If I have a company in the US that is doing all of its business entirely in US, can I use profits so attained in order to trade the eminis? Am aware that its illegal to send money outside India to conduct leveraged trading of any kind because that would be in violation of FEMA rules. In my case am using funds created outside india to carry out trading and not sending any money out of india
Did you get an answer to this question? If yes, please share. Thanks.
Citizenship in another place
It’s cheaper to do a setup for 12-15 lakh.
Buying the cheapest citizenship available would cost you around 115000 USD.
Can you please outline this setup you mentioned about.
There are certain ways in which a company in a particular jurisdiction can be setup with a consultant acting as the incorporater to and get certain regulatory clearances from SEBI and RBI it costs 15 lakh when done properly.
I have a setup and having been using for past 2 years.
All in all it’s pretty complex and better to stick with Zerodha and make money from the Indian markets for the average trader. You would have to make 15 lakh just to break even on your offshore derivatives trading investment.
It also costs 35k a year to maintain.
@HFT the cheapest residency, in my opinion, is way cheaper than 115k USD price tag you quoted above(residency is not citizenship but should suffice for business purposes)…and as far as my knowledge goes, a shell company(FATCA & other inter-governmental tax treaty compliant), can be incorporated in any of several havens(Cayman, Belize etc) for around 3-5k USD and the owner(for KYC purposes) is usually different from the benefactor(not done to evade tax. tax will have to be paid to the IRS if US markets are used)… There’s also an option to set up in a free zone like the rakez etc but am not too familiar with that route.
Also why would you want to obtain regulatory approvals from SEBI and RBI? Does FEMA or any other body of legal code require that such a disclosure be made? Please let me know
What’s a cheaper citizenship and which country?
Cayman and Belize are no longer havens after pressure from EU blacklist. And getting a nominee director would cost around 2 lakh a year and there are other hidden costs too. And the general reputation for these so called havens is not good either.
And any foreign asset owned directly or INDIRECTLY has to reported on the Schedule FA of your income tax return, the setup I did can be done for 12 lakh and just 35k yearly cost and in well reputed countries.
NOTE: This is not legal advice. Don’t take any action based on the information provided above.
Also better to stick to Zerodha and trade in Indian markets.
@HFT Not citizenship but residency. Cayman and Belize etc are on blacklist and more places are going to come under the scanner in the near future, but then it’s a problem for those that are getting into shady stuff. Transparent entities that pay taxes are always welcome everywhere today and in the future. A director doesn’t cost 2 lakhs, there are of course ongoing fees but that’s nominal…of course any asset directly or indirectly owned by you has to be reported to IT dept but if you have obtained residency and are doing business and paying taxes in that jurisdiction, FEMA is enforced differently
And I would like to know which reputed countries are you referring to?
It’s developed countries with a DTAA with India.
NOTE - Not legal advice.
What about sending money as gift to my friend who’s will open his tradinfg account and we both will operate and I will receive profits as gift to India
There is a simpler more secure way.
Trade with Zerodha.
Or invest 10 lakh in setting up a structure.
Yes I agree but just asking how about this idea ?
It will still count as remiting money to trade, and the taxation will be very complicated and maybe you will have to pay twice. Once yoyr friend and again in your account.
Can we all just not request NSE/BSE to start the global futures(SP500,Dow,Nasdaq) again in extended trading hours till 12: in night. Or request RBI to allow trading in margin account in global market. If we all jointly take effort then it might be possible. Please share your views.
Very few trade in India. Out of that few again very few care about trading s&p500 or Eminis etc… liquidity therefore is going to be next to nothing until 2030
In India,Unlike in other places, retail traders are treated as a problematic lot(and maybe rightly so) by SEBI. And generally speaking, In India a lot of things take a lot of time to change. It’ll change for sure, but we’ll be old by then
how this will work?
the friend is very generous he opens his acccount he deposits his money and we both share our views and trade.if profit he sends me some money as gift and if loss he scolds me
The friend operated account route is a risky one from a legal perspective and not recommended. What @HFT has suggested is to set up a structure overseas, costing around 10lks(any business entails set up costs), which is legally safe. Of course that’s only for experienced traders and quants, not for the general retail trader.
If that friend of yours is an NRI or PIO, then SEBI regulations require you to get registered as an Investment Advisor, and that’s something you don’t want to do. Make sure the person you trade for is a foreign citizen and obtain a Power of Attorney to manage his/ her account.
Refer to Q 21 in the article below:
Other than that, there’s only one way through which a resident Indian can trade in foreign securities (E-mini S&P):
- Under Section 6(4) of the Foreign Exchange Management Act, 1999, a person resident in India is free to 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.
This takes a lot of effort, but at least you can trade your own account.
Refer to Q 16 in https://www.rbi.org.in/scripts/FS_FAQs.aspx?Id=66&fn=5#q17