@nithin @TAXIQ.IN hi What about the tax rate of a LLP , Is it 30% or more taxes are leviedSame 30%
How about trading F&O as a sole proprietorship? Does zerodha support account opening in sole proprietorship name?
Also, can I claim back the GST which I pay to zerodha if I trade as a sole proprietorship?
Sole propreitorship is not possible, but as a partnership/pvt ltd company is. No benefit you have by doing this though.
Nithin, just clarifying ā¦ If we form an LLP and start trading F&O in it. It is fine. No need to register for NBFC but the moment you invest in stocks (delivery) and the profits arising from stocks and not F&O is more than 50% then technically the LLP has to register as an NBFC.
Income from financial assets constitutes more than 50% ? Does F&O count as financial assets ?
If not, is it not simpler to start a regular partnership firm. The trading in F&O happens in the partnership account while the actual delivery shares / stocks are held in the partnerās DMAT account as the partnership firm can not have a dmat account in its name. Am I correct ?
Yes, definitely easier with partnership. By the way, F & O is defined as trading activity and Equity delivery defined as Investing . Investment Income comes under NBFC norms not trading (so not F&O)
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@nithin @TAXIQ.IN Can an LLP with F&O Trading as its objective take loans from individuals for carrying out its business? Any requirements / restrictions on the same?
Under LLP as such there is no restriction on taking unsecured loans from friends / relatives.
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Nithin ji by mentioning personal trading business did you mention ITR3?if yes did the govt approve the turnover to be scrip trade wise or by sales price because all auditors say to consider net sales price as turnover which comes in several crores
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@nithin what if I set up private limited company and sell its shares instead of entering into profit sharing agreement.
I donāt think that there would be any violation doing it so as person buying stake would be deemed to aware of the business activities the company is engaged and risks associated with it.
If you are setting the pvt ltd company and its main purpose is trading, then yeah it is an issue. If more than 50% of income comes from this activity, you might have to get an NBFC license. Also selling shares might seem like you are circumventing the collective investment scheme regulation. Think about it, everyone would do it this way instead of having to take AIF or PMS license, if it was this easy.
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I wish to start a holding company(with my family), which invests in multiple operating companies. Does the holding company need to be registered as an NBFC? Basically, I want to buy into a portion of two other businesses registered as LLPs and probably more in the long run. I will also invest in equity cash segment. I want to streamline all of these investments (as a family business, 3 people involved).
Is holding company the best way to go about this or is there some other way? Like invest in stock market personally and become partners of the LLPs, which is not streamlined in my opinion.
Thanks in advance!
What are the formalities for taking such a loan? I believe the loan agreement will have to be signed on Stamp Paper right?
@TAXIQ.IN I recently applied for LLP registration using below Object clause,
" The LLP Business shall be the business to carry on professional and consultancy services dealing in share securities, commodities, currencies and derivatives including delivery and non-delivery based transactions, until and unless changed as mutually agreed upon by all the partners for the time being of the LLP"
but the same was rejected with the following statement.
āAs the objects of the proposed LLP includes ādealing in currencies, derivativeāsā indicate financial activity and the same is not allowed in case of LLP pursuant to RBI Notifications, hence rejectedā
Can you help or clarify if anything was wrong in the Object clause. The objective of LLP is to trade using own funds in F&O segment, so are the other things like currencies, derivaties etc not required to be mentioned?
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As per MCA guidelines: NBFC Business activities are not allowed in respect of LLP pursuant to RBI notification. Hence, you need to remove all activities related to loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature from the objects of the LLP.
Hope this helps:slightly_smiling_face:
u mean to say that LLP can not trade in the share market intraday business profession activity ?
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Pls clarify !!!