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The Securities and Exchange Board of India is keen to curb the practice of some companies using the stock exchange system to convert their unaccounted income (black money) into accounted money.
For this purpose, SEBI has advised stock exchanges to keep a ‘constant and strict vigil’ on companies, Parliament was informed on Tuesday.
In its preliminary enquiries, SEBI has prima facie observed that companies acting in concert with each other had misused the stock exchange system to generate fictitious long-term capital gains, which is tax exempt. These companies have indulged in these activities to evade tax.
SEBI has advised stock exchanges to keep constant and strict vigil on companies that are involved in such misuse of the stock exchange mechanism for tax evasion and take immediate action, Jayant Sinha, Minister of State for Finance, said in a written reply.
The regulator has already passed orders in three cases — Moryo Industries, First Financial Services and Radford Global.
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