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Income from Forex Trading

Business Analyst


Hello Experts!

 

I am having the confusion that if i earn income from Forex Trading in India, under which head my income would be taxable and what would be the tax rate and tax implications behind that?

 

Please help me out.

 

Regards,

 

Jigar

 
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Asstt Manager (Accounts & Finance)

if the person indulge himself in the business of forex trading such income shall be taxable under the head "Business Income".  In other case it may be covered under the head " Income from other sources". Tax rate applicable applicable to individual is charged on such income.

regards,

ratan

 
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Agreed with Ratan.

If it is your vocation that you do on a continuous basis then income from business / profession. If it is one off transactions then income from other sources.

The tax rate depends how you organise yourself. If you trade as individual / proprietorship, your income is taxed as per your slab rates. If you organise the business as a partnership firm or company, applicable rates for those entities apply.

 
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Business Analyst


Hi,

 

Thanks for responding. I heard that it is illigal in India. Is it true?

 

Regards,

 

Jigar

 
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Asstt Manager (Accounts & Finance)

IN India only person authorised by Reserve Bank of India named as "authorised person" are only authorised to trade in forex. it is regulated under FEMA Act, 1999.

regards,

ratan

 
Reply   
 

True. I assumed Jigar was a licensed FOREX broker.

Illegal or not, department will tax him anyhow. For income earned illegally you are liable to pay the tax still. Yes he will be prosecuted under FEMA by RBI if he has done anything to violate.

 
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Business Analyst


Thanks. I was planning to trade in Forex but still i have to invastigate it.

 

Thanks,

 

Jigar

 
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 can anyone explain me what is forex trading . whether it is anything relating to export sales and when the transaction is settled we end up with exchange fluctuation is this called forex trading. 

 
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Originally posted by :RAKESH
"  can anyone explain me what is forex trading . whether it is anything relating to export sales and when the transaction is settled we end up with exchange fluctuation is this called forex trading.  "

 

Forex trading is not related with export sales. If some one Trade Foreign Currency then it will called Forex trading. The export sales are different from it IN export sale the profit/loss is not depends on forex rate exchange fluctuation is just matter of chance where as in forex trading the trader depends on fluctuation profit & loss

>> Rajesh


Total thanks : 1 times

 
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if it is the business of the person then it will be the income under head PGBP  and if it is the casual income of the assessee then it will be taxable under head income under other sources.

 
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