I-T probe into claims of capital gains, losses by stockbrokers

The Union Budget 2003 had exempted capital gains arising from shares which make up the BSE-500 index and purchased after 1 March 2003 and sold after holding the same for a period of 12 months or more to claim exemption from payment of capital gains tax.

Senior I-T officials says the department will ask the brokers to produce the exact details of the transaction, including date, the exact quantity of shares bought and sold or vice versa to get any tax benefits under Section 143 (3) of the I-T Act. The officials also indicated that they suspect a number of brokers take accommodation bills of short-term losses to offset short-term gains.

This is despite the fact that all the stock exchanges gave undertakings to the Securities and Exchange Board of India that only the software approved by the market regulator will be used for transactions, including details of client code.

This will make it very difficult for the brokers to procure such bills on the basis of reported transactions. However, in a number of cases, the brokers circumvent the provisions and rely on bills, which are not reported on the exchanges.

The I-T department has also started examining call transactions of the current month in the derivatives segment. It suspects these transactions may be accommodation transactions between two parties and claiming false capital gain or loss.