No… only 1 tax. US resident will be paying. He will transfer money to your a/c and I do not think there is a tax for that.
The best way is to reach out to some prop firms:TopStepTrader/Apex Trader/One up Trader, give there evaluation tests(they put you in a simulator and give you profit targets and max loss), if you clear it you get a funded account.
Now you have a freelancer-contractor relationship with the prop firm since you are trading there money and they are paying you 50-80% of your profits, so it isn’t against any of the RBI rules.
The evaluation tests cost 100$-600$ depending on the type of account you want($50k to $350k).
Also if you trade from India, you won’t be able to scalp futures in US, because of internet latency issues(Mumbai to Chicago its around 500-600ms round trip), so it actually takes more than half a second(sometimes even more) for quotes to be updated that puts you at a disadvantage.
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Gamblers are so addicted to Derivatives here that now they’re figuring out ways to go International.
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it is not about gambling it is about ROI for 3k max risk will you pay 18k .check margin for option spreads we have highest margin anywhere present in the world.
some pandits teaching to trade option spreads by selling atm option and buying away far otm option to hedge it is like selling naked option (after new margin rules came)
@siva request zerodha to talk to sebi regarding this.this is increasing market risk n increases chances of default by brokers
n request SEBI to put in Risk Based Margin System for hedged trade like in usa
With the revised margin framework implemented in June 2020, spread margins have fallen drastically.
The additional exposure margin charged is what’s higher and is added to cover the risk for all market participants.
Exposure margin is useless for hedged option trade (this is the main culprit).SPAN is enough.
1)what are brokers doing to prevent risk where client sell atm n buy otm to reduce margin,what if there is a black swan event 
.
2)zerodha is preventing people to buy otm option but what about other big brokers aren’t theyincreasing overall market risk
3)you recently tweeked your system to enable easiest where you prevented client to stop transfering if they have sold shares(moneylife article).why this sytem cant be deployed to prevent selling one leg if there is insufficient margin in traders account
4)SEBI is always fearfull of retail traders engaging in Fno trades
-Change margin system for hedged trades
-allow only hedged trades for retail traders with less networth (USA also has some what same system)
-this will also increase liquity in stock option
Sebi is run by bunch of jokers and idiots like ME. I as well as the folks sitting there believe that f&o is just gambling. Traders give us all sorts of reasons to convince it’s not but we don’t agree.
The End Result is Traders keep on cursing SEBI and they simply don’t care.
Not really. But ignorance can make it so. You can trade like a gambler, but that doesn’t mean F&O is gambling.
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In one FIRESTICK you an burn your house also , and the same you can bring light for your house also ,
its all depended upon you how you are trying to use these firestick -
everybody cannot be a success in same business ( For ex- Rcom , air cell , VI , TATA docomo )
the same its will be in stock market also
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When you sell ATM and buy deep OTM, the margin benefit is as per the max loss of the portfolio.
Here is an instance.
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Nifty 16300 CE ATM Sell- 82K margin
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Add Nifty 18000 CE OTM Buy- margin reduces to 61K only as the risk is now capped to (1700*50=85K minus option premium paid)
We do allow option buy outside the range if you have a short position (for hedging)
We are working on a system in our new in-house OMS (under testing) to allow the exit of the margin consuming position first to help our customers avoid margin penalties. However, this would be something that can’t be implemented exchange wise.
At the exchange level, all orders and positions are treated individually.
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k so after implementation of oms will brokers go to sebi and say we have implemented oms which will prevent clients to square off one leg of hedged position. pls remove this exposure margin requirement for hedged position. rest we will take care off.
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Short answer is, YES, you surely can trade US derivatives from India, with certain limitations of course. You are only allowed to open cash accounts with US brokerage firms. Also as its a cash account, you have to adhere to the settlement times as well.
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Umm I mean everything seems like gambling when you dont know what you are doing. Same with long term investing. If you dont know what you are doing, it sure is like gambling
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It doesnt matter if your account will be funded with money earned in US. They only see which country resident you are. So if you are an Indian national, then none of the US brokers will allow you to open Margin account.
I dont know what type of trading you are looking to do, but cash account is still a great option with a US brokerage firm.
What about the withdrawal of money?
and how to tax it?
The best option would be to setup a checking bank account in some American bank and transfer the funds there for your initial investment. After that you can send it to your brokerage account. you can withdraw your profits to that bank account whenever needed. If you want to withdraw it back to Indian account you can use apps like transferwise which hardly takes 1 minute during business hours.
But you have to track your P&L properly. The elaborate statements will be available on your brokerage websites. You will also get 1042-S tax form if your investment had any instrument which might incur a withholding from US Govt. You will have to pay tax on most of your investment/trading in India properly. Maybe hire a CA for you first year taxes. But it should be straightforward. As I trade US derivatives only, I think it comes under " Non-speculative business income".
please leave any questions you have. Will try to answer when I am free as it seems like I see mis-interpretation or over analyzing going on on this. I am also open to get any information others might have as well. Thanks
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First, F&O gains in USA does fall under capital gains. But its different. If you hold long term “Long position” on an option (At least 1 year) then you can avail Long-Term capital gains tax rate. If its short term, then it should be added to your primary income and normal salary income tax slabs will be applied. Which makes it kinda similar to the business income in India.
If you are day trading US options in a Cash Brokerage account, then it is completely legal, as there is no margin involved. (not that they will allow us to open Margin account if we are Indian resident). So I think we should file ITR3 for this. I am planning to go to a CA myself for this. Will let you know when I know more on which ITR to fill.
EDIT: I just researched on this a bit deeper and I found some information. As the Securities Transaction Tax (STT) does not apply to a foreign stocks (Atleast not on US stocks), and because there is no mention about Foreign F&O investments, Foreign Stock income (no margin involved) as a whole might fall under capital gains here in India. So If it falls under Short-Term Capital Gains (And no STT), it should be added to your normal income here in India and the normal tax slabs are applied. So maybe thats why your CA told you to mention them under capital gains.
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Hi, I am an Indian, and I just want to ask this following question - Can I trade commodity future contracts at CME Group through any authorized foreign broker from India? If yes, what are the formalities I need to undergo to execute these trades without any regulatory legal hassle? Thanks for your time and effort to keep this topic of - “Trading Derivatives in USA from India” active. It’s genuinely helpful. Regards.
As per RBI we cannot transfer funds outside the country for trading.
