F&O trade as Pvt. Ltd

Just a random thought… Is it a wise option to trade in F&O segment as a registered Pvt. Ltd. company instead of an individual?
I am asking this question because of the followings -

  • Corporate tax for MSME is 22% vs personal income tax of 30% (assuming net income > 10 lpa)
  • tax holiday scheme of GOI entitles 3 out of 10 yrs of tax rebate

I am a novice in terms of business income taxation system, so please excuse me if both of my above logic is completely wrong.

Hi @sachinsp15
The private limited company is assumed to have many tax advantages. There are some industry-specific advantages, but taxes are to be paid at a flat rate of 25% or 30 % on profits (as applicable), also Minimum Alternate Tax (MAT) applies here.

Moreover, To pay taxes on 22% there are so many conditions u/s 115BAA which should be complied and company cannot claim so many deductions here which are generally allowed.

Furthermore, To incorporate the company having main objective of trading you need to get an NBFC license from RBI. Also there are so many year around compliances which needs to be followed for every PLC.

Talking about tax holiday scheme for startups, there also company needs to satisfy the eligibility criteria for claiming this benefit and also obtain certification from the Inter-Ministerial Board setup for eligible purposes of a company.

If you can manage to pass through all those conditions, then only it would be wise to trade in F&O segment as a registered Pvt. Ltd. Company.

Hope this helps!