High networth individuals who ‘buy’ loss/profit from friendly brokers to either suppress taxable income or convert black money into white, will find it difficult to do so, from August 1. This follows the new rules on modification of client codes (the client’s trading account number), effective from Monday. Under the new SEBI rule, brokers will be penalized 2% of the turnover value of the non-institutional trades done in the wrong account, if the turnover value of such trades exceeds 5% of the total monthly turnover value. For errors up to 5% of the total turnover value, the penalty is 1%
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