Fema trading
Santosh
(Querist) 26 August 2013
This query is : Resolved
Hi,
Consider a situation:
1) Party A is recipient of money (in rupees) 2) aware that the original source of payment is from trading in foreign country (USDollar) and 3) is engaged into an agreement with party B 4) the party B is going to covert the USD to Rupees 5) make the payment to party A by cutting TDS.
In this situation, if party B is somehow violating FEMA rule, does the party A will also be implicated under FEMA rule ?
Could you please answer this query. I really appreciate your advice.
Santosh
(Querist) 26 August 2013
Sorry Sir,
This is not an academic query. I, with some of my friends are venturing an agreement as party A in the above statement.
Before approaching a formal lawyer, we would like to know if there is any risk associated if we won't be "directly" dealing with the foreign exchange.
I really appreciate your response on this.
Thanks.
Advocate Sastry
(Expert) 26 August 2013
Resident Indians cannot trade in foreign currencies and FEMA guidelines do not permit trading in Foreign Exchange in Domestic/international market... Please do not do... I attached copy of RBI Press release in this regard for your query on the forum messages...
If you still wish please contact Regional Office of RBI in your state.
Guest
(Expert) 27 August 2013
This is not a case of trading in foreign country, but a case of trading in foreign currency.
However, if this is not an academic query can you give reply to the following questions:
1) What types of goods or services the party 'A' wants to trade in foreign country?
2) When party 'A' would be trading in foreign country, why the money remitted by the foreign third party would land in to your account, who would not be having any direct concern with the foreign party?
3) On what count, as an individual, you would deduct TDS?
4) As a party 'B', you being a manager in some company, what would be the role of your employer and whether you would be able to do business, as proposed, in partnership with party 'A'?
Rajendra K Goyal
(Expert) 27 August 2013
The questions raised by the expert P S Dhingra ji, need to be replied by the author.
Santosh
(Querist) 27 August 2013
Party A will be doing margin trading in foreign country.
The profits (if it is realized) will be taken by party B.
Part of the profit will be converted into Rupees and given to party A after deducting TDS.
Advocate Sastry
(Expert) 27 August 2013
Margin Trading in foreign country in which commodity ?
Santosh
(Querist) 27 August 2013
margin trading in stocks
Guest
(Expert) 27 August 2013
You have not replied my queries.
Another question arises, on what account B would get profit from A?
Advocate Sastry
(Expert) 27 August 2013
You did not understand my point... margin Trading is allowed In Currencies, Shares and commodities... Please tell me in which commodity exchange he wants to trade... Is your friend a Resident or Non Resident... For trading in commodities he needs prior approval of Authorised Dealer as per RBI Master Circular on Risk Management... I suggest you contact your Banker to know more details OR send me PM
Santosh
(Querist) 27 August 2013
I have taken a decision not to engage into this contract.
Dear Experts, Thanks for your time and valuable suggestions.
Guest
(Expert) 27 August 2013
That is fine. Even otherwise also, when you were not ready to revel anything about the proposed deal any advice was not possible without knowing the background of the case.
