PAN made sole ID number for transactions in securities market: MoS
Published: Aug 11, 2018
By TIOLCORPLAWS News Service
NEW DELHI, AUG 11, 2018: The MoS for Finance Mr Shiv Pratap Shukla, had stated in Parliament that the Securities and Exchange Board of India (SEBI), vide circular dated April 27, 2007, had mandated that PAN would be the sole identification number for all participants transacting in the securities market, irrespective of the amount of transaction.
Schedule VII of the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 states that for registration of transfer of securities, the transferee(s) as well as transferor(s) should furnish a copy of their PAN card to the listed entity. It also states that for securities market transactions and for off-market or private transactions involving transfer of shares in physical form, the transferee(s) as well as transferor(s) should furnish copy of PAN card to the listed entity.
To regulate transactions between clients and brokers, SEBI had mandated that the Brokers and sub-brokers should not accept cash from the client for purchase of securities and/or give cash against sale of securities to the clients. Further, it had been mandated that all payments should be received or made by the stock brokers from/to the clients strictly by account payee crossed cheques/ demand drafts or by way of direct credit into the bank account through electronic fund transfer, or any other mode permitted by the Reserve Bank of India. In the case of securities also, giving/taking delivery of securities in "demat mode" should be directly to/from the "beneficiary accounts" of the clients except delivery of securities to a recognized entity under the approved scheme of the stock exchange and/or SEBI.
Further, SEBI had brought to the notice of registered market intermediaries the various notifications issued by the Govt of India on Prevention of Money Laundering Rules, relating to making Aadhaar number issued by the Unique Identification Authority of India (UIDAI) and Permanent Account Number (PAN) or Form No. 60, as defined in Income Tax Rules, 1962 mandatory for both new and existing accounts with financial market intermediaries including securities market intermediaries.
SEBI had further clarified in the circular that in case PAN is not submitted by any client at the time of opening of account based relationship, one certified copy of an "officially valid document" (OVD) should be submitted. However, for securities market, in terms of SEBI circular dated April 27, 2007, the requirement of PAN would continue to be mandatory for completing the KYC process.
Moreover, SEBI registered intermediaries are required to follow stringent KYC norms on an ongoing basis and are also required to file Suspicious Transaction Reports (STRs) to the Financial Intelligence Unit (FIU) in case of suspicious activities of their clients.
Appropriate action against evasion of taxes and black money, including against cases involving black money investments, is an on-going process. Such action under direct tax laws includes searches, surveys, enquiries, assessment of income, levy of taxes and penalties and filing of prosecution complaints in criminal courts, wherever applicable. The Income-tax Department does not maintain sector-wise details of the searches conducted.
