The Securities and Exchange Board of India (SEBI) is the major financial sector regulator in India. SEBI is responsible for regulating the operations of depositories, market participants, securities issuers, investors, and credit rating agencies. One of the greatest influences that SEBI has over a Forex market in India is its Foreign Exchange Management Act (FEMA). Under this act, it is officially illegal to get involved in Forex trading on any currency pair not involving the national currency – the Indian rupee (INR). However, only SEBI regulated Forex brokers in India are authorized to offer INR currency pairs.
Since locally regulated Forex brokers are not able to offer the most popular Forex assets, Indian Forex traders will often trade with international brokerage companies that hold licenses from the regional market regulators, such as the Dubai Financial Services Authority in Dubai, or the Monetary Authority of Singapore (MAS). Furthermore, the Indian rupee does not represent a popular Forex trading asset as the demand on the INR currency pairs is extremely low. Instead, Indian traders will often choose USD/JPY or EUR/USD pairs, which represent the dominant major Forex pairs.
SEBI has also restricted leverage significantly in March 2021. The market regulator has increased the margin requirements from 25% to 50%. This could mean that SEBI-regulated Forex brokers would not be able to offer leverage more than 2:1. Furthermore, trading with SEBI-regulated brokers would mean that traders have to pay taxes according to the transaction amount. The amount of the GST tax can vary from 1% per transaction to fixed fees of INR 5,500 + 0.01% of the transaction amount.
The best online Forex brokers in India will offer numerous payment solutions to its clients that range from traditional payment systems such as bank wire transfers or credit/debit card payments with Visa and Mastercard to the innovative e-payment platforms such as Skrill, AstroPay, Paypal, or M-Pesa. There are no deposit/withdrawal fees payable with the international brokerage companies in India.
Due to the extremely strict regulatory framework that the Securities and Exchange Board of India (SEBI) incorporates on the local Forex trading scene, the best option for the Indian Forex traders is to trade with international Forex brokers with multiple legal authorizations. The best brokers in India will often hold licenses from the DFSA, MAS, FSA (of Japan), or similar. These organizations have an even stronger reputation than SEBI itself and allow brokerage companies to operate in many different jurisdictions, whereas SEBI-regulated brokers will have to stay with the Indian market only. Below is the list of the best brokers for international Forex trading in India.
CySEC, FCA, ASIC
MT4, MT5, WebTrader
CySEC, CBI, FSA, FFAJ, BVI FSC, FSCA, FSRA
MT4, MT5, WebTrader, AvaTradeGO
Swedish FSA, Finansinspektionen
cTrader, MetaTrader 4, MetaTrader 5
SVGFSA, FCA, DFSA, FSCA, FSA
From 30% to 100%
Risk Warning: YOUR CAPITAL MIGHT BE AT RISK
FCA, CySEC, FSA
MT4, MT5, WebTerminal
ASIC, CySEC, FSA, BVI
WebTrader, MT4, TradingView
FCA, CySEC, DIFC, CIMA
WebTrader, MT4, MT5, IRESS
ASIC, SCB, CMA, CySEC, FCA, BaFin and DFSA
MT4, MT5, cTrader, TradingView
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
The Securities and Exchange Board of India (SEBI) is the main market regulator of financial sectors in the country. SEBI is a government-appointed institution that oversees the conduct of various financial companies and market participants and monitors their compliance with the regulatory framework of the country. The Foreign Exchange market is regulated by the Foreign Exchange Management Act (FEMA) under the supervision of SEBI.
As per the regulatory requirements of FEMA, the regulated brokers are not allowed to offer any currency pairs that do not contain the local currency – the Indian rupee. Therefore, Forex traders are extremely limited with SEBI brokers to choose from the following currency pairs only: USD-INR, EUR-INR, GBP-INR, and JPY-INR. These currency pairs are the least active on the market and therefore we would not expect Indian traders to earn significant profits while trading with them. Moreover, the securities board imposes several restrictions on Forex trading including the margin requirements. Due to the inconvenience of trading with SEBI brokers, Indian traders often choose internationally regulated brokerage companies.
There are three major regional regulatory organizations in Asia: the Dubai Financial Services Authority (DFSA), the Monetary Authority of Singapore (MAS), and the Financial Service Agency of Japan (FSA). The DFSA is known to be the most liberal regulatory authority in the region with a flexible regulatory framework and tax exemption for Forex traders. The MAS, on the other hand, has been actively participating in banking services in the past decade, however, has accomplished a lot to regulate several securities markets throughout the recent period. The FSA is one of the most advanced market regulators closely resembling the notorious Financial Conduct Authority of the United Kingdom. Therefore, you will find the majority of the successful Forex traders in India trading with the brokers regulated by any of these three Forex regulatory authorities.
Forex incomes are taxed as Goods and Services Tax (GST) in the amount of 18% according to the SEBI regulations. However, the amount of tax will depend on the volume of transactions. For instance, the transaction amount that is less than or equal to 100,000 Indian rupees will be subject to 18% tax with a minimum GST payable of Rs. 45. Below is the guideline on how Forex transactions are taxed in India according to the transaction sizes:
If you are trading with SEBI-regulated Forex brokers then you can trade only local currency pairs. The regulatory framework does not allow trading any foreign currency pairs if they do not involve the Indian rupee. However, the brokers that do not hold licenses from SEBI are prohibited from offering the Indian currency pairs. Therefore, you have two options – either trade only local currency pairs with SEBI brokers, or trade over 80 Forex currency pairs not involving INR with international brokers. Local SEBI authorized brokers will offer these four currency pairs only:
While international Forex brokers will offer on average 60+ currency pairs including:
SEBI incorporates leverage cap according to the recent 50% margin requirement regulation passed in March 2021. Previously, the regulatory authority obliged brokers to require at least a 25% margin, however, there are predictions that eventually SEBI will proceed with increasing the margin requirements until introducing 75% margin ask later this year and even 100% expected for the next few years to follow. These margin requirements restrict the regulated Forex brokers to offer flexible leverage. They can offer 2:1 leverage on most financial instruments according to the existing regulations, which is much less than in European Union or other Asian countries.
The cap on leverage is another reason why Indian Forex traders will often choose internationally regulated Forex brokers instead of SEBI-approved ones. With MAS or DFSA regulated Forex brokers traders can easily get leverage of up to 1:500 or even 1:1000 in some cases on Forex currency pairs.
India Forex brokers offer a great variety of payment methods including common solutions like bank wire transfers, as well as innovative e-payment platforms like PayPal, Skrill, AstroPay cards, and M-Pesa. Along with these payment methods clients are free to pay using Visa and Mastercard debit/credit cards. Most Forex brokers in India will not charge additional fees for withdrawals and deposits. Some of them might even reimburse any costs related to deposits made with the broker. For instance, while brokers themselves do not ask for deposit fees, the payment services providers usually will have transaction costs varying between 1% to 3% or the fixed fee of 1 or 2 US dollars.
All brokerage websites will provide information on what credit or debit card providers they support and which online payment methods can be used with them. Also, make sure that your bank allows international transactions and check on the fees since bank wire transfers are usually the most expensive payment methods, as well as the most time-consuming ones. They take from one to seven working days to process the international transactions.
Unfortunately, India is one of the main targets of Forex scam companies. There have been multiple fraud cases throughout the last decade in the country. In March 2021 alone the police arrested several scammers who took over 1.7 million US dollars from the Indian Forex traders. The company came under as one victim filed against the FX scam who lost more than 15,000 US dollars with the broker. Sadly, there is no separate organization investigating the cases of fraudulent behavior on the Indian Forex market. The money laundering and scam-related crimes are investigated by the Central Crime Branch or the cybercrime police.
Therefore, we strongly recommend that all Forex traders in India strictly follow the guidelines of SEBI or other financial regulators and trade with the authorized and approved brokerage companies only. Furthermore, we suggest that you keep your personal login details with your broker private and do not share your trading account with anyone else. Also, make sure to read the guides for how to avoid Forex scams and check on individual reviews about the broker beforehand you start trading with it.
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