Chinmaya IAS Academy – Current Affairs Chinmaya IAS Academy – Current Affairs
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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.
‘Intent matters’
“If the intent of settlement is merely to avoid any undue hardships and buy peace, without the taxpayer being convicted for any offence/wrong-doing or criminal/civil violation, then such payment may not classify as a penalty. Deeming such payment as a penalty will deter the taxpayer from taking benefit of the settlement procedures prescribed b y SEBI,” Mr. Mehta added. Between 2014-15 and 2017-18, SEBI disposed of 378 matters under the consent mechanism, which was introduced in 2007.
