A trading account with FxPro

A dividend paid to a demat holder, beside a cash adjustment on a price contract

A dividend paid to a demat holder is paid by the company to the shareholder whose name is on the record at the record date. The money is credited to the bank account linked to the demat account, and tax may be deducted at source. The holder has the right to vote and to receive the dividend.

A cash adjustment on a CFD is different. FxPro offers contracts for difference on shares of companies listed around the world and on stock indices. A CFD on a share is a contract on the price of that share: no share is bought, nothing is registered in the reader's name at any depository, and the holder has no vote and no shareholder rights. Where a share CFD is offered, any dividend-related payment is a cash adjustment made by the broker around the ex-dividend date under its own contract terms. It is not a dividend paid by the company.

Why a contract has no record date and no TDS entry in the annual information statement

A CFD has no record date because no share is held. The broker's cash adjustment is a payment under the contract, not a distribution by the company. Its size and tax treatment are set by the broker's terms, which this site does not state. The reader must read the contract specification before relying on it.

A dividend paid to a demat holder appears in the annual information statement and in Form 26AS on the income-tax portal, with any tax deducted at source shown. A cash adjustment on a CFD does not appear there. The reader must keep the broker's statement and consult a tax adviser on how to report any gain or loss from the contract.

What to read in the terms and what to ask an authorised bank before sending money abroad from India

Before opening an account with FxPro, read the broker's terms on the website. Check the contract specification for the share CFD you are interested in: what the cash adjustment is, when it is paid, and what happens if you hold the contract over the ex-dividend date. Also read the risk disclosure: a CFD is a leveraged product and losses can be fast; the broker states that clients cannot lose more than the funds they deposited (negative balance protection) and offers a free practice account.

Remitting money abroad for margin trading is restricted under RBI and FEMA rules. Funding the account may be impossible or unlawful for a resident. The reader must check with an authorised bank before sending any money. This site does not say whether any particular transfer is permitted.

FxPro is not registered with the Securities and Exchange Board of India (SEBI). An account is opened with a company regulated outside India - the group's companies are authorised by regulators such as the FCA in the United Kingdom - so a resident here deals with a foreign firm and the protections of a locally registered one do not apply. A contract for difference on a share is not ownership of a share and does not appear in a demat account. Sending money abroad for margin trading falls under the Reserve Bank of India's rules and the Foreign Exchange Management Act, and the reader must ask an authorised bank before sending any. The diary contains no investment advice of any kind.