What is the punishment for forex trading in India?

#1
Hi!

As per the RBI, forex trading is illegal.

The Reserve Bank of India has today clarified that remittance in any form towards overseas foreign exchange trading through electronic/internet trading portals is not permitted under the Foreign Exchange Management Act (FEMA), 1999. The Reserve Bank has also clarified that the existing regulations under FEMA, 1999 do not permit residents to trade in foreign exchange in domestic / overseas markets.

http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=23941

I just had a chat with forex4u.com representative:

18:25framebuffer: is forex trading allowed in India?
18:25framebuffer: According to RBI its not allowed to trade foreign currencies
18:25framebuffer: is this true?
18:25Anna Garibjan: RBI does not permit Indian residents to trade in currency pairs except INR. Please turn to the RBI's official website http://www.rbi.org.in for first-hand information, as even though Forex4you does it's best to follow current legislation in different countries, it's sometimes practically impossible to update the information in a timely manner. You may seek further clarification on this from your financial adviser or Chartered Accountant.
18:27framebuffer: Its very confusing, I have been to RBI website but they have clearly mentioned that its not allowed.
18:27framebuffer: http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=23941
18:27framebuffer: But then how come people are doing it? Like alpari, reliance money and yourself?
18:27framebuffer: Can indian paiers be traded?
18:28Anna Garibjan: you cannot trade only INR, there have to be 2 currencies involved
18:29framebuffer: I know, i wrote indian pair...to pair with USD etc
18:29framebuffer: Its vey confusing
18:29framebuffer: I dont want to end up in jail
18:29framebuffer: where can we get some definative answers as everone, including CAs etc dont know
18:30Anna Garibjan: We cannot give you a legal advice on this. It is our clients' responsibility to make the decision whether to trade or not
18:31framebuffer: I understand that, but since you are running the operations, you must be having some idea..thats all. I want to be sure that its allowed
18:32Anna Garibjan: according to RBI as far as we are informed it is not allowed
18:32framebuffer: Then how come Reliance money, Alpari and you are doing it?
18:32framebuffer: just curious
18:33framebuffer: what if you get caught?
18:33framebuffer: what is the panelty?
18:33framebuffer: maybe i will take a risk
18:33framebuffer: if the panelty is low
18:34Anna Garibjan: the penalty, if any, will not be against the company, but against the customer who took that risk
18:34framebuffer: ok
18:34framebuffer: i understand
18:34framebuffer: but it will be informative to know it, so we can take the risk
18:35framebuffer: if its like a non-bailable offence with 25 years in jail, then its not worth it
18:35framebuffer: if its a small fine, like 50k, then one can take the chance
18:35framebuffer: Has anybody been caught?
18:35framebuffer: so we can know what happened to him
18:35Anna Garibjan: We do not know what kind of penalty you may risk
18:36framebuffer: Thanks Anna, you have been helpful. Thanks for honest answers. I will try to learn more about the punishment.
18:37Anna Garibjan: You are welcome. Is there anything else I may assist you with?
18:37framebuffer: No, that it. Thanks.

So what should we do? What are the risks in the future for getting caught? And is it worth taking the risk?

Thanks.
 
#2
LOL, DON'T GIVE A DAMN ON THAT, MILLIONS OF PEOPLE ARE TRADING FROM INDIA ,ASK SAVANT GRANDE SIR FOR CLARIFICATION. AND I HIGHLY DOUBT IF ANY ONE WILL GET INTO TROUBLE UNLESS HIS TRANSCATIONS ARE LIKE MILLIONS A MONTH. THE BANK MAY ASK FOR CLARIFICATION THAT WHERE DID THE MONEY COME FROM. I DON'T THINK THAT IS A PROBLEM. I TRADE WITH MY ICICI CREDIT CARD AND I GET A MONTHLY STATEMENT THAT I HAVE CREDITED X AMOUNT TO RETAIL-FX :p . I THINKS BANKS ARE NOT THAT MUCH AWARE OF THE RULE BUT IF LARGE VERY LARGE WITHDRAWAL EVERY MONTH LIKE A CRORE OR IS DONE BANKS WILL ASK YOU THAT FROM WHERE HAS THE MONEY ARRIVED ? then i think you have to make up story :p OR YOU CAN DO IS TO GO OFFSHORE AND FUND FOR FOREX. BTW I DON'T THINK THAT ANYONE WILL GET CAUGHT NO MATTER WHAT! TRY THE ROYAL BANK OF SCOTLAND OR ANY OTHER VERY LESS POPULAR OF FOREIGN BANK IBM AMRO! AND BTW THERE ARE MANY LOOPHOLES LIKE MONEYBOOKERS, NETELLER BUT YOU WILL HAVE LITTLE DIFFICULTY FUNDING TO THEM! SECONDLY AS FOR THE PUNSIHMENT IF CAUGHT NOTHING WILL HAPPEN LIKE JAIL . YOUR PUNSIHMENT AT MAX CAN BE PENALTY!!YOU ARE DOING FX TRADING WHICH IS LEGAL ALL AROUND THE WORLD . YOU ARE NOT MURDERING OR SMUGGLING OK? THESE RULES ARE IMPLIMENTED BECAUSE MANY PEOPLE FROM OUR COUNTRY HAVE LOST A LOT OF MONEY. SO IF YOU MAKE PROFIT THERE IS NO HARM! AND YOU ARE BRINGING THE MONEY INTO THE COUNTRY ALSO. JUST PAY TAXES! ask savant grande sir he can explain u more nicely and tell you which way to do it if heavy withdrawl is there :)
 
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#3
Thanks saiftauheed for the clarifications.

One more question, what do you show it as in the income tax? Can I say its futures or stocks etc?

Also is retailfx a good broker? Do you recommend them?

Do you recommend any Indian broker?
 

sumosanammain

Well-Known Member
#4
LOL, DON'T GIVE A DAMN ON THAT, MILLIONS OF PEOPLE ARE TRADING FROM INDIA ,ASK SAVANT GRANDE SIR FOR CLARIFICATION. AND I HIGHLY DOUBT IF ANY ONE WILL GET INTO TROUBLE UNLESS HIS TRANSCATIONS ARE LIKE MILLIONS A MONTH. THE BANK MAY ASK FOR CLARIFICATION THAT WHERE DID THE MONEY COME FROM. I DON'T THINK THAT IS A PROBLEM. I TRADE WITH MY ICICI CREDIT CARD AND I GET A MONTHLY STATEMENT THAT I HAVE CREDITED X AMOUNT TO RETAIL-FX :p . I THINKS BANKS ARE NOT THAT MUCH AWARE OF THE RULE BUT IF LARGE VERY LARGE WITHDRAWAL EVERY MONTH LIKE A CRORE OR IS DONE BANKS WILL ASK YOU THAT FROM WHERE HAS THE MONEY ARRIVED ? then i think you have to make up story :p OR YOU CAN DO IS TO GO OFFSHORE AND FUND FOR FOREX. BTW I DON'T THINK THAT ANYONE WILL GET CAUGHT NO MATTER WHAT! TRY THE ROYAL BANK OF SCOTLAND OR ANY OTHER VERY LESS POPULAR OF FOREIGN BANK IBM AMRO! AND BTW THERE ARE MANY LOOPHOLES LIKE MONEYBOOKERS, NETELLER BUT YOU WILL HAVE LITTLE DIFFICULTY FUNDING TO THEM! SECONDLY AS FOR THE PUNSIHMENT IF CAUGHT NOTHING WILL HAPPEN LIKE JAIL . YOUR PUNSIHMENT AT MAX CAN BE PENALTY!!YOU ARE DOING FX TRADING WHICH IS LEGAL ALL AROUND THE WORLD . YOU ARE NOT MURDERING OR SMUGGLING OK? THESE RULES ARE IMPLIMENTED BECAUSE MANY PEOPLE FROM OUR COUNTRY HAVE LOST A LOT OF MONEY. SO IF YOU MAKE PROFIT THERE IS NO HARM! AND YOU ARE BRINGING THE MONEY INTO THE COUNTRY ALSO. JUST PAY TAXES! ask savant grande sir he can explain u more nicely and tell you which way to do it if heavy withdrawl is there :)

Have you heard of the four magic letters, FEMA ?????
 
#5
Thanks saiftauheed for the clarifications.

One more question, what do you show it as in the income tax? Can I say its futures or stocks etc?

Also is retailfx a good broker? Do you recommend them?

Do you recommend any Indian broker?
FIRST OF ALL FORGET ABOUT PUNISHMENT

"The Reserve Bank of India has today clarified that remittance in any form towards overseas foreign exchange trading through electronic/internet trading portals is not permitted under the Foreign Exchange Management Act (FEMA), 1999. The Reserve Bank has also clarified that the existing regulations under FEMA, 1999 do not permit residents to trade in foreign exchange in domestic / overseas markets."

Read this carefully now the rbi has clearly written that you cannot remmit money for forex trading abroad or change INR to USD and trade with that money with abroad or overseas brokers! I read somewhere in traderji and i am saying that again the best way would be that if you have a friend living offshore tell him to deposit for you. this way you never converted INR to USD and trade with the money. above in the letter it is also written --

"The Reserve Bank has also clarified that the existing regulations under FEMA, 1999 do not permit residents to trade in foreign exchange in domestic / overseas markets."

From this message get in mind that rbi does not want you to put mother India money, the money you earned in bharat to offshore broker !! why? because this money is going offshore for fx trading ,rbi knows 95 % that it is not coming back ....why? again read it -
"RBI cautioned investors against advertisements issued by certain electronic and internet portals offering trading or investing in foreign exchange with guaranteed high returns.Many companies even engage agents who personally contact gullible people to undertake forex trading and investment schemes and entice them with promises of disproportionate or exorbitant returns, it said."
It is because of some fools who wanted to get millionaire overnight funded and gambled large amount of money in these off-shore broker and later crying went into the police station for fraud!

what I suggest to circumvent this stupid act is to get in to currency futures and option trading also.
What you can do is open an account with a broker who lets you do option/futures (together with fx if you want) like may ECN brokers that offer cdf, futures as well as stock

You can fund from and withdraw to an on-shore acct in India in such a case then, it will be called as investment returns from futures or stocks or cdf anything. now what can rbi do about this? they can do shi* haha

And if you have a friend off shore then what is the problem if he can fund it, you never remitted anything and you are not trading with INR converted to USD.OR YOU ARE TRADING WITH RISK FREE INR, Secondly to avoid the maximum hassle choose a foreign bank like royal bank of scotland , Banks will ask you where you get so much money buddy? even believe me if you say you got the money from fx trading with no money converted from INR to USD, nothing will happen, most of the banks do not pay attention and are unaware , you can smile and say investment from international future,cdf and stock buddy! I have never heard of anyone getting into any kind of trouble, and if millions of money is coming in the bank account, they may ask for some kind of documentation , i am shore the ECN broker can provide you with some invoices..........
END OF THE STORY - FOREX TRADING IS NOT LEGAL IN INDIA IF YOU DO ILLEGALY(converting inr to usd and trading with that money ) BUT IF YOU NEVER REMMITED FROM INDIA AND IF YOUR TRADING IN ECN BROKER WHICH OFFER FUTURES, OPTIONS, WHAT WILL RBI DO?? SUCKS OUR BA""s
 
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#6
I have a friend abroad in Germany. The problem is, they have 40%(or something) flat tax and they are very well organized.

If he invests on my behalf, and I make money, then that money will be a capital gain and he has to pay tax on it. Then he will transfer it in my account where I will have to pay another tax. Double taxing.

Same if I have to invest more and put money in his account. It can only go as a loan or a gift. Gift will be taxed. (Now triple taxing)

If the money goes as a loan, then the capital gain from trading will be taxed twice.

Am I missing anything?

Another problem is, if you use an Indian broker, like reliance money, alpari, forex4u or xtb etc, then they can do whatever they want. They are like the pimps. And you are a prostitute. Since prostitution is illegal, you cannot go and complaint against the pimp. Similarly, if they treat you like trash and play against you or cheat you otherwise, what are you going to tell the police? They are not returning my forex money?

I think the forex industry should lobby and get it legalized. India is a poor country with no social security and we need all avenues possible for more job generation. If people want to trade they should be allowed to.

What is a forex broker to do? A 9-5 job? :confused:
 
#7
I have a friend abroad in Germany. The problem is, they have 40%(or something) flat tax and they are very well organized.

If he invests on my behalf, and I make money, then that money will be a capital gain and he has to pay tax on it. Then he will transfer it in my account where I will have to pay another tax. Double taxing.

Same if I have to invest more and put money in his account. It can only go as a loan or a gift. Gift will be taxed. (Now triple taxing)

If the money goes as a loan, then the capital gain from trading will be taxed twice.

Am I missing anything?

Another problem is, if you use an Indian broker, like reliance money, alpari, forex4u or xtb etc, then they can do whatever they want. They are like the pimps. And you are a prostitute. Since prostitution is illegal, you cannot go and complaint against the pimp. Similarly, if they treat you like trash and play against you or cheat you otherwise, what are you going to tell the police? They are not returning my forex money?

I think the forex industry should lobby and get it legalized. India is a poor country with no social security and we need all avenues possible for more job generation. If people want to trade they should be allowed to.

What is a forex broker to do? A 9-5 job? :confused:
I DON'T UNDERSTAND TELL YOUR FRIEND TO FUND MONEY IN YOUR FOREX ACCOUNT WITH CREDIT OR DEBIT CARD!!!!!!!!!! MAKE PROFIT IN YOUR ACCOUNT AND THEN PAY HIM BACK BY WITHDRAWING FROM YOUR FOREX ACCOUNT TO HIS CREDIT/DEBIT CARD! NOW WHEN YOU HAVE PAID HIM THE SUM YOU DEPOSITED YOU CAN JUST USE ANY ALTERNATE WAY OF WITHDRAWING!!!!!! OK LISTEN TO ME JUST FUND WITH AN ECN BROKER with your own money you could open an account with the Ireland-based AVA-FX which also includes Oil, Stock Indices (DJ, S&P500, FTSE, DAX, CAC, MIB, NIKKEI and others), Gold, Silver, Sugar, Cotton, Gas and all the other major commodities along with its comprehensive Forex platform,TRADE EVERYTHING THERE! by this way you are indirectly trading forex in a multi-investment stock and share company !!Now just tell me does it sounds good? JUST A SILLY EXAMPLE - "agar hindustan mai gai ka dood pina ek jurm hota aur agar tum bhains ke andar se gai ka dood nikaal ke pe rahe ho toh police kya samjhegi. ? vasehi agar tum ek broker mai jo stocks and share bhi trade karti hai usme fx karte ho toh police kya samjhegi?
 
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#8
Have you heard of the four magic letters, FEMA ?????
Dear sumosan the 4 magical word fema. foreign exchange management act! Here are the rules for outward remmitance -

. What are the prohibited items under the Scheme?

Ans. The remittance facility under the Scheme is not available for the following:

i) Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000;

ii) Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty;

iii) Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market;

iv) Remittance for trading in foreign exchange abroad;

PLEASE READ MY EARLIER POST IN THIS THREAT AND THEN START READING BELOW
FOCUS -REMITTANCE, other words - depositing, collecting( I NEVER REMITTED SO I AM NOT LIABLE TO PROCEED WITH ANY STUPID ACT OF YOUR RBI,

another one - " "The advertisements by these Internet or online portals exhort people to trade in forex by way of paying the initial investment amount in Indian rupees," the RBI said.

so as i told read my post below what can be done. if your friend who lives in abroad ca do the favour for you, remember the act is only for OUTWARD REMITTANCE , converting your own money and funding outside!!!!!


"The Reserve Bank of India cautions the public not to remit or deposit money for such unauthorised transactions Any resident Indian collecting or remitting such payments outside India DIRECTLY/INDIRECTLY is liable to be proceeded against with, for contravention of FEMA and violation of regulations relating to Know Your Customer (KYC) norms and Anti Money Laundering (AML) standards, the circular addeD"

INDIRECTLY MEANS FUNDING THROUGH THIRD PARTY,(PAYPAL,NETELLER,MONEYBOOKER, ANYOTHER)

FOCUS - : HOW THE HELL WILL THEY EVER KNOW WHAT I DID WITH THE MONEY IN 3RD PARTY ACCOUNT? EVEN IF THEY ASK ME I CAN SAY INVESTMENT IN FUTURE OR ANYTHING !

- "The advertisements by these Internet or online portals exhort people to trade in forex by way of paying the initial investment amount in Indian rupees,"

FOCUS- "I NEVER REMITTED ANY MONEY OUTSIDE INDIA, I NEVER CONVERTED INR TO USD"

LAST DOUBT THAT THEY CLARIFIED -

"The Reserve Bank has also clarified that the existing regulations under FEMA, 1999 do not permit residents to trade in foreign exchange in domestic / overseas markets.The advertisements by these Internet or online portals exhort people to trade in forex by way of paying the initial investment amount in Indian rupees

Residents are, however, permitted to trade in currency futures and options contracts, traded on the stock exchanges recognised by the Securities and Exchange Board of India (SEBI) in India, subject to the conditions specified by the Reserve Bank from time to time."

FOCUS - " Today most of the broker will allow you to trade in stocks, CDF,options, future,metals and yes the forex. YOU KNOW WHAT YOU HAVE TO DO!
 
#9
Dude! That pimp and prostitute example was awesome!!! And very true !!! I totaly agree with you!!!











i have a friend abroad in germany. The problem is, they have 40%(or something) flat tax and they are very well organized.

If he invests on my behalf, and i make money, then that money will be a capital gain and he has to pay tax on it. Then he will transfer it in my account where i will have to pay another tax. Double taxing.

Same if i have to invest more and put money in his account. It can only go as a loan or a gift. Gift will be taxed. (now triple taxing)

if the money goes as a loan, then the capital gain from trading will be taxed twice.

Am i missing anything?

Another problem is, if you use an indian broker, like reliance money, alpari, forex4u or xtb etc, then they can do whatever they want. They are like the pimps. And you are a prostitute. Since prostitution is illegal, you cannot go and complaint against the pimp. Similarly, if they treat you like trash and play against you or cheat you otherwise, what are you going to tell the police? They are not returning my forex money?

I think the forex industry should lobby and get it legalized. India is a poor country with no social security and we need all avenues possible for more job generation. If people want to trade they should be allowed to.

What is a forex broker to do? A 9-5 job? :confused:
 
#10
I have a friend abroad in Germany. The problem is, they have 40%(or something) flat tax and they are very well organized.

If he invests on my behalf, and I make money, then that money will be a capital gain and he has to pay tax on it. Then he will transfer it in my account where I will have to pay another tax. Double taxing.

Same if I have to invest more and put money in his account. It can only go as a loan or a gift. Gift will be taxed. (Now triple taxing)

If the money goes as a loan, then the capital gain from trading will be taxed twice.

Am I missing anything?

Another problem is, if you use an Indian broker, like reliance money, alpari, forex4u or xtb etc, then they can do whatever they want. They are like the pimps. And you are a prostitute. Since prostitution is illegal, you cannot go and complaint against the pimp. Similarly, if they treat you like trash and play against you or cheat you otherwise, what are you going to tell the police? They are not returning my forex money?

I think the forex industry should lobby and get it legalized. India is a poor country with no social security and we need all avenues possible for more job generation. If people want to trade they should be allowed to.

What is a forex broker to do? A 9-5 job? :confused:
ABOUT THE PIMP AND PROSTUTE IS ILLEGAL! but wait the example you gave has really no connection to forex example as i said - t is because of some fools who wanted to get millionaire overnight funded and gambled large amount of money in these off-shore broker and later crying went into the police station for fraud! BECAUSE THEY LOST RBI CREATED THIS RULE IN OTHER WORDS PEOPLE ARE NOT AWARE OF THIS RULE! THOSE WHO ARE AWARE ARE VERY SMART! THEY WILL NEVER GET INTO ANY TROUBLE!
 

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