Forex Legality about to solve

[fxgood]

Is this issue solved or yet not?

 

[scalperfx]

Hi ForexKhan-

I would like to pitch in my 0.02$ here. I kind of agree and disagree with what you have written. In fact my heart would like to agree on
>>I think the ambiguous status is more inclined towards the 'it is legal' then towards 'it is illegal'.<<<<
But my head says it is still very much a grey area and depends on each and every person's faith/understanding about RBI's intention.

>>come to think of it. One of the major forex broker in India goes on the record and gives a press release about how their org is going to achieve 200 crores of turnover per day in India, through appointing IBs.
This guys have offices in India, and almost every other website carries their banner ads.
If it were illegal is it possible for them to operate like this.
To top it we don't have a recorded case, as of yet about RBI penalizing someone for Forex Trading. >>>>

Again my heart agrees with the above, but the fact remains that if you give them (I am assuming you mean Alpari) a call, they are as clueless about the wiring/remittance legality as you and I are. If RBI decides to shut them up, they will just shut shop and move on, after all they themselves are a glirified Introducing Intermediary for Alpari UK.
You and I can't shut shop and move to a different country, can we?

>>>>To top it we don't have a recorded case, as of yet about RBI penalizing someone for Forex Trading. <<<<
True. That is why we are still trading forex and still debating about the legality and clarity of the law.
But on the flip side, more and more shady operators are getting busted for running a ponzi scheme citing forex (especially in the south). I hope this won't impact the true forex traders.


>>>>As a developing economy and as one of the open countries today, i am sure RBI would not be putting people behind bars just because they traded Forex with a UK broker and not with CME broker.<<<<

I think RBI's circular made no specific mention of forex trading, it had to with restriction on remitting money to overseas exchanges/overseas counterparty for the intent of margin trading or margin call. So as far as RBI is concerned, there is no difference if you are trading through CME in currency futures or trading with a bucketshop.


>>>>My CA friend actually told me that their association, infact conducted a one day workshop on understanding Forex trading and how to account the profits. <<<<

I am assuming their workshop would be on how to open offshore accounts and report profits/withdrawals as business income and be taxed accordingly.In which case,that is no consolation.Perhaps you could share on what actual info the auditors shared in the workshop, it might help us learn a bit more about accounting/taxation issues.


>>>>So as of now, whether it is legal or illegal, but looks like you are not going to be penalized for doing it, which in my books is legal<<<<

I agree with that. In my books too it is legal until told otherwise.So happy trading too until then.

Regards,
Scalper

 

[lonelyhunk]

Its kind of solved

OK Guys..enough of debate on legality of forex. Here is an exercpt from the FEMA, 1999 - which clearly says it is legal:

9. Exemption from realization and repatriation in certain cases.- The provisions of sections 4 and 8 shall not apply to the
following, namely:-

(a) possession of foreign currency or foreign coins by any person up to such limit as the Reserve Bank may specify;
(b) foreign currency account held or operated by such person or class of persons and the limit up to which the Reserve Bank may
specify;
(c) foreign exchange acquired or received before the 8th day of July, 1947 or any income arising or accruing thereon which is held
outside India by any person in pursuance of a general or special permission granted by the Reserve Bank;
(d) foreign exchange held by a person resident in India up to such limit as the Reserve Bank may specify, if such foreign exchange
was acquired by way of gift or inheritance from a person referred to in clause (c), including any income arising therefrom;
(e) foreign exchange acquired from employment, business, trade, vocation, services, honorarium, gifts, inheritance or any other
legitimate means up to such limit as the Reserve Bank may specify; and
(f) such other receipts in foreign exchange as the Reserve Bank may specify.

Now for that matter here are sections 4 and 8:

(4) A person resident in India may hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India.

8. Realisation and repatriation of foreign exchange.- Save as otherwise provided in this Act, where any amount of foreign
exchange is due or has accrued to any person resident in India, such person shall take all reasonable steps to realize and
repatriate to India such foreign exchange within such period and in such manner as may be specified by the Reserve Bank.

I have gone through the entire FEMA circular and the penalties are in order:

1. Fine
2. Higher Fine
3. Arrest warrant (will be set free on payment of fine)
3i. Upto 3 years in case fine is 1 crore or more
3ii. Upto 6 months if less.

IN no case there will be any arrest warranty unless a showcause notice has been served and the defaulter has not responsed to it.

So guys...enjoy.

 

[fxgood]

I've been trading forex for quite some time now, but fxgood, as you know this will never be settled it seems, untill we hear something from the horse's mouth directly. i.e the RBI.

I think the ambiguous status is more inclined towards the 'it is legal' then towards 'it is illegal'.

come to think of it.
One of the major forex broker in India goes on the record and gives a press release about how their org is going to achieve 200 crores of turnover per day in India, through appointing IBs.
This guys have offices in India, and almost every other website carries their banner ads.

If it were illegal is it possible for them to operate like this.

To top it we don't have a recorded case, as of yet about RBI penalizing someone for Forex Trading.

As a developing economy and as one of the open countries today, i am sure RBI would not be putting people behind bars just because they traded Forex with a UK broker and not with CME broker.

My CA friend actually told me that their association, infact conducted a one day workshop on understanding Forex trading and how to account the profits.

So as of now, whether it is legal or illegal, but looks like you are not going to be penalized for doing it, which in my books is legal

Quite satisfactory answers.....

 

[fxgood]

Why do we scout for illegal route when Currency pairs are already available on NSE & MCX-SX platform. Using paired strategy we can trade in all leading crosses. My Broker Anagram has helped me a lot in understanding the segment and also in trading cross currencies officially on the exchange platform

Liquidity, Timing and Platform which just makes us to scout, but its never proved officially as illegal

 

[Edward]

:thumb: Rightly put.

Why would we scout if we can get the same kind of liquidity and MT4. I think it's high time that the Indian major brokers too woke up to this and do something about it. Getting MT4 platform is not that difficult and liquidity is also not an issue today in India.

Liquidity, Timing and Platform which just makes us to scout, but its never proved officially as illegal