Can Government Employees Trade in Share Market?

Can Government Employees Trade in Share Market: If you are a government employee and whatever government job you have, there is a restriction that you can open your demat account in the share market but the investment you will make will be done only for the long-term. You cannot make any short-term investments. 

As a government employee, if you are in any job then you cannot do any kind of business with your job but after retirement, you can do any kind of investment activities. 

In this article, we will discuss whether a government employee can invest in the share market or do trading like intraday and f&o and what are the rules and regulations for them, we will also know today in this article. 

Can Government Employees Do Intraday Trading?

As per section 35(1) of the Central Civil Services (Conduct) Rules, 1964 provides that no Government employee, whether working for a union territory, state government, or the central government, shall engage in speculative investment such as intraday trading. 

And this rule also applies to crypto but government employees can do mutual funds, PPF, NPS and long-term investing, but you can’t participate in the IPO of the company in which you are an employee and are involved in decision-making. 

Apart from this, if you are involved in passing the tender of such a company, then you can’t invest in such a company. If any government employee does this, then he may face heavy penalties or may even have to lose his job.

India’s Prime Minister Narendra Modi also can’t do intraday trading and along with this, any government employee who works in any government sector can’t do intraday trading. The reason behind this is that the government officials know which sector will grow and which sector will decline.

Along with this, if any government official starts doing all these things, then his personal profit will be more and everyone else will have more loss. So to stop all these things, rules and regulations have been made here that no government employee can do intraday trading. [Can Government Employees Trade in Share Market]

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Can a Govt Employee Do F&O Trading?

35(1), it specifies that no government employee can speculate in F&O or any other kind of trading. Speculation means frequent purchase or sale of both shares and financial instruments. 

If you are repeatedly buying and selling any stock or index for quick profit that means if you are doing F&O trading, then according to the rules it’s not allowed which simply means no government employee can do F&O trading. 

The logic behind this rule is that trading is full-time work and if a government employee is doing F&O trading, then it may impact his official duties. [Can Government Employees Trade in Share Market]

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Can Wife of Govt Employee Do Trading?

According to the rules, neither any outsider nor his wife can trade on behalf of any government employee. That means if you have given your trading account to an outsider or your wife and she is investing from your account, then it’s not allowed at all. 

The reason for this is that all the investments made in this account are being made in your name and your own money is being invested in it. Hence if you suffer a loss in it, it will only make a difference to you and you will be financially as well as mentally influenced which may impact your official duties. [Can Government Employees Trade in Share Market]

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How Much Money Can a Government Employee Invest in Share Market?

Before 2019, the rule was that if you were group A & B officers and you had invested more than ₹50,000 in a calendar year, then you had to inform your department about it. 

Whereas if you are group C & D officers, then this limit for you was ₹25000 and if the investment was more than ₹25,000, you had to inform your department about it. 

But the government changed this 27-year-old rule in 2019 and all the government employees were kept in the same category. According to the new rule, if the total investment of an employee in a calendar year is more than his 6 months basic pay, then he has to inform your department in the specified proforma. 

For example, if your basic pay is ₹30,000, then your total basic pay for 6 months will be ₹1,80,000. If you make a total investment of more than ₹1,80,000 in one calendar year, then you will have to inform your department about it. 

Always remember that while calculating the value of total investment, you should include the combined value of all stocks, mutual funds, debentures, bonds, etc. Apart from this, also remember here that you have to calculate your total investment according to the calendar year, which means from 1st January to 31st December.

If you exceed the investment limit, you will have to inform your department about it in the specified proforma by 31st December. Apart from this, you will also have to specify in the proforma that you have arranged your funds for the investment made from your personal savings or from some other source. [Can Government Employees Trade in Share Market]

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Can Retired Govt Employees Trade in Share Market?

After retirement, no government employee has any kind of official responsibility, hence there is no restriction on them and they can trade as much as they want in the share market. 

But since the share market is very risky, my advice would be that if you are a senior citizen, then you can take advice from a trusted or experienced trader or advisor who understands your financial status and will guide you according to your expectations, needs and risk appetite. 

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Conclusion

In Conclusion, as a government employee, you can’t participate in any kind of trading activities which are considered strictly prohibited. 

However, if you want to invest in mutual funds or want to make long-term investments directly in equity or want to invest in any other long-term financial instrument like debentures, bonds, deposits, commercial papers, etc then there will be no restrictions on you. But your approach should be only for long-term investment and not for short-term trading. 

However, if government employees want, they can make occasional investments in the stock market. That means if you invest in the share market with a long-term view or do SIP in mutual funds, then it’s allowed and you can make this investment directly through the stockbroker. [Can Government Employees Trade in Share Market]

Many of you may be government employees who may have heard about these rules for the first time. But if you are already investing or trading in the stock market, then you may be wondering why you are not following these rules for so long. You have been trading since and you never even followed these rules and till date, you have not faced any kind of problem.

So, is it necessary to follow these rules? Central Civil Services Conduct Rules say that no government employee can do trading but our enforcement machinery is very weak. Rules have been made here but there is no one to see how well those rules are being followed. 

As long as this is going on, it’s going on like this, but the day this thing becomes strict, you may have to face problems, that’s why you should also follow all the rules and regulations on a safe site. I hope that from this article, all your doubts have been cleared. If you still have any questions, you can tell us by commenting below. 

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Can Government Employees Trade in Share Market (FAQs)

Q1. Can govt employee spouse do intraday trading in India?

Many people also ask the question whether a government employee can do intraday trading in the account of his/her spouse or family member? If you have opened a demat account in the name of your spouse, parents, siblings or any other relative and you are doing intraday trading in it, is it allowed?

So the answer is no, you can’t do this under the Central Civil Services (Conduct) Rule and the logic behind this rule is the same that intraday trading is full-time work and if a government employee is doing trading then whether he does it from his own account or from someone else’s account, it can affect his official duties.

Q2. Can an IAS officer invest in the stock market?

A member of an All India Service means that the Central Civil Service Conduct Rule does not apply to IAS, IPS and IFS officers and this rule also does not apply to those who have been excluded from this rule as per the orders of the President. So an IAS officer with proper information can invest in the stock market.

Q3. Are government employees allowed to invest in mutual funds?

There are many people who are in government jobs and wonder whether they can invest in mutual funds? Yes, a government employee is allowed to invest in mutual funds. 

Q4. Can a govt servant buy shares?

Central Civil Services (Conduct) Rules 1964, no Government servant can buy any kind of shares.

Q5. Can PSU Employees Do Intraday Trading?

No, PSU employees are prohibited from participating in speculative or intraday trading. Under the rules, you can’t engage in any short-term trading but can engage in long-term investments if you wish. 

Q6. Can a government employee have a demat account?

Everyone knows that any government employee can invest in the share market, if he does it for long-term purposes. However, by following the rules & regulations and with the restrictions, a government employee can have a demat account which is a requirement for investing in the share market.