Local tax evaders using commodity mkts for fake gain/loss?

Moneycontrol Bureau

It appears that high networth individuals (HNIs) who till last year used to evade tax by 'buying' loss/profit from friendly stock brokers, are now using the commodity markets for such transactions. Fake profit/loss transactions help HNIs either suppress taxable income or convert black money into white.
A report in the Business Standard newspaper says that the Income-Tax department has sought details of client code modifications (CCM) done by brokers on commodity futures exchanges. The report has quoted Anurag Srivastava, Director General (investigation) as confirming the development.
Exchanges allow brokers to change client codes at the end of the trading session, to rectify errors caused by booking the trades in the wrong account. However, this facility is believed to be widely misused by brokers, who help clients generate artificial profits/losses by transferring trades between different accounts.
Till July last year, this practice was rampant on the stock exchanges, and there were certain broking houses which specialized in such services.
However, the Securities and Exchange Board of India clamped on the practice by imposing a stiff penalty for modifying client codes. In a matter of months, the instances of client code modification dropped dramatically.
The FMC had imposed a 1% penalty on CCM in October last year. Forward Markets Commission chairman Ramesh Abhishek was recently quoted in The Economic Times as saying that instances of CCM have fallen sharply since the penalty was introduced.