Capital markets regulator Securities and Exchange Board of India (Sebi) on Thursday cautioned investors against fraudulent notices being circulated in its name, demanding payment of Securities Transaction Tax (STT).
The regulator said it has come across instances where fraudsters are forging Sebi’s letterhead and sending fake communications asking investors to clear supposed outstanding STT dues.
“It has come to the notice of SEBI that certain fraudsters have circulated notices requiring compliance with Securities Transaction Tax (STT) under the Finance Act, 2004,” the regulator said in a statement, as per news agency PTI.
Sebi says it does not issue such notices
Sebi clarified that these notices have not been issued by the regulator and investors should not act on them.
“It is being informed that STT is levied on every purchase and sale transaction of securities executed on stock exchanges, and the tax is collected by the broker,” it said.
The regulator stressed that it does not send notices asking investors to remit STT payments. It also made it clear that it does not coordinate with the Reserve Bank of India (RBI) for the collection of such tax.
Sebi warned that fraudsters have been impersonating its officials and misusing its logo, seal and letterhead to mislead investors. According to the release, forged emails and notices have been sent in Sebi’s name, urging people to transfer money to fraudulent accounts, leading to financial losses.
“…the public is urged to exercise caution and verify the authenticity of letters/ notices demanding information or payment on behalf of Sebi,” the regulator said.
Advisory on fake ‘risk-free’ stock market schemes
In a separate advisory issued the same day, Sebi also warned investors about individuals and entities posing as account handlers or fund managers who promise risk-free returns in the stock market.
The regulator said such operators claim to offer portfolio or account handling services and often demand access to investors’ trading account credentials. They typically charge a share in the profits, while any losses are borne entirely by the investor.
Sebi pointed out that these entities are not registered with it and operate outside its regulatory framework. It advised investors not to trust claims of guaranteed profits and not to share their trading account details with anyone.
“Investors are advised to verify the status of registration of entities with Sebi… before investing and to carry out transactions only through authentic trading apps of Sebi-registered intermediaries,” the regulator said.
The market watchdog said the advisories are aimed at protecting investors from frauds and scams being carried out by unregulated entities.>
