How one can setup a Proprietary Trading Firm, any registration needed with SEBI, other formalities, etc?

[Jason_Castelino]

@Venkat_Krishnan

Asking because there’s an opportunity to convert F&O gain into STCG and hence pay lower taxes.

Had a post on this.

Tax Planning: Convert FNO profits to STCG

As we are aware, FNO income is taxable under the head ‘Income from business and profession’ and the gains we generate on trading shares on delivery basis is taxed ur the head ‘Capital Gains’ The existing tax rates applicable are as follows Income from business: Slab Rates Story term capital gain: 15 percent Considering the above I was planning a strategy to reduce my tax liability and I would like to share the same here. Requirements for this strategy to work: FNO income falls in 30 perce…

[viswaram]

What if your analysis is 100% accurate and is making money for the clients all the time, does the analyst require a SEBI registration?

One thing I noticed is clients complain when they lose money. And then SEBI debars or fines that analyst.

What if things are working and no complaints??

[Joe_Maxpayne]

in 2023 which option is best to reduce tax if ones fno profit is over 50lakh. as per google search LLP tax rate is 30%, so its same as individual.

[nithin]

@Joe_Maxpayne

in 2023 which option is best to reduce tax if ones fno profit is over 50lakh. as per google search LLP tax rate is 30%, so its same as individual.

If you are just trading for your own money, I think it is best to show it as an individual itself. You can claim all expenses for trading as an individual as well, no need to set up a partnership or company for that purpose.

[KD61]

@nithin The maximum surcharge & cess is lower in partnership. Individual max tax rate is 39% and partnership is 34%. So don’t you think, partnership is the best way? It is quite simple, no grey area. Trading is allowed in partnership 100%.

[nithin]

@KD61

@nithin The maximum surcharge & cess is lower in partnership. Individual max tax rate is 39% and partnership is 34%. So don’t you think, partnership is the best way? It is quite simple, no grey area. Trading is allowed in partnership 100%.

@TAXIQ.IN @Quicko ?

[Quicko]

Hello @KD61 @nithin,

The maximum surcharge rate for Partnership firms if the income crosses ₹1 crores is 12% and cess is 4% making the effective rate 34.944%. However, in the case of individuals, the highest surcharge rate if the income crosses ₹5 crores in old regime is 37% and cess is 4% making the effective rate 42.744% while under the new regime, if the income crosses ₹3 crores, the maximum surcharge is 25% making the effective rate 39%.

From the above, it can be seen that the effective rate is lowest in partnership firms but there is no slab rate benefits and the limits of the surcharge are also different.

Hope this helps!

[psyaap]

Hi Nithin. Highly appreciate the time taken out by you to reply to these posts.

I intend to form an LLP between my mother and me, for the purpose of investing in equities (not trading). Unlike other posts, my purpose for this is not taxation or profit sharing (although I might draw a salary). I’m interested in applying for a SEBI PMS license. The first main requirement I’m working on currently, i.e. getting a 2 yr postgrad degree in finance. The 2nd main requirement is having 5 yr experience in related fields (RIA, RA, MFD etc), out of which 2 yrs must be in fund management. I wanted to know if forming an LLP with a decent capital base and having its audited track record of 5 yrs would qualify as relevant experience?

[nithin]

@psyaap

I intend to form an LLP between my mother and me, for the purpose of investing in equities (not trading). Unlike other posts, my purpose for this is not taxation or profit sharing (although I might draw a salary). I’m interested in applying for a SEBI PMS license. The first main requirement I’m working on currently, i.e. getting a 2 yr postgrad degree in finance. The 2nd main requirement is having 5 yr experience in related fields (RIA, RA, MFD etc), out of which 2 yrs must be in fund management. I wanted to know if forming an LLP with a decent capital base and having its audited track record of 5 yrs would qualify as relevant experience?

Hmmm… This is what SEBI says.

An experience of at least five years in activities relating to advice in financial products or securities or fund or asset or portfolio management.

I don’t think self-trading or trading on your company/partnership firm account will count as experience.

@somnath248 @Meher_Smaran can we speak to the legal team that we interact with for licenses and figure this out?