Sebi keeping tabs on exchange misuse for tax evasion: Sinha
New Delhi: Market regulator Securities and Exchange Board of India (Sebi) has asked bourses to take immediate action against entities involved in misuse of stock exchange system for tax evasion, Parliament was told Friday.
Preliminary enquiries conducted by the regulator in the recent past, inter alia, indicate that certain persons/companies acting in concert with each other have misused the stock exchange system to generate fictitious long-term capital gains, Minister of State for Finance Jayant Sinha said in the Lok Sabha.
Prima-facie, this has been done to evade tax on otherwise taxable income, he said, adding appropriate action in such cases has been taken.
“Besides, Sebi has advised the stock exchanges to keep constant and strict vigil on persons/companies which are involved in such misuse of the stock exchange mechanism for tax evasion and take immediate action,” Sinha added in the written reply.
BSE, through a notice on January 1, suspended trading in 22 companies.
In another reply, Sinha said that in 2013-14, Sebi passed orders against 19 entities for carrying out collective investment schemes (CIS) without obtaining the certificate of registration while the number was four each in the previous two fiscals.
In 2013-14, Sebi had completed 73 investigations pertaining to market manipulation and price rigging while it was 41 in the previous year. It also completed investigations in 13 cases of insider trading in 2013-14.
Sinha further said Sebi has been undertaking various activities for the protection of interest of investors, which include conducting regional seminars and investor awareness programmes.
To a question related to irregularities in mutual funds, Sinha said that in 2015-16 (up to April 30), one deficiency letter was issued by the market regulator while the number was 56 and 19 in the previous two fiscals, respectively.
In 2014-15, 49 warning letters were issued against mutual funds as against 48 in the previous year.
