If account is opened as NRI, brokerage won’t enable intraday or F&O on that. If NRI trades without declaring he is NRI and opening a normal resident resident. The issue will happen when filing taxes. You would have foreign income and F&O. The problem will be with the IT officials if there is scrutiny.
Thanks @nithin … One follow-up question.
If I’m planing to shift to another country in upcoming years then I have to open a new nri account or i can get my current account converted in to nri one without selling my current holdings?
Is it possible to transfer my account to my nominee without selling my holdings?
A different case… If I go abroad for my studies (no foreign income), still I cannot trade in f&o?
For NRIs there are two types of accounts that can be opened, the NRO( non repatriable) and NRE(repatriable) your existing resident account can be converted to an NRO account, the sales proceeds of holdings from such an account cannot be taken back overseas.
You can transfer the holdings to a nominees/ relatives account.
If you go overseas for studies, banks would still open a non resident account for you, and your status changes to non resident, without an income proof you will not be allowed to trade FNO.
Regards
HI @nithin
What if I’m an employee of a US company (Getting salary in USD and other perks as per US company laws) but I’m in India on deputation for 3 years (Keep flying to US time to time).
So am I eligible for trade in F&O?
If you are an Indian resident, you can continue doing F&O. If you are NRI, then you have to come through the custodial participant route.
You’re not NRI. There is a defined definition on the term NRI. I also get money from my IT company abroad only but I am sitting on my home in half pants mostly.
“He/She is in India for 182 days or more during the financial year” Then you can call yourself Resident Indian.
Also, simply put –
- Any income that is ‘earned’ in India is taxable for you in India.
- Your Income outside of India is not taxable in India.
If it is approved by account owner otherwise it is illegal.
Thanks for clearing my doubt.
So one needs to live 182 days continuously or total 182 days in a FY?
Total.
Yep and that is not going to change I think.
There are ways by which you can invest from other’s account:
Scenario 1: Investing Family Money
You could open a trust where your interested Family members could become beneficiary and you could become the trustee. In this situation, trust will act as a investment vehicle where you all could pool in the money and manage it. This comes with a downside, i.e. the money invested will be in the name of trust but not in the name of individuals. Also, money can be taken out after the trust dissolves or if the trust deed says so.
Make sure to form trust deed carefully and how the money will be provided to the beneficiary. Also, keep a record of the money given by the beneficiaries. Also, you could take a salary from the trust or can also do profit sharing.
You could become Authorized Person of a Broker and operate accounts of your family members. You might need build your own terminal on top of the API and manage the funds. This gives your family members one advantage that the money invested by them remains in their hand and power. Just with one click they can revoke your access to view and execute trades on their account. You could also earn some commission from the broker, but it will be pretty less.
You could take money as a gift from family members (it’s take free) and then invest in under your own name. Although, this method is not that great as it would require a great mutual understanding.
I won’t recommend this, as if you got greedy they might never receive their money.
Forming an HUF is also another great solution. Interested Family member’s can gift money to HUF (It’s tax free) and the HUF will use the same for investing purposes. Probably, you are not going to be the karta, therefore you could be appointed to manage investments and take salary or profit sharing. This also comes with downside, i.e.
- Not everyone can open HUF (Only Buddhists, Hindus, Sikhs and Jains can form HUF).
- Each member of HUF has equal right on the Assets.
- It becomes more complex as there are more generations. (For example, if you want to manage your grandparents money using this method then your grandparent’s HUF will consist of all their children and their children and so on.)
Scenario 2: Investing Other People’s Money
Now, here the things get tricky since, HUF can’t be formed the only solution (From above mentioned solutions) would be to form a Trust as it will act as proxy between you and your clients. This method is only feasible if you have small number of clients, but if you have more clients you could opt for one of the following option:
- Forming an NBFC
- Becoming a Trading Member and execute trades and take your commission accordingly.
- Forming a Unlimited Partnership Firm
- Becoming Authorized Person of a Broker (You could only earn the commissions provided by the broker which are very less)
- Hedge fund (Minimum fund size 20 crore)
- Portfolio management (A customer should invest at least 50 Lakhs)
- Asset management (Net Worth of 50 crores to start)
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