@nithin@TAXIQ.IN Thank you everyone for providing such comprehensive information. It has saved me significant time and effort that would have otherwise been spent researching online for satisfactory feedback.
Based on the thread, it appears that trading Equity & F&O through LLP/PVT LTD without an NBFC license from RBI is not permitted. However, is it permissible to engage in Equity, Currency, Commodity, and F&O trading through a Partnership firm using partners’ funds w/o NBFC license?
Secondly, If NBFC license is must for Equity investment under any company types then can I buy Stocks (Equity) in Partner’s personal DMAT Account to avoid NBFC license requirement and Partnership firm utilize only for F&O (Index, Stock, Currency, Commodity) trading?
Additionally, can borrowed funds from relatives/banks be utilized solely for trading within the Partnership firm across these segments?
Does Zerodha permit the opening of a trading account in the name of a partnership firm without requiring an NBFC license?
@nithin Thank you for your response; much appreciated.
Considering your influential position, may we seek your support in advocating for an exemption from NBFC licensing for companies solely utilizing personal capital, particularly those engaged in share market investment and trading, without involvement in external borrowing or lending?
Brokerage firms can facilitate DMAT and offer trading to company without requiring an NBFC license. However, governmental regulatory bodies, including the Income Tax department, mandate the possession of an NBFC license for conducting business in this domain.
What if trading or investment gains extra 20-30% due to a policy change or political event, inadvertently becoming the primary source of income, comprising 51% of total earnings by the end of the financial year? If the company lacks an NBFC license during this period, it could render all transactions illegal, potentially leading to undue scrutiny and harassment from various government bodies for the business owner. Please correct me if my assumption is incorrect.
I’ve come across numerous online references to traders exclusively conducting F&O transactions through their company accounts without possessing an NBFC license.
At present, it seems to be a deliberate trap for small-scale traders, unless the respective government bodies recognize and treat companies with more than one partner or director as individual entity, allowing them to use their own funds for investment and trading purposes.
@nithin , what’s your opinion? Would you advocate for this requirement with the relevant government body? In my view, your support could greatly benefit the trading community, so please consider being a guiding light in this matter.
