18 April 2012
Hello, Sir i am trading in forex market with 4xp.com in EUROUSD in the f.y. 2011-12 and has earned 7.8 lacs ruppees. The same has been encashed by me through ANZ bank. They deducted some bank charges and I have withdrawn the amount. Sir, Will I be liable to pay any income tax /?? Is it an income within INDIA .Please guide me sir. Also Please tell me rules pertaining to FEMA ACT. Will I be required to get mi books audited from C.A.???
You need not to pay any kind of Taxes because of your income not exceed Rs 8 Lakh PA.
By reporting capital gains on IRS Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles), forex traders are allowed to split their capital gains on Schedule D using a 60% / 40% split. This means that 60% of the capital gains are taxed at the lower, long-term capital gains rate (currently 15%) and the remaining 40% at the ordinary or short-term capital gains rate, which depends on the tax bracket the trader falls under (as high as 35%). This results in an average rate of 23%, which is 12% less than the regular (short-term) rate.
18 April 2012
Thank you Sir.No taxes need to be paid now. Sir i would like to known one more thing there is too much rumour in market that as per FEMA ACT of RBI , Forex trading is ILLEGAL in INDIA leading to imprisonment too. SIr please clearify on this matter too.?
19 April 2012
In order to trade in Forex one has to convert currency first because there are no interesting pairs with rupees (in fact, there are pairs with rupees appearing now but they are not going to be very popular among Forex traders due to a number of factors), but in India there is no free conversion of the national currency! Luckily, RBI has been softening foreign exchange rules in recent years and now every Indian is allowed to exchange rupees for up to 200,000 USD per year without giving any justification.
But RBI guidelines say that Indian citizens cannot use this 200,000 allowance for margin calls.
They are not regulated by any government, legally speaking - they don't exist. So you can use them without breaking any laws, but your government is not going to help you in case of problems with broker - you simply won't be able to prove that you had any money on account.
CAclubindia
