I-T department probes unlisted share transactions, potential tax evasion in OFS deals: Report

Tax

The income tax (I-T) department is investigating suspect transactions in which promoters, their associates and anchor investors bought unlisted shares of companies and then offloaded through offer for sale (OFS) when the firms went public, The Economic Times has reported.

The department's investigation wing has sent out several notices over the past 10 days, interrogating investors in multiple cities about how they calculated the cost of acquiring the unlisted shares and the subsequent gains they made during the OFS.

The notices pertain to investors who subscribed to unlisted shares of companies which were later listed between early 2018 and July 2024, the report said.

The tax office suspects that several investors pegged unacceptably high fair market value (FMV) for the stock purchase instead of the actual outgo in order to lower capital gains and tax numbers, the report cited sources as saying.

Moneycontrol couldn't verify the report independently.

Along with the possible tax evasion, the department may also look into the source of the funds used in the deals, the sources said.

Some of the companies which are under the lens have also been asked to share the names of the investors and dates when the subscription amounts were paid, the report said. The tax officers may also investigate whether some of these were back-to-back “cash-against- cheque” transactions.

"If it is found that the investor never really had the wherewithal to make the investment, it could well be a benami transaction," the report quoted a source as saying.

As part of an OFS, promoters and other investors of a company can sell a part of their stake directly to the public.