How is income from a prop firm taxed in India?
Quick answer
For an Indian company or resident founder, prop firm profits are normally taxed as business income under the Income-tax Act, and services may carry GST depending on the customer and place of supply. Payouts to traders are usually treated as business expenses. Use a chartered accountant, as treatment depends on structure.
Detailed answer
General information, not legal, tax or regulatory advice. Rules differ by country and change over time; confirm your position with a qualified professional before acting on it.
Points to confirm with your accountant:
- Corporate or individual income tax on profits.
- GST: whether your services are exports and how they are treated.
- Deductibility of payouts, platform costs and marketing.
- Withholding (TDS) on payments to Indian traders, if you serve them.
- Overseas entity: if profits sit abroad, how they are taxed when they reach you.
- Foreign exchange reporting for money received from abroad.
Keep clean records from the first day: sales, refunds, payout calculations and platform invoices. This is general information, not tax advice.
Common questions for your accountant
- Is the company's income treated as export of services for GST?
- How should payouts to traders be recorded?
- What documentation do banks need for foreign receipts?
- How will profits be distributed to founders?
Keep separate books
If you run both an Indian company and an overseas entity, keep their accounts and invoices fully separate, with clear agreements for any services one provides to the other.
PropExecutor team · Updated
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