India Denies Tax Raids On Stockbrokers

by Lorys Charalambous, Tax-News.com, Cyprus

23 February 2007

The Indian government has denied reports in the national media that tax officials have launched a series of raids on the offices of stockbroking and intermediary firms around the country.

“No searches are being conducted on stock brokers and other stock market intermediaries as erroneously reported in the media,” a Central Board of Direct Taxes (CBDT) spokesperson told reporters.

"The decision about any search operation against any party is taken by the field officers at the local level... and no directions are issued by the CBDT or government in this regard," he added.

However, government sources have confirmed that probes were carried out by tax investigators into other businesses and professions after the Indo Asian News Service reported on Thursday that the income tax department had carried out "massive" raids on the premises of major service providers, professionals, advertising agencies and builders nationwide.

"Raids are being carried out at premises owned or operated by doctors, advertising agencies, interior decorators, builders and other professionals and service providers in the city," a senior official from the Mumbai income tax department told IANS.

The reasons behind the raids by local tax officials are currently unclear, but it has been rumoured that any investigations into stockbrokers and other market intermediaries may be linked to the illegal sale of shares.

A statement issued by the Ministry of Finance also confirmed that there was "no truth" in the rumours that the government was coordinating a nationwide tax evasion crackdown against stockbrokers, although it did not explicitly deny that searches were being undertaken on other businesses.

"It is being reported in some sections of the media that nationwide searches are being conducted by the Income Tax Department on stock brokers and other stock market intermediaries," the ministry stated.

"There is no truth in such reports. There are no nationwide searches being conducted by the Income Tax Department. No searches are being conducted on stock brokers and other stock market intermediaries as erroneously reported in the media," the statement added.

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