Trading in family member account

General
1

Hi all, i have a query. If i have some capital, lets say 30 lacs which is my earned money i am trying to put in market.
My question is, can i give this to my family members (spouse and senior citizens parents, 10 lac each) and trade on their name. Is it legally allowed? Would this trigger any tax scrutiny especially on my senior citizen parents account as their bank account are not exposed to trading till now.

Thanks

2

You aren’t legally allowed to trade on someone else’s account (family or otherwise). Although, no one can question you if your whole family opens a demat and starts trading (if you know what I mean).

3

You mean, it’s your money, which you would give to your family, considered as gift, and demat accounts will be opened in their names, and once the funds are transferred to their accounts, you will trade in all of their names, but technically they are trading, and as such, the profits or losses are theirs and returns will be filed.

Hypothetically speaking.

4

Given as loan

6

You are right. All P&L will be in their name do u see any complication

1 Like
7

Not loan. It is given to them as gift… And trading P&L returns all will be in their name

2 Likes
8

And why is that you are thinking of this particular scenario? Is it because you are already in the 20% or 30% profit, and as such, any gains if made in your account will be added to your earnings and you will pay more tax?

1 Like
9

Well if the gift amount is invested in interest bearing instruments, the returns from such have to b clubbed with your income. But if it’s only trading then I suppose that’s okay (assuming they are trading :wink: )

10

No, I think that is applicable only when it is between husband and wife, and not between other relations. One who receives will borne the taxes, if any.

1 Like
11

It’s a grey area as zerodha says. But it should be okay. I guess you can say that you helped trading them which should be completely fine.

12

Give this amount as a loan to them, (Your accountant/CA will show this as loan in the Balance Sheet.) Do trading, make profit, file IT Return of your Parents, Spouse, etc. Get some amount back to your account as repayment of the loan shown earlier.
If you will gift this amount to them , then it will attract the clubbing of income rules. Better avoid it,

13

Which amount you are talking about ??