Trading US Stock Derivatives from India

This query is : Resolved

Suprabhath SUPRA (Querist)
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08 September 2021 Hi All,

I wanted to post a query that has been niggling me after going through all the information on the internet on this and even after that I am left with more questions than answers.

Basically, I did my masters in the US and worked almost 2 years. I have saved up a good amount in my US bank account so that I can day trade US stock options from India, as I am planning to return to India soon.

I have read the LRS from the RBI website under which its prohibited to open margin accounts to trade derivatives in US stock market. But, as my brokerage will be funded from my US bank account, the amount will not fall under LRS, consequently, allowing me to trade US derivatives like Options from India. Firstly, I wanted to confirm if my assumption is correct.

If its correct, then, I wanted to know how I will be taxed on profits that I make on that. At what point should I file taxes? The income is considered taxable in a particular year only after I move the profits to an Indian account? or I should file the taxes regardless of it reaching my Indian bank account?

Apart from that, I also wanted to know if there is a way to legitimately trade foriegn derivatives from India if I choose to send money from India to may be US brokerage in the future to bypass LRS? may be through setting up an offshore company?

Thanks in advance as these will help me immensely. I am aiming to day trade US stock Options everyday as a profession. So any help will be greatly appreciated.

Thanks.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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22 September 2021 1. Correct.
2. Based on your residential criteria. For Resident total global earnings are taxed in India, subject to rebate of any taxes paid in foreign country.
3. The tax-ability is based on income accrued, and not over its credit to any Indian bank.
4. Depends upon the rules and regulation prevailing at that particular time.

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