Attention! - Forex trading is illegal in India!

[supaTrade]

Its true. Forex derivatives traded on NSE are legal. But only INR pairs are available.

If you use any other medium you are at legal risk if RBI finds out. I again repeat that in India only Institutional investors and banks are allowed to use the interbank network or ECNs. Individuals are strictly prohibited.

 

[supaTrade]

Hi Manaoj,

Answers are given below:

a) Can I maintain my Infinity Futures account?
Yes. you can. But you can only invest in stocks - no speculation.

b) Can I withdraw my profits and get it transferred to India? Is there any legal issue.
No legal issues as long as there is no speculative income.

c) I will be paying taxes in US and can I get the double taxation benefit for Indian taxes. I will be paying more taxes in US compared to Indian taxes.

There is a double taxation treaty between India and US so you wont be taxed twice, but you will have to get exemption in US. i.e. declare W8BEN and dont pay taxes in US (if you plan to reside in India and dont have any US activities).

You income will be taxed when it enters India.

However its better if you consult an expert for second opinion.

Hope it helps

Hi All


I am presently in US and planning to move to India. I have an account in Infinity Futures for trading in S&P Futures, Forex Trading and Metals Trading.

I have the following questions:

a) Can I maintain my Infinity Futures account?

b) Can I withdraw my profits and get it transferred to India? Is there any legal issue.

c) I will be paying taxes in US and can I get the double taxation benefit for Indian taxes. I will be paying more taxes in US compared to Indian taxes.

Any help will be appreciated.

Thanks
Manoj Gattani

 

[mgattani]

Thanks for the reply.

My Infinity Futures account is for trading S&F Futures, Gold and currencies it is funded with the amount earned in US. Do I still I have a problem if I trade futures with margin from India.

Thanks

 

[nms123]

http://www.rbi.org.in/scripts/FAQView.aspx?Id=66

This link clarifies RBI's disapproval for trading in exchanges abroad!!

 

[supaTrade]

Please look under Q3 - ii.

Q. 3. What are the prohibited items under the Scheme?

Ans. The remittance facility under the Scheme is not available for the following:

i) Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000;

ii) Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty;

the above sentences says it all. No margins for exchanges abroad. i.e. no futures, no options, no day trading and no forex.

However you can safely invest in securities on delivery basis (WITHOUT using any margin).

http://www.rbi.org.in/scripts/FAQView.aspx?Id=66

This link clarifies RBI's disapproval for trading in exchanges abroad!!

 

[SavantGarde]

First go through the Policy it does not say an Individual cannot trade FX anywhere outside India....

All that RBI prohibits is 'Remittances From India' & it is a hugely loaded statement....

Therefore all this about being illegal and things holds no water... have written about this in detail elsewhere in one of the threads here in Forex...

SavantGarde

 

[preetksgill]

First go through the Policy it does not say an Individual cannot trade FX anywhere outside India....

All that RBI prohibits is 'Remittances From India' & it is a hugely loaded statement....

Therefore all this about being illegal and things holds no water... have written about this in detail elsewhere in one of the threads here in Forex...

SavantGarde

true

the wording hhas a very large scope.

 

[buccas13]

I do no think there is anyway one needs to panic. One needs to properly interpret the statement written in the update.

"Remittance for trading in foreign exchange abroad"

Indian Government is already trying hard to bring back the black money abroad. All this is in wake of that. This move is to prevent tax evasion.

If one remits money abroad to trade in forex, what happens is money goes in jurisdiction beyond Indian govt. the person may or may not disclose the profit for computing his tax liability in India. Besides trying to find out retail accounts of small balances is a very tedious job. Besides it is possible that you may remit a portion of that profit using hawala channel too.

Trading in foreign exchange can be done if you open an account in a broker having office in India. This way your accounting of Profit and Loss will happen in India.

Often you will read that trading is illegal and if caught by RBI you will land in Jail. This is false. You will not land in Jail. FERA the earlier law treated forex offense as criminal in nature but FEMA it treats forex offense as civil in nature. So you will have to pay penalty but you will never land up in jail.

EG:

Mr A sends 500 abroad for forex trading and he earns profit of 4500. Total account balance is 5000. Now, he gets caught by RBI. So what will happen is:

The amount considered for offense is 500. This will be the amount used by RBI when filing case under FEMA.

Now, If you donot declare your profits from forex in IT filing, then your 4500 will become illegal. RBI wont but if IT dept caught you then they will refer to 4500 for filing a case against MR A.

 

[sumeetsj]

http://www.traderji.com/forex/49792-remittance-profits-trading.html

 

[supaTrade]

RBI has clearly stated that trading in Forex is illegal for individuals. See following link:

http://articles.economictimes.indiatimes.com/2011-02-21/news/28618054_1_forex-trade-portals