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India is an emerging Forex trading hub. A good percentage of its one billion population are now interested in or are already involved in some form of currency trading. With Forex’s growing popularity in the country, many are curious to know about how taxation works in this market.

Forex taxes in India

Starting off with one of Google’s most searched questions in 2023: do you pay tax on currency trading in India? Yes, Forex trading in this country comes with tax responsibilities, as almost anywhere in the world. However, knowing this should not be a reason why you should not give it a try. In fact, knowing the right process to taxation very early into your investment journey will mean less drama and stress later on.

Income from Forex trading in India can be declared either as business income or income from other sources. According to Traders Union, Forex tax declared as income tax in the country is subject to individual tax income tiers which ranges between 5% to 30%. Meanwhile, capital gains tax for equities come at 15% for short-term gains and 10% for long-term, subject to conditions.

Three important key points to remember

Meanwhile, there are three main points to remember about Forex taxes in India:

  1. Delivery trading is currently not permitted for Forex pair derivatives – everything is cash settled
  2. Income generated from trading Forex futures and options (F&O) can be treated the same way as business income
  3. Business income from F&O is considered ‘non-speculative’

In addition, for trading income under 3 lakhs of Indian Rupee is exempted from tax. Here are the tax tiers for the respective Forex trading income in the India under New Tax Regime:

  • Income up to ₹3,00,000: No tax
  • Income from ₹3,00,001 to ₹6,00,000: 5% of income exceeding ₹3,00,000
  • Income from ₹6,00,001 to ₹9,00,000: 10% of income exceeding ₹6,00,000
  • Income from ₹9,00,001 to ₹12,00,000: 15% of income exceeding ₹9,00,000
  • Income from ₹12,00,001 to ₹15,00,000: 20% of income exceeding ₹12,00,000
  • Income above ₹15,00,000: 30% of income exceeding ₹15,00,000

Can Forex tax be avoided?

Forex trading, or foreign exchange trading, in India is not illegal, but it is heavily regulated by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). Nevertheless, there are many ways to legally minimize Forex charges, and here are some strategies recommended by experts:

  • Sign up with brokers offering competitive fee structures and low spreads
  • Go for online payment platforms that charge lower transaction fees
  • Be mindful of withdrawal fees – these are quiet profit-killers
  • Stay informed by fee reduction promos offered by your broker

It is important to remember that an individual can be classified as a tax resident in India if he spent 182 days or more in the country during the tax year. Also, if he is present in the country for at least 60 days during the tax year for a total of 365 days or more in the past four (4) years. If the conditions are not met, the individual is considered a ‘non-resident’ for the tax year.

Top Forex traders in the world

In addition to knowing the country’s taxation rules, being familiar with the top Forex traders in the world can also set you up for success. For those wanting to take Forex trading into the next level, here are the top 7 successful brokers you should know and follow.

  1. George Soros – with a net worth of $8 billion, this Hungarian billionaire always appears on the list of top traders worldwide. Soros is known for having a distinct strategy which he has been using since the early nineties, taking highly leveraged positions tracking how their associated currencies are performing.
  2. Joe Lewis – has $5 billion net worth. Lewis is a UK-based trader known for selling their family’s catering business to try his luck with currency trading.
  3. Paul Tudor Jones – estimated net worth of $5 billion. He is one of the traders who took advantage of the volatility during the 1987 market crash, shorting positions which landed him a $100 million fortune.
  4. Bill Lipschutz – holds a net worth of $2 billion and is ranked as one of America’s richest Forex traders. He amassed millions of dollars from trading with the Salomon brothers back in the 1980s.
  5. Andrew J. Krieger – $1.6 billion net worth and also earned his fortune from the 1987 market crash. During that time, Krieger identified the New Zealand Dollar (NZD) as extremely overvalued and amassed gains from shorting the kiwi.
  6. Stanley Druckenmiller – $2 billion net worth and was the lead portfolio manager of Soros’ Quantum Fund.
  7. Michael Marcus – with an estimated net worth of almost $2 billion, Marcus was under the mentorship of the renowned commodity trader Ed Seykota.

Tips on how to be a successful trader

Aside from knowing taxation rules and knowing the right people to follow, below are some tips on how to become a successful trader in 2024.

  • Choose the right broker – one with strong regulatory backing, holds a license to legally operate, offers a wide-range trading instrument, has low fees, and does not have a history of fraud throughout its years in the market.
  • Novice traders should be careful – beginner traders are not advised to use high leverages due to the risk involved.
  • Diversify – do not rely on only one trading instrument nor trade just one asset. As they say, do not put all your eggs in one basket.
  • Perfect the timing – Forex is a time-sensitive industry. Find out which time is the most profitable to trade in your country. In the Wheon article, it said that Friday is also not the best Forex trading time in India. On this day, most market participants start to fix their positions, so it’s very difficult to predict the behavior of the currency pairs in such conditions.


Understanding Forex taxation in India is essential for traders to ensure compliance and minimize stress. Income from Forex trading can be declared as business income or income from other sources, with tax rates ranging from 5% to 30% based on income tiers.

While avoiding taxes is illegal, traders can minimize costs through brokers with competitive fees, low transaction fees, and promotional offers. Staying informed about top traders and following successful trading strategies can also enhance one’s trading journey in the country.


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July 2024