Best Legal Entity for Trading

Up to 2Cr profit, the tax rate is about 34%. If you include your family in trading, that can easily be 5 accounts. So you really don’t need to worry about all this until you make over 10Cr profit annually.

I know the cost associated. I was saying the cost involved in getting membership is much more than the benefits. May be I wasn’t very clear and it sounded like a query.
I have been saying this from long time. The ones who are saying you can save tax by incorporating a company do not really know the compliance involved. Moreover there is double taxation involved as well. Tax on income and again tax on the distribution of income in the hands of the shareholder.

This is exactly what I mean by people do not know much about taxation and jump to conclusions. There is no ddt anymore. Dividend is taxable in the hands of the shareholder. Imagine tax for the shareholder if he falls in the highest tax bracket.

Double taxation can be avoided by always taking out money in the form of salary for employees/director. I also presume that people trading in company account avoid taking out money as much as possible. Big investments could be done on behalf of the company.
The traders profitable enough to reach such high figures in annual profits might already have their monthly expenses sorted out in form of other income.

1 Like

Yes. This can be done. But for how long.

Some day or the other he has to draw it right.
You can delay it as long as you want. It’s like you have money but you can’t use it. Company money can’t be used for personal expenses. You can make investment and then what.

Since you are delaying taxation it may make some difference if your income is more than 10cr but I do not think any of the ones posting here and asking if they can incorporate company have that income.

They might be hoping one day India will become tax free.

I don’t know the average profits of people here. If you delay taking out 5 crores or 10 crores for 5 to 10 years, it will be significant savings due to compounding effect of lower taxes and higher growth.

Even I don’t know the purpose of having money in the account but unable to claim it. Maybe some CAs advise them on grey ways to withdraw or spend it.

Even I know some ways in which you can still take it out. But it’s not worth the pain.

1 Like

@t7support basically you’re saying a company can trade as long as it’s not borrowed money ?

Yes provided the company incorporated is an AP for a stock broker or a stock broker itself, if you want to do this without getting a NBFC license.

probably check with lawyers on this. may not really add up.

Also, there are practical steps involved that might come in the way of achieving what you are suggesting.

what’s better in your opinion trading via a NBFC or AP or Individual itself if you’re primary dealing in F&O with a net profit of about 1.5 to 3 cr

AP is the cheapest and easiest option.

Pls check the SEBI circular and RBI info I shared above. What doesn’t add up from your side ?

Being an AP is cheap and doesn’t involve regulatory complexities like being a full fledged stock broker. May I know what are the practical steps that you are referring to ?

1 Like

hey can you share the tax benefits of AP .

No specific tax benefit for AP. AP entity will be taxed like any other business.

If someone one’s to take it seriously and start a company for the same doesn’t CIC (core investment company) sounds good too though might get compliance but it does allow you to manage others money accept deposits and stuff right??
And you’d get all the corporate benifits too

However APs can’t recieve or pay into securities in it’s own name can it ?? (Correct me if I’m wrong)