check the Tesla share price anytime using your trading platform or even a simple Google search for Tesla share price will get you the desired result. One thing to note is that since Tesla is not a listed entity in India, you cannot look for Tesla’s share price in India. The Tesla share price would be the same everywhere. At the time of writing the Tesla share price was at $193.17 around ₹15,839.94.
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Disclaimer: Benzinga India doesn’t give financial advice. The above article is for educational purposes alone.
Editor’s Note: Artificial intelligence was used as a secondary aid in the writing of this story.
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