Groww Ceases US Stock Investments, Urges Customers to Act by June 30, 2024

India's Largest Stock Broker, Groww, Makes Significant Service Changes

In a recent announcement, Groww, India's largest stock broker by volume, revealed the suspension of its US stocks investment service. The decision comes into effect on February 27, 2024, with additional restrictions on fund additions to US dollar wallets beyond this date. Notably, all withdrawals are slated to cease after March 31, 2024. Groww has since extended the deadline for users to take action to June 30, 2024.

The move was disclosed in a communication to customers, citing reasons linked to the 20% Tax Collected at Source (TCS) and the substantial costs associated with international remittances as key factors influencing the decision.

Anonymous sources familiar with the matter indicated that the decision is prompted by the financial implications of the 20% TCS and the high expenses involved in international remittances.

Transferring holdings to another broker usually involves associated costs, although Groww has not specified these charges as of the current report. However, a senior executive at Groww, preferring anonymity, assured that the company would absorb the migration costs. Customers are presented with two choices: either withdraw their funds before the June 30 deadline or transfer their holdings to another US-based broker.

For customers opting to transfer, it's essential to note that the process often incurs costs. While Groww has not disclosed specific charges, an unnamed executive confirmed the company's commitment to covering migration expenses.

Alternatively, investors may choose to withdraw their investments, triggering the sale of all US stock holdings. However, this action could lead to tax liabilities. Selling US stocks within two years of purchase attracts taxes at the slab rate, while sales after two years are taxed at 20% with indexation benefits. Additionally, Indian residents must annually report their foreign assets in Schedule FA of their income tax return.

A Bangalore-based Groww user, who preferred to remain anonymous, shared their perspective: "I was one of the earliest people to sign up for the Groww US stock service. I chose Groww as I already had a very large Mutual Fund portfolio with them. There were no commissions, all was free, there was a small charge on withdrawals. I have never withdrawn until now as they are forcing me to. It would cost at least $100 to initiate the transfer (this is standard fees in..."

Groww users are advised to carefully consider their options and take necessary actions by the revised deadline of June 30, 2024.