Hi,
My wife is doing F&O trading and to increase her trading capital she is planning to keep her jewels in bank and use that capital for trading (We know taking loan for f&o is really bad idea, but she is very less risk taker and doing with proper hedging).
Anyone Please advice.
Hi @PrakashRiti
As you rightly mentioned. although it is not a good idea to taking loan for F&O trading:
If you take a loan for your trading business, you can claim interest on loan as deductible expense.
As long as you have supporting documents related to jewels. It shouldn’t be an issue but always a safe option to consult with your CA on these matters.
@Quicko will be able to throw more light on this
Although u didn’t ask for this, still
Please don’t do it man.
If you are a good trader, you won’t need to pledge family jewellery, and if you are a bad trader, you will eventually lose them.
Either way, there is no good reason to pledge them. They should only be used if there is some big family emergency life or health.
So my humble advice is to just don’t go ahead with this.
Thanks @Praksy for your suggestion. My wife is not salaried and If I lend her my salary, then it will come under clubbing of income. So to increase her capital a bit, planning to keep a smaller portion of jewel only. Just a safe bet
Give her a loan and charge her reasonable interest. 
Can you please let me know how this work ? What document need to be kept as proof ?
Nothing. Just give her loan. Account for interest in your ITR. Consult your local CA for better clarity.
Hi @PrakashRiti
There is no such prohibition that you cannot use a jewel/gold loan for F&O Trading used exclusively for F&O Trading and mentioned the same on loan documents. You can then claim the interest on such loan.
You can give her a loan and earn interest income from the same. It would be advisable to do such transactions through banking channels.
Hope this helps!
With your money, buy Growth debt liquid funds.
Using off-market transfer, send them to her demat where she can pledge and use for margin.
You agree with her to return same X units with higher NAV when she decides to wrap up and until then the units have just been borrowed.
Also, you can look at it as X units borrowed at nav1 and when returned, it is with gain at nav2. When you sell, there is Capital Gains of nav2-nav1 added to your income.
When you intend to sell, she can send them back to you, the gain in NAV is your gain sometime in the future.
Hi @Chirag1 , in this case the gain she makes with the pledged liquid fund will not come as clubbing of income ? Also what proof need to maintain for this transaction?
Income arising as Capital Gains should be clubbed with yours as I said,
but further income arising is based on technical/professional qualification and isn’t clubbed.
Also, follow proper process of ITR3 for your wife.
Also pledged collateral in not actually being money utilized, the daily MTM etc is what the cash Broker’s account.
Clubbing of Income under Section 64 (cleartax.in)
see last example of bond.
Just exchange email of the same.
When you do off-market trx, it is anyway captured in IT-AIS and the PAN number of transferor is also captured.
So the trx/records are already known by the system.
Let’s take a hypothetical situation. Let’s say I have taken a loan of the some amount from My father, brother, or mother. They have taken a loan to give me that money . Can I claim interest while paying them the interest?
Hey @dtyxg,
Yes, you can still claim the interest paid as an expense. Additionally, your mother, father or brother, whoever you are paying interest to, should show the interest as an income while filing their ITR.
Hope this helps!
Hi,