(TH)
There have been instances wherein individuals and companies have managed to avail tax benefits from the Income Tax Department on the money paid to the Securities and Exchange Board of India (SEBI) to settle matters under the consent mechanism. Entities have shown the settlement amount paid to SEBI as a deductible business expense to lower their taxable income and thereby the tax liability.
Now, a panel set up by SEBI under the chairmanship of Supreme Court former Justice A.R. Dave to review the consent mechanism has highlighted this regulatory loophole and recommended that the markets watchdog take up the matter with the government.“It may be appropriate for the [SEBI] Board to write to the Central Government to request appropriate changes in the Income Tax Act, 1961, on the lines of the U.S. IRC (Internal Revenue Code) and explore seeking an undertaking, to be reproduced in settlement orders, in respect of non-tax reimbursements,” the panel stated in its report.
