• Govt employee investing in share market

I am a central govt. employee with annual income over 15 lakh. As far as I understand, a govt. employee can invest open debit account and invest in shares, but cannot do frequent buying and selling. Can you please clarify the difference? If I buy a share today and keep it for at least 6 month will it be treated as an investment which is permitted or frequent buying and selling which is not permitted?
Asked 4 years ago in Labour

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9 Answers

Dear Client,

Investment in share, debentures etc not ban to govt.but speculation i.e. is frequent buying and selling of shares.

Holding share for 6 months not comes under speculation.

Investment exceeds 50,000 Rs,. a year, than intimation to authority required.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

As per CCS (Central Civil Services) conduct rules 1964, investments in shares, debentures and mutual funds can be made by the Government servant. However "frequent buying and selling" of these are considered as "speculation" and is banned.

2) if you buy shares and keep it for 6 months then sell it would be regarded as investment and not speculation

Ajay Sethi
Advocate, Mumbai
87895 Answers
6207 Consultations

5.0 on 5.0

It will be treated as investment, not speculation as the term of investment is 6 months.

P. S. You can’t invest in a share if you are either involved in their IPO/FPO process as a govt. officer OR are getting their shares in director / management quota etc.

Siddharth Jain
Advocate, New Delhi
5925 Answers
101 Consultations

5.0 on 5.0

1. share trading is buying today selling tomorrow or buying today and selling today before market close or buying today and selling within few days after price goes above buy price

2. if the shares are bought and not traded like above and retained for a long time then it will be called as investment

3. so you can always buy shares as investment or buy mutual fund units for long term and that will not be treated as share trading

Yusuf Rampurawala
Advocate, Mumbai
6876 Answers
79 Consultations

5.0 on 5.0

1. Please refer to the CCS service Rules.

2. The daily trading is not considered to be a commercial activity if you do for yourself only.

3. When you do for some other person then it is barred by the service rules.

4. However to remove doubt you should refer to the service rules.

Devajyoti Barman
Advocate, Kolkata
22515 Answers
402 Consultations

5.0 on 5.0

1. Investments in shares, debentures and mutual funds can be made by a government servant. However "frequent buying and selling" of these are considered as "speculation" and is banned. Furthermore, investment in shares, mutual funds etc are to be intimated to the Department at the end of every calendar year as per the ref.: DoPT OM No. 11013/6/91-Estt. (A) dated 8.4.92 regarding CCS [Conduct] Rules, 1964

2. Sub-rule (1) of the Rule 16 also provides that no government servant shall speculate in any stock, share or other investment. It has also been explained that frequent purchase or sale or both, of shares, securities or other investments shall be deemed to be speculation within the meaning of this sub-rule.

3. With a view to enable the administrative authorities to keep a watch over such transactions, it has been decided by the govt that an intimation may be sent in the enclosed Proforma to the prescribed authority in the following cases:

(a). Group ‘A’ & ‘B’ Officers:– If the total transactions in shares, securities, debentures or mutual funds scheme etc. exceeds Rs. 50000/- during the calendar year.

(b) Group ‘C’ & ‘D’ Officers:– If the total transactions in shares, securities, debentures or mutual funds scheme etc. exceeds Rs. 25000/- during the calendar year.

4. It is clarified that since shares, securities, debentures etc. are treated as movable property for the purpose of Rule 18 (3) of the CCS [Conduct] Rules, 1964 if an individual transaction exceeds the amount prescribed in Rule 18(3), the intimation to the prescribed authority would still be necessary. The intimation prescribed in para 3 will be in addition to this, where cumulative transaction[s] i.e. sale, purchase or both in shares, securities, debentures or mutual funds etc. in a year exceed the limits indicated in para 3.

Ashish Davessar
Advocate, Jaipur
30761 Answers
971 Consultations

5.0 on 5.0

There is no absolute prohibition on investing in stocks however speculative trading is not allowed. As per CCS (Central Civil Services) conduct rules 1964, investments in shares, debentures and mutual funds can be made by the Government servant. However "frequent buying and selling" of these are considered as "speculation" and is banned. Also for transactions above certain value, the government officers have to inform prescribed authorities. Frequent is like brokers who are in this profession 24/7.

Prashant Nayak
Advocate, Mumbai
27224 Answers
88 Consultations

4.4 on 5.0

1. You can trade in share which will be considered as investment by the Income Tax Authority or your employer.

2. If you make short term capital gain by selling the shares within a one year, you shall have to pay STCG Tax and if it is held for more than one year then it will be treated as Long Term Capital Gain and shall be taxed accordingly.

3. So, even daily trading in share market is not illegal for Govt. Employees

Krishna Kishore Ganguly
Advocate, Kolkata
26602 Answers
726 Consultations

5.0 on 5.0

Share market trading activities are prohibited but investments are permitted.

Since you buy it now and sell it at the time when you get good price for your invested amount that will not come under trading.

Hence you can safely practice that kind of activity.

T Kalaiselvan
Advocate, Vellore
78050 Answers
1543 Consultations

5.0 on 5.0

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