1.1 million permanent account numbers (PAN) that the government deactivated last month, Income-tax (I-T) sources say a majority were duplicates and were being used to open share-trading and demat accounts, transact on the stock markets, and operate in shell firms. The I-T department has discovered one individual could have five to seven PAN cards, each with a slightly different spelling of the holder’s name.
According to I-T officials, such people, who have been identified as small- and medium-sized stock brokers, sub-brokers and their clients, have evaded taxes.They could have evaded so by using one card for filing tax returns, and others for investing in financial instruments or making high-value transactions, said a senior tax official.
High-value transactions of more than Rs 50,000 and above require PAN details. During demonetisation, PAN was required to be quoted in the case of cash deposits of more than Rs 2 lakh in savings accounts.Sources said that the tax department had used data analytics to track down evaders by collecting information such as common addresses, mobile numbers, and emails to establish the relationship among multiple PANs.
The exercise is continuing since Demonetisation, at the time of which the department matched the databases of third parties such as banks and financial institutions with its own database and other details like know your customer (KYC), Tax deducted at source (TDS), and payments made overseas. This is how it got a comprehensive profile of taxpayers. A senior tax official said the department identified the link between PAN holders through their business associations, assets and associated transactions, and compliance history in the various databases.
Markets have been on a downward spiral since August 2 when the Nifty50 hit a high of 10,137 levels in intra-day deals. Since then, the index has tanked nearly 4%, or around 400 points to 9,737 levels in intra-day deals on Friday.
The recent fall has been triggered by rising geopolitical tension across the globe – one, between India and China on the Doklam standoff, and two the developments with North Korea and the United States. That apart, Sebi’s order to ban trade in 331 suspectedshell companies also dented sentiment, as did sub-par second quarter results of select companies.
Given the developments, analysts say there could be more pain in store for the markets that have recently taken cognizance of the developing geopolitical situation. Though they do not wish to predict how deep and long this correction could last, experts do caution that the fall is beyond anyone’s control as it is driven by geopolitical reasons.
“Global events that are beyond market control have triggered the recently fall. If there is more action over the weekend, the markets will continue to fall in the coming week as well. A lot depends on the geopolitical front and to that extent predicting the road ahead for specific index levels is risky,” says Jayant Manglik, president retail distribution at Religare Securities.
Since its recent high on August 2,investor wealth as measured by market-capitalisation (market-cap) of the Nifty 50 companies till August 10 has dipped by over Rs 1,47,600 crore, ACE Equity data show.
In a bid to bring back some of the lost zing, the markets regulator, the Securities and Exchange Board of India (Sebi), is looking to extend the trading hours for the derivatives market. Sources said Sebi was considering if trading in index futures could be kept open even after the cash market closed. The move will provide investors the tool to price in news flow that comes after market hours.
Currently, a lot of foreign investors use global platforms such as the Singapore Stock Exchange (SGX) and the Chicago Mercantile Exchange (CME) — which offer almost round-the-clock trading on some Indian contracts — for trading or hedging their underlying exposure to Indian stocks.
“Extending derivatives market timing would be a great idea. Our market should be open whenever customers want it to remain open. Given the current setting, there is a crisis on the international competitiveness of the Indian exchanges.
A decade ago, nearly 100 per cent of the trading on Indian underlying used to take place domestically. Half of that has now gone to overseas locations. Our index, currency and interest rate derivatives are all getting traded overseas, which is a big problem. Extending timing is one element which can help us tackle this issue,” said Ajay Shah, senior fellow at the National Institute of Public Finance and Policy (NIPFP).