Let us Trade Forex Legally.

[richo]

Hi

Let us accept the fact that funding a forex account from India is against the regulations. I have been trading forex since 2012 from my NRI cousin's name and account.

This can be converted as a legal business with the following terms.

- He opens a master Oanda trading account in his name and fund from his account

- He opens a MT4 sub account for each individual whoever wanted to trade forex and the userid / password to be given to them.

- The withdrawals request to be sent to him and as soon as the broker process the withdrawals, he sends the amount back to your account.


I invite members to discuss and give suggestions to the legality of the above process, whether this can be successfully implemented.

Richo.

 

[richo]

Hi


Only problem with this modality is .... You trust your cousin ... I trust my brother .... How and Why will strangers trust either your cousin or you ... My brother or me ????

Yes.. agree with you. why would anyone trust a stranger. This is just an option if someone willing to trust.

How about any legality issues here.

Richo.

 

[richo]

Legally, it is perfect ....
But how will you transfer funds to your cousin to open the account/s? ....

May be each one has to send directly to the account by paypal, credit card, bank wire, etc, which are legally available for sending money abroad.

 

[tatyawinchu]

Now, In above method, I do see problems ..

I am speaking strictly LEGAL, not MORAL or emotional of TRUST

Lets say trust is 100%, other foreign party [lets call it B] is not going to cheat you..

Now..

Indian person [lets call it A] sends money to B .. using paypal or such ..

* Some cause needs to be given WHY A has sent money to B abroad .. THIS is your CA's job.. ask him what is a good reason to be given to income tax if they ask WHY was money sent out... especially RBI ..

see.. OUTGOING MONEY = UNHAPPY RBI
INCOMING MONEY = UNHAPPY Income Tax dept ONLY if you dont pay tax.. they are OK and wont give a **** if you are paying your taxes, BUT if kicked on their butt from central, to figure out where the influx is from, they HAVE the jurisdiction to enquire .. KE TERA PAISA KIDHAR SE AYA .. NOT ONLY KITNA AYA AUR TU TAX KITNA BHARA .. clear?

* You make profits in forex and want to withdraw it...
First, the party B would be asked WHY they are sending money to India BY their GOVT and whether they would have to pay 'gift tax' or such over it.. THIS is unlikely as most nations have forex income as tax free at their end .. IF NOT, then your profits will be less as B will cover their taxes from your profits.

* You get paid in Indian rupees here .. still income tax can ask you FROM WHERE the money is coming.. you need a good excuse for that too .. your CA's job again

so as you can see .. its not exactly as straight forward as it seems...

Regarding this matter, I found Galts Gulch to be most knowledgeable guy on these forums. You may wish to request his advice over it.. I found it to be extremely helpful.

 

[throwawayacc123]

Thanks for your compliment ....
This is how I operate through my brother ...
1. Investor gives cash / cheque in INR to me
2. I deposit it to my brother's bank account in India, account held in INR
3. My brother sends Euro's to the broker to open the account
4. Whenever there is a withdrawal, my brother sends amount to his account, held in India in INR. If the profit is Huge, my brother will deduct whatever the tax he has to pay and send the remaining amount ... This tax is no where near the profits one can generate in FX ...
5. I withdraw from his account and pay the concerned Investor
6. Investor has to worry about the IT filing, but till the time one pays the tax, handling tax men is easy ....
7. As I keep conducting (FX)trading workshops, I show as income from those workshops ... Remember I'm paying tax, since 6 years ... 7 years of trading ...
8. Where ... there is a will ... There are ways ....
FX is where money is ....

All this is nice Galts, but not everyone has a brother in the US/UK. So while FX trading is profitable just like trading in NSE/MCX, it's not for everyone here.

 

[tatyawinchu]

All this is nice Galts, but not everyone has a brother in the US/UK. So while FX trading is profitable just like trading in NSE/MCX, it's not for everyone here.

5. I withdraw from his account and pay the concerned Investor :thumb:



Hope that helps !

 

[throwawayacc123]

5. I withdraw from his account and pay the concerned Investor :thumb:



Hope that helps !

How does that help?

 

[tatyawinchu]

you could invest through him ! ^^ ..

Lets logically evaluate both conditions :

see at the end of it you have to take a risk ..

either of showing

*Direct money transfer to international broker by any means and hope that RBI never finds you = LEGAL RISK ..

Transactions show some link to international broker from your indian account, let it be paypal, webmoney etc..

[ Not interested in excuses WHY its near impossible for RBI to come after you etc..thats another post.. lets consider risk as a CONSTANT ]


*Indirect Money transfer to international broker by angadia means = TRUST/ CASH RISK

There is NO record of you at international end ..

Logically if you see, what would be better?

Say both risks play out.

With legal risk, you lose your money AND you end up in jail .. FEMA violation is NON BAILABLE ..

With Trust Risk .. well, its self explanatory , your money is gone, but you are a FREE bird .. Now of course, for this second method, taxes and everything from broker side would be more because as you can see, if you take TRUST RISK, it makes you LEGALLY SAFE.. a much BETTER way to be ..

But heh, thats just my risk evaluation .. By no way you can ELIMINATE the risk, you can ONLY REDUCE IT. Granulate it and choose one of the lesser evils

And of course, this reply is for educational purposes only ! :thumb:

 

[throwawayacc123]

you could invest through him ! ^^ ..

and why would i do this?

I must be crazy to give my hard earned money to a unknown stranger to make money for me.

 

[tatyawinchu]

heh you asked!

More over, your premise is wrong...

System is such -
you give money to a guy in india .. he deposits the money in an indian account of his brother who is an NRI .. so NRI can send money outside.. no problem ..
NRI opens broker account say in UK in NRI name and gives you details.. you trade, you make profit, you click WITHDRAW, it goes to NRI bank account in NRI name .. NRI sends money to his brother in India .. his brother charges whatever service charges are and sends rest of profit to YOUR indian account in Indian account .. so there is NO legality problem here ..

Coming to trust system .. well, to each his own .. why people would go for it .. because some of us feel we can make BIG profits in forex .. way more than what NSE BSE etc has to offer BUT, we are trying to find a LEGAL way to do it ... as I said, risk evaluation is to each his own and such systems exist since post independence ..


Above is the ONLY legal way to go about it ..