Trading F&O via LLC or Pvt Ltd

Hmm… yes and that is what I have mentioned many times above.

In the case of a Private Limited or Public Limited company, if more than 50% of revenue comes from financial income (trading), then the company is required to get registered as an NBFC (Non-Banking Financial Corporation) with RBI.

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does this 50-50 rule apply to F&O or intraday in cash segment or both ?
Does one person company allowed to open corporate demat & trading account account ?


Any financial income. So even if you are a company with only Bank FDs and no other business, 50:50 will kick in, and you have to close the company or get an NBFC license.

An OPC can’t do any investments, so can’t open a trading and demat account.


OPC has only one shareholder so it is the most suitable for those who wants to invest/trade their own money.

SEBI allowed OPC to start broking business with condition that they can’t trade or invest.

It will be good if government allowed OPC trade in stock market in future.

So many asking if they can form a private limited company? What benefit do you guys really see?

they see “youtube guru” videos of people trading through private limited company and want to do the same so that they can pay 25% something in taxes instead of the maximum rate ~42.7% if your income is >5 crore.
Now i dont know if they are making 5 crore or more.

What about tax on dividend from the company which is again taxed in the hands of the shareholder?

Now you will say they will never give out dividends. How will they meet personal expenses?

I really wanna know what am I missing here. From past 2 years since I joined this forum I have seen so many members wanting to start a private limited company.

Perhaps their capital has grown beyond the definition of personal and as such it can be better managed both operationally and financially, if they become a private firm :thinking:

You can never remove it out of the company without paying taxes. What’s the point. I fail to understand

Of course. Is the tax structure more beneficial for the firms, due to any deductions, incentives etc?

Also, may be they have gained enough personal experience and want to become a firm that manages more money both for themselves and clients.

Doesn’t make sense. Will wait for one of them who wants to incorporate a company to answer.


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You are just doing some guess work mate. So let the ones who actually want a company answer if they are willing to. Seriously, No offence.


Of course I was.

I was trying to come up with possible reasons that I can think of, which if indeed are possibilities make sense :grin:

You can definitely be sure of this possibility of being a social currency. Validations for sure. I guess it’s definitely a big thing to say “I own a company that trades stocks”. The same way as gold and real estate

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How about this scenario - buy movable or immovable assets with profit taxed at lower 25% rate and then claim the depreciation on assets as expense later. One gets to enjoy the material possessions with less tax burden. Ofcourse the assets are in the name of the company but the major shareholder who may also be a director or executive in the company also has control over the assets.

How does my cooked up scenario sound to you ?

Yes, that sounds big.

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The possibilities are endless within the confinements of law :grin:

Yes. I was aware of this scenario even before. But for all their personal expenses they will have to pay dividend na. Let’s say education expenses, daily groceries etc. there is clear double taxation. May be they will save a little. But they are only differing the tax. Some day or the other they will have to pay tax on it again.

Yeahhh. Can proudly say, “We have a trading company”. Makes little sense. Though there is no financial benefit as such.
Ah. I have seen this a lot. So many create companies with two shareholders for small business with turnover of 60 to 80lakhs. Husband and wife.

Private limited companies do have their own perks for sure. But for stock trading I don’t really see any.
Anyways. The ones looking to create private limited companies are either really ignorant of how taxation and compliance works or may be it’s me. I do not know something they do.

I still really hope one of the above members looking to incorporate company replies.

Lot of personal expenses could be shown under company expenses - transportation, phone and internet, food, accomodation etc etc thereby lowering the profit and then pay less tax on it.

Dividend taxation comes only when we take out money. If we let the company take care of our existence it doesn’t ring in right.

Also when they want to take it out they can take it out as salary and so just the individual tax rates apply and again that is an expense for the company.