Indian Resident Forex Trading through NRI friend's account

[yogasutra]

I am an Indian citizen residing in India. I have a friend in whose name I have opened a Forex Account in Dubai. I trade, I make money. Give him 10% and he sends me 90%. Can I not show this as income from other sources while filing my IT returns in India? If the taxman comes calling, I can say that I provide a service using my expertise in forex and receive compensation for the same.

Please advise. Is there any other way of doing this deed in a legal manner?

 

[aryabhatta]

tricky question

As a resident Indian you're not allowed to trade FX, but in this case you can conceal this as there's really no proof that you trade.

The statements will be in your friends name, imho you can always say you've invested your money with your friend and he generates the returns and passes on a percentage to you.

Should be permissible but make sure its not a joint account your name should not appear anywhere not even POA also please do check with a knowledgeable CA firm preferably a firm that specializes in FEMA regulations.

 

[vartika]

I am an Indian citizen residing in India. I have a friend in whose name I have opened a Forex Account in Dubai. I trade, I make money. Give him 10% and he sends me 90%. Can I not show this as income from other sources while filing my IT returns in India? If the taxman comes calling, I can say that I provide a service using my expertise in forex and receive compensation for the same.

Please advise. Is there any other way of doing this deed in a legal manner?

this is one of the best way to trade in forex .
As i m even planing to trade in the same .
Few of my friends are trading in same way for abt 2-3 years and they are safely trading
\

 

[eTradeStar]

tricky question

As a resident Indian you're not allowed to trade FX, but in this case you can conceal this as there's really no proof that you trade.

The statements will be in your friends name, imho you can always say you've invested your money with your friend and he generates the returns and passes on a percentage to you.

Should be permissible but make sure its not a joint account your name should not appear anywhere not even POA also please do check with a knowledgeable CA firm preferably a firm that specializes in FEMA regulations.

If a resident Indian is not allowed to trade FX, not sure how these websites advertising like eToro and others who are willing to open FX account operate?

Thanks
TS

 

[yogasutra]

this is one of the best way to trade in forex .
As i m even planing to trade in the same .
Few of my friends are trading in same way for abt 2-3 years and they are safely trading
\

It sounds like a good plan but how do they fund the account? They will have to send some money to these friends. So I'm wondering that while these friends are showing profits, how did they manage to get their money to their friends account in the first place if investing in Forex is illegal in India?

 

[yogasutra]

Sounds like a good plan. Except i'm wondering how this money could be transferred to my friend's account. If I remit it I will have to give an explanation as to what the purpose is. That I cannot lie about. If I say that I am sending it abroad for investment sake, will that be permitted?

tricky question

As a resident Indian you're not allowed to trade FX, but in this case you can conceal this as there's really no proof that you trade.

The statements will be in your friends name, imho you can always say you've invested your money with your friend and he generates the returns and passes on a percentage to you.

Should be permissible but make sure its not a joint account your name should not appear anywhere not even POA also please do check with a knowledgeable CA firm preferably a firm that specializes in FEMA regulations.

 

[eToro Team]

If a resident Indian is not allowed to trade FX, not sure how these websites advertising like eToro and others who are willing to open FX account operate?

Thanks
TS

Hi eTradeStar,

I am not sure about the legal status of forex trading in India. What I can tell you for a fact is that we do have many traders in our social trading network who are based in India, and who have no problem funding their accounts through their banks.

We haven't yet heard of a legal incident.

I certainly do not mean to encourage you to break the law, if indeed it is illegal.

You can get in touch with our Indian traders and ask them about it through our social trading network, the eToro OpenBook here: http://etoro.tw/Xu7FSw - there's no registration required.

Happy trading!
Andy, eToro Team

 

[ztrader1234]

Hi eTradeStar,

I am not sure about the legal status of forex trading in India. What I can tell you for a fact is that we do have many traders in our social trading network who are based in India, and who have no problem funding their accounts through their banks.

We haven't yet heard of a legal incident.

I certainly do not mean to encourage you to break the law, if indeed it is illegal.

You can get in touch with our Indian traders and ask them about it through our social trading network, the eToro OpenBook here: http://etoro.tw/Xu7FSw - there's no registration required.

Happy trading!
Andy, eToro Team

Stay away from etoro, people. They are a bucket shop. you have been warned. If you don't believe me try it for yourself.

They are really good at stop loss hunting. I have traded with other Forex broker and there are some good ones like Onanda and Hotforex. But this was when i was not aware of the laws related to Forex trading in india.

But trading FX is illegal and it is a fact. If Indians could trade FX, I would be trading US/EU markets as well. But we cannot , as all margin based trading outside india is illegal and forbidden and if caught and land you in jail or pay a hefty fine.Don't believe me. Check with your local indian brokers and he will give you all the details.

Don't waste your money in FX and buckets shops like etoro.

Trade in NSE/MCX-SX Currency futures.

 

[eToro Team]

Hi ztrader1234,

If indeed forex trading is illegal in India, by all means stay away from it, it's not worth the risk of getting in trouble with the authorities.

However, eToro is not a "bucket shop" and we do not hunt stops - we simply couldn't afford to even if we wanted to! Here's a quote from investopedia regarding stop loss hunting:

"In a 4 trillion dollar market it is highly unlikely that a single broker can control price on a whim. The only way a broker could do this is by manipulating their data feed, which should never happen if your broker is regulated".

eToro is indeed regulated (check out our legal page - http://etoro.tw/Z1ailq), and does not manipulate data feeds. We do not have a trading desk and we make profits exclusively from spreads, so that we have nothing to gain from traders losing their positions. On the contrary, the more our traders gain, the more trades they open and the more spreads we earn. This is why we launched our social trading network - to help traders trade smarter together.

Best regards,
Andy, eToro Team

 

[aryabhatta]

Hi ztrader1234,

If indeed forex trading is illegal in India, by all means stay away from it, it's not worth the risk of getting in trouble with the authorities.

However, eToro is not a "bucket shop" and we do not hunt stops - we simply couldn't afford to even if we wanted to! Here's a quote from investopedia regarding stop loss hunting:

"In a 4 trillion dollar market it is highly unlikely that a single broker can control price on a whim. The only way a broker could do this is by manipulating their data feed, which should never happen if your broker is regulated".

eToro is indeed regulated (check out our legal page - http://etoro.tw/Z1ailq), and does not manipulate data feeds. We do not have a trading desk and we make profits exclusively from spreads, so that we have nothing to gain from traders losing their positions. On the contrary, the more our traders gain, the more trades they open and the more spreads we earn. This is why we launched our social trading network - to help traders trade smarter together.

Best regards,
Andy, eToro Team

Andy your company has rather poor reviews from traders at fpa

http://www.forexpeacearmy.com/public/review/www.etoro.com

This coupled with the infamous "Sanotsh Tiwari" incident where you abruptly closed this traders open trades and froze his account refusing to give payout of several hundred thousand dollars for many months raises many red flags about your company.