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Income from Forex Trading

Jigar (Business Analyst) (32 Points)

20 October 2009

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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15 Replies

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 20 October 2009

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

Sunil (Trader) (2611 Points)
Replied 20 October 2009

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.

Jigar (Business Analyst) (32 Points)
Replied 20 October 2009

Hi,

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

Regards,

Jigar

Ratan Deep Saxena (Asstt Manager (Accounts & Finance)) (2998 Points)
Replied 20 October 2009

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

Sunil (Trader) (2611 Points)
Replied 20 October 2009

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.

Jigar (Business Analyst) (32 Points)
Replied 20 October 2009

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

Thanks,

Jigar

RAKESH (Almost CA) (2199 Points)
Replied 20 October 2009

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.

(Guest)

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

1 Like

rahul chauhan (Job) (151 Points)
Replied 21 October 2009

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.

Rajeev (www.rkmco.com) (985 Points)
Replied 23 October 2009

Agreed that it should be taxed as business income , same as F&O.

Regarding forex trading this should help : -Open an online share trading or forex trading or currency trading account whose registered Regulatory office is based anywhere out side Indian Jurisdcition. Then open an International Personal Banking Account in the same country bank where you hold trading account and I would like to say that it is allowed as per the LRS scheme FAQ point number 36 mentioned on https://www.rbi.org.in/scriptttts/FAQView.aspx?Id=53

Once you open a trading account AND also an international personal banking account in jurisdiction which falls outside India, then you can first of all send the money to you international personal banking account using the LRS scheme. Then from that bank account simply transfer to your trading account which is also in the same country and does not falls in Indian Jurisdiction. This is the way and legal way to do forex trading using the LRS scheme and within legal limits.

Also ICICI securities is offering forex trading to share trading clients

PS : pls do your homework , i dont practise RBI regs or fema

AGhosal (Teacher) (21 Points)
Replied 21 August 2016

Can anyone please tell me, is the binary option forex trading legal in india ? like binary option trading on 24option.com or iqoption.com ? Those are UK based platform. And the income from that is taxable ? and how much ? I am not getting any clear idea about it. Please help.

Sireesha Gorti (Sole Proprietor) (174 Points)
Replied 24 May 2018

Hi,

Can anyone please tell me whether forex trading with a broker outside India and in which INR is not involved is legal in India or not.

Also please suggest whether CAs can get into forex trading.

Thanks

Shyam Popat (2 Points)
Replied 12 August 2019

HOW WE CAN SHOW LOSS OF FOREX TRADING IN ITR 3.

Sunil (Trader) (2611 Points)
Replied 12 August 2019

It is illegal to register with foreign broker without authorisation from RBI. Requirements are too stringent for individuals to comply and get a license.