Trading is not allowed for govt. employees. My father is also an Govt. Employee who is years away from retirement. So i want to open an account in my mothers name(Homemaker, uneducated) and trade only in that account and will file ITR without fail.
Income, if at all any, will be Gifted/Loaned to me by my mom.
Can that be done? What all legal precautions have to be taken?
Does an IT officer bother about who actually does trading? (If for some unforeseen reasons, IT notice is served OR An IT officer cross examines us)(PS: My mother is uneducated)
My concern is, will IT officer can take any legal action if they are convinced that profits are due to trading by someone else.(Provided no tax has been evaded)
Open a joint account for trading let her be first holder and U can be second holder. Or u can open account in her name but have to receive a POA( power of attorney) to trade in her account ask it with Ur broker he ll know.
Will trading through my mom’s account, will be an issue, if by some reason IT intervention happens.
(I am in a good Govt. post, which will be under frequent IT vigil)
My concern is, will IT officer can take any legal action if they are convinced that profits are due to trading done by someone else and not MOM.(Provided no tax has been evaded)
You can do a Trading in Mother name and she can appoint on role to execute the orders. Its your call to do and for you it can be lucky also. ITO wont questions that. If the intention is to evade the taxes , them there can be questions. And apart from this all these transactions are tracked through PAN … So need not worry till you declare true profits. You can gift/ Loan mother as well she can also do the same. There is no restrictions on the same
You can just open a trade account in her name and enjoy , only her saved personal income as a home maker part of earned income and enjoy loan from relatives and friends. Never tax issue or clubbing arise . You can also create a HUF and do trade in name of huf by paid employee also.
a. She can employ someone to do trading on her behalf, that won’t be a legal problem for both the employer and employee. Right?
b. OR i can trade in her account, and as long as i and mom don’t evade tax, there is no problem. ITO doesn’t bother about who has actually done trading in this account. Right?
There is nothing stopping you from practically trading from your mum’s account.
The question to ask is, Do you want to trouble them with going to the accountant for filing their yearly tax returns, signing there , signing here , taking them to a assessment appointment with the IT Dept ( in case of ITR notice issue) etc ?
Easy to get started, but everyone starts getting uncomfortable when having to deal with the paper work and legal compliance.
Thanks for the prompt reply. I do not want them to go through all these red tapes, but as an NRI i am barred from operating demat account in India. Will jointly holding account with mum and doing trading on her behalf avoid rigorous assessment by IT Dept. PS: My intention is never to evade taxes and fully intend to pay what ever tax that come may.