Is Binary Option Trading Legal in India? This is a question that is on the minds of several due to the popularity that this trading has received in recent times. Many have come across ads on social media and other mediums and like the idea of making quick money. However, there is a dark side to Binary Options and the legalities when it comes to trading them.

The RBI and SEBI prohibit the trading of Binary Options in India. Not only that, but the RBI also does not condone online trading of Foreign Exchange on unregulated platforms and applications. There are a few currency pairs that the RBI and SEBI allow and one can trade them through legitimate brokers.

Is Binary Option Trading Legal in India?

Why is Binary Option Trading Not Legal in India?

The reason the RBI and the government have taken such a strict stance is that these assets are not regulated. If something is unregulated by the government, it immediately becomes an object of suspicion. If there was any sort of malpractice when trading these instruments, there would be no one to be held accountable. Therefore, the Foreign Exchange and Management Act (FEMA) prohibits it and traders can trade these instruments at their own risk.

Is Olyump Trade / Binomo / IQ Option Legal in India?

Coming back to the question of “is binary option trading legal in India?”, these popular applications are free to market their products due to unchallenging social media rules. However, the law still looks down upon trading these instruments. There have also been instances of Binary companies cheating traders after letting them be profitable for some time. The conclusion is that it is best to stay away from these platforms.

Why does the Government not Ban platforms like IQ Option and Olyump Trade?

Since these platforms are not regulated by the RBI or SEBI, and are operating from countries where the law has little significance, it becomes impossible to hold any individual responsible. This is the main reason why the legalities of these applications are questionable. If these companies shut down and run away with an investor’s money, nothing can be done about it.

Is there any Punishment for Binary Trading in India?

If you’re wondering whether there is any punishment for Binary Trading in India, the answer is yes. Since the RBI and SEBI have prohibited the trading of these instruments, there can be consequences if one does so. Although it is not completely banned, if one does manage to raise a huge amount of wealth, they will come under the eyes of the law and can be penalized.

Does one have to pay Income Tax on Binary Options in India?

Since the RBI and SEBI prohibit the trading of these instruments but have not banned them completely, the profits from these assets would fall under speculation income. Therefore, they would be taxed at 30% plus CESS and Surcharge that is applicable.

Trade on Regulated and Legitimate Platforms

If you are looking to make money, it is advised by experts to do it the right way. Trading and Investing in the Indian stock market is sufficient for one to be profitable and generate wealth. Our courses aim to teach you how you can do just that. What’s more, is that we are highly reasonable. You may learn more by clicking here or get in touch with us.


  • Novruzova, O. B., Y. O. Pronina, and E. S. Vorobeva. “Binary Options as New Financial Instruments and Their Integration into the Financial Sector.” 2nd International Scientific and Practical Conference “Modern Management Trends and the Digital Economy: from Regional Development to Global Economic Growth”(MTDE 2020). Atlantis Press, 2020.
  • Micallef, Ria. The legal and regulatory aspects of online binary options under Maltese law. MS thesis. University of Malta, 2016.


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