Skip to main content

Sebi ups vigil on tax evasion attempts

By
As the current financial year nears its end, the Securities and Exchange Board of India (Sebi) has stepped up its surveillance to check tax evasion attempts through ‘arbitrage’ and bogus losses using stocks and mutual fund investments.
Towards the end of every financial year, the manipulators tend to devise new ways of tax evasion, including incurring ‘losses’ from stock market trades and offsetting that against their capital gains booked earlier in the financial year.
Besides, there are also attempts to make temporary investments in mutual funds and other financial instruments providing tax benefits towards the end of a financial year, which get re-routed back to the investors soon after the new fiscal begins, a senior official said.
Sebi has also stepped up its vigil against illicit 'arbitrage' through derivatives trading from offshore locations, as also for any misuse of 'client code modifications', he added.
The regulator has already clamped down on a number of high-profile cases following such a modus-operandi in the past while it is now also concerned about the misuse of mutual fund platforms for tax evasion attempts in fiscal-end periods.
The Securities and Exchange Board of India (Sebi) is already investigating some suspected cases of tax evasion by way of 'arbitrage' between bogus losses shown in the Indian market and the 'gains' at offshore locations.
Such arbitrage could have taken place through trades in currency as well as equity derivatives, sources said, while adding that the modus-operandi typically involved payments being made for 'bogus losses' in Indian markets and 'huge profits' at overseas locations.
With regard to the client code modifications, several cases had come under the Sebi's scanner that took place between 2009 and 2011 after which the regulator tightened its norms to check such manipulations.
Before tightening of the norms, the Indian markets saw client code modifications to the tune of Rs 50,000-60,000 crore a month, which came down to just about Rs 100 crore soon after Sebi's action.
This is believed to have further come down, sources said, while adding this shows that a large-scale manipulation was taking place where brokers were making changes in the client details after execution of trades citing 'genuine errors'.
Modification of the client codes is a practice under which brokers change client details in sale and purchase orders of securities after the trades are conducted. While it is legally permitted to rectify inadvertent errors in punching the orders, there were concerns that such modifications could be misused for manipulative activity in the market.
An earlier probe also showed that the quantum of such modifications was much higher in March compared with the other months, which hinted at the tax evasion angle as it's the last month of the fiscal.
Business Standard, New Delhi, 8th Feb. 2016

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more