LIVEMINT.COM MINT MONEY ThursDAy, 31 AugusT 2023 NeW Delhi 11 ment of the DVRs. However, the capital loss cannot be set off against the dividend but only against other capital gains. Why is there such an unfair tax treatment to DVR sharehold- ers? It appears that corporate laws did not leave much choice to the company which wanted to discontinue the DVR shares as their purpose was not being achieved. It appears that corporate A large listed company recently announced that it would cancel the equity shares with differential voting rights (DVRs)that it had issued and instead allot a lesser number of ordinary equity shares to the DVR shareholders. This exchange is being achieved through a restructuring scheme being filed before the National Company Law Tribunal (NCLT) under the Companies Act, 2013. One would have expected that there would be no tax on such exchange of one type of shares of a company for another type of shares of the same company, like in the case of conversion of pref- erence shares into equity shares, which is exempt. In fact, there Remember, your credit score will not change over- night. Once the changes are made, it may take some time before the improved credit score starts to reflect. Given the importance of credit score, it is important that such discrepancies are not ignored. A bad credit score can make it difficult for you to get loans at favourable terms in the future. A good credit score shows the creditworthiness of an individual and is an impor- tant factor in determining one’s loan eligibility. Raj Khosla is founder and managing director of MyMon- eyMantra.com Cibil will correct the mistake in its own records. If the dispute is resolved in your favour, the necessary changes will be made in your credit report and Cibil will send you a revised credit report. If the lender does not agree with your dispute, the details in your credit report and the credit score will remain as they are. In such a case, you might have to get in touch with your bank or len- der directly and provide them with proof of your timely loan repayments. If you are not satisfied with the resolution or if you do not get a response within 30 days, you can follow-up and approach Cibil again to esca- late the matter. MINT * MUTUAL FUND SCHEMES TO INVEST IN Compiled by Neil Borate Data and analysis by CRISIL Research Returns as on 28 August 2023; Corpus data as of July 2023; Growth option in regular plans has been used *Debt funds can be viewed in the full table online Absolute returns E Q U I T Y UTI Nifty Index Fund - Growth HDFC Index Fund - Nifty 50 Plan Category average LARGE CAP 3-years return (%) Corpus (₹ cr) 5-years return (%) Axis Midcap SBI Small Cap Category average Midcap Category average Smallcap Canara Robeco Equity Tax Saver Mirae Asset Tax Saver Category average We have hand-picked 20 mutual funds for your portfolio that have jumped through hoops of good returns, low risk, good portfolio hygiene and our own qualitative research. We have restricted the choice universe to 10 categories out of the total 37 and given you at least two options to pick from each. Edelweiss Balanced Advantage ICICI Prudential Balanced Advantage Category average H Y B R I D Kotak Equity Arbitrage Tata Arbitrage Category average BHARAT Bond ETF - April 2031 Motilal Oswal S&P 500 Index Fund O U T O F T HE BOX Returns since launch Date of launch Corpus (₹ cr) Canara Robeco Flexi Cap Parag Parikh Flexi Cap Category average EQUITY FLEXICAP EQUITY SMALL AND MIDCAP EQUITY TAXSAVER ARBITRAGE BALANCED ADVANTAGE 12,048 9,395 22,178 20,018 5,979 17,419 9,458 48,721 23,737 6,955 12,997 2,919 10,218 39,848 20 4.89 5.22 4.63 NA 4.57 4.82 21.99 15.21 30.20 18.64 27.23 15.41 34.38 18.23 19.42 11.41 19.24 11.19 18.97 11.05 18.63 12.63 21.41 17.08 20.34 12.06 4.70 23 Jul 2020 16.09 28 Apr 2020 21.27 13.74 22.02 14.74 21.38 12.03 13.87 10.41 13.57 10.55 12.75 9.40 Neil Borate & Sashind Ningthoukhonjam neil.b@livemint.com F influencers are back in action, with fake screenshots, tele- gram channels and even men- torship. Ask Mayank Saw, a commerce student from Dhanbad in Jharkhand. Saw spent 14 months trying to time the market but was unsuccessful. Frustrated, he turned to Youtube videos to check if he could get any leads. That’s when he stumbled on a video posted there by Abhishek Kar, showcasing screenshots of the lakhs of rupees in profits that he had made by trading in derivatives. Saw was impressed and bought a pass to Kar’s premium Telegram chan- nel by paying ₹17,049. The payment was done through Rigi, an app made for creators to sell their financial courses and Telegram channels. These chan- nels came out with recommendations or stock tips for subscribers on buy and sell options daily. Saw, however made a minor loss in the market based on these calls and thereafter ‘muted’ the channel, preferring to rely on his own research for stock trading. Kar, meanwhile, is being called out on social media for putting up fake trading screenshots to lure people into joining his paid courses and telegram channels. His actual income statement that got leaked on social media showed a loss of ₹1.07 crore made by trading in derivatives from FY21 to FY22. Another trader, ‘Ghanshyam Tech’, was also questioned on social media for putting up fake trading videos. What gave the game away was a video of him claiming to book profits when his con- sole showed ‘buy’ and not sell orders. In another instance, he was accused of showing only profitable trades in a par- ticular account and hiding losses from other accounts. Another video surfaced of him where he attached his verified P&L (profit and loss) statement in You- tube description which showed ₹72 lakh in losses from 1 April to 30 Sep- tember 2021. These videos were promptly deleted. In his response, Kar told Mint that he has been vocal about his losses quite often and that people did not subscribe to his course due to profit screenshots but for his knowledge. “My intent has always been educational. I have been wrongly accused with misinterpreta- tion of facts.” said Kar. As for the Tele- gram channel, he said, “No buy or sell recommendations were provided, it’s just a conspiracy. There were even dis- claimers put up in this regard at the time of downloading access to the Tele- gram channel.” Ghanshyam Tech did not respond to Mint ’s queries. Affiliate Links The phenomenon of fake trading screenshots and fake trading videos (sometimes generated from apps that clone those of brokers like Zerodha) stems from the rapid growth of finan- cial influencers or ‘finfluencers’ in India’s social media space. Finfluencers who are able to garner large followings through such screenshots receive reve- nue from affiliate links or marketing links provided by the brokers. Such social media finfluencers also up-sell trading ‘courses’ to their followers. “Today it may be Ghanshyam or Abhishek Kar, tomorrow it could be someone else,” said Bandi Shreyas, a Bengaluru-based trader who has been vocal about finfluencer malpractices on social media. “The problem is not a minimum ticket size of ₹1 crore. It had declined a client’s request to manage money (in 2022) because of a staff shortage. “We will get back to you regarding this query. Kindly note that the minimum capital to avail our PMS services is INR 1 Crore. If you can man- age to get that capital, we can set up a phone call with our Operations Man- ager Mr. Sharath,” said the email. PR Sundar, in his response to queries by Mint , said, “I do not have any license for PMS or AIF. However, I am running a mentorship program where people stay with me for sometime to learn trading and they trade themselves.” He added, “Probably my office people did not know the difference and might have loosely used the word PMS instead of Mentorship. I regret the mis- take done by my office.” There is another way to transfer money: through illiquid options. They target illiquid stock options where there’s little to no oversight. For instance, if an option’s fair value is ₹100, they would place an order for ₹200 using the customer’s account. Then, they place a matching sell order from their own account, pocketing the profit discreetly. This tactic allows them to exploit unsus- pecting customers who are unaware of the true nature of their losses. Sebi has proposed a consultation paper that would stop regulated inter- mediaries from partnering with finflu- encers. This would also affect the affili- ate link model. Akshat Rohatgi contributed to this story. (For an extended version of this story, go to livemint.com) How finfluencers use fake screenshots to run scams Stock tips on Telegram channels offer ‘support and resistance’ instead of ‘buy and sell’ options Finfluencer models: These are some of the routes used by finfluencers to extract money from followers Display fake screenshot Posts of rich lifestyle/expensive cars Offer followers membership of Telegram channel Membership conditional on using affiliate link to trade Stock tips in the name of mentorship/education Himanshu Garg, 23 Model 1 Enroll as Authorized Person (AP) with broker Build follower base through click-bait Broker gives dashboard Track commissions through dashboard Take cut of commissions Model 2 Enroll as Authorized Person (AP) with broker Take log-in credentials of clients Carry out illegal investment advisory/PMS Siphon off money through illiquid/manipulated trades Completed graduation from IITM, Allahabad I joined his premium Telegram channel and quickly realized that he was giving buy and sell tips on Nifty and Banknifty options without any analysis. I was not able to crack the market even after trading for 14 months, and seeing his P&L screenshot, I used to think: why am I not able to do that? Apart for these, most finfluencers offer paid courses Amount spent: ₹12,000 for 1 year to private Telegram channel Trainer: Abhishek Kar Mayank Saw, 20 Completed BBA from Amity University, Jharkhand. Amount spent: ₹6,700 for 1 year to private Telegram channel & ₹10,349 for lifetime access Trainer: Abhishek Kar Model 3 How finfluencers game the system How P&L can be gamed Showing P&L through different accounts on different days Fake screenshots Clone apps As per Ashish Nanda of Kotak Securities: BROKER cannot access trade done with other brokers WHERE portfolio gets transferred from another DP, broker cannot access cost price VERIFICATION is partial, but gullible clients may not understand it VERIFICATION could be misleading I do not have any license for PMS or AIF. Probably my office people might have loosely used the word PMS instead of Mentorship. I regret the mistake made by my office. PR SUNDAR Director, Mansun Consultancy Pvt Ltd Trader-finfluencer in the spotlight GHANSHYAM TECH 1.4 million Youtube Subscribers ABHISHEK KAR 828,000 subscribers the individuals. It is the system of affili- ate links that incentivizes traders to share such screenshots.” Shreyas said that finfluencer-traders earn huge commissions through such links. Often, they ask subscribers to start a brokerage account vide the affil- iate link—a precondition to joining their telegram channel or paid courses. For instance, Saw said Kar was offering a basic paid course for free to anyone who opened a brokerage account through his affiliate link with broker Dhan. Shreyas, said that providing tips through telegram channels allowed finfluencers to carry out de-facto investment advi- sory. “Tips groups are run in the name of mentor- ship/ education; many of them are on a platform called Rigi,” he said. To be sure, after market regulator Sebi started clamping down on unreg- istered entities giving stock tips, many finfluencer-trader changed their modus operandi and started giving indirect tips. This they did by switching the words ‘buy’ and ‘sell’ with ‘support’ and ‘resistance’ or show people what they bought and sold without explicitly telling them to do the same. For instance, Kar sent support and resistance levels daily to his Tele- gram subscribers. In response to a Mint query, Rigi said: “In our public declaration dated 29th May, we have unequivocally dis- tanced ourselves from people who use our tools to provide unregulated stock advisory. As a commitment to main- taining a trusted platform, Rigi has introduced self-imposed regulations for finfluencers, thereby becoming the first platform in India to take such a massive step. Despite potential busi- ness implications, we recognize the broader responsibility of ensuring that our platform isn’t misused for unregis- tered stock advisories.” Unregistered PMS Another problem is that of autho- rized persons, or APs, managing client money in a structure akin to a portfolio management services (PMS) but with- out a Sebi license. Sub-brokers or APs would get people to open an account with them and get a dashboard where they can control the trades of affiliates. Some of them would then go on to make informal contracts with the sub-broking clients to manage their money. According to insiders Mint reached out to, these unregulated PMS managers would charge 30-70% of the profits earned from clients. That’s the average indus- try standard. “These people (sub-bro- kers) earn money regardless of what happens to the trade as they are enti- tled to their brokerage commissions,” said Shreyas. Clients pay this profit sharing amount either in cash or as consultancy charges. ”Clients who are unhappy can’t approach courts as this is an informal arrangement.” According to an email accessed by Mint , PR Sundar’s Mansum Consult- ancy was seen offering such a PMS with Finfluencers also earn huge commissions from subscribers by promoting affiliate links of brokers Raj Khosla I recently found my Cibil (Credit Information Bureau-India) score was much lower than what I expected it to be. Could it be because of an error made by my bank in reporting my timely repayments on my home loan? How can I rec- tify any discrepancy in my Cibil score, especially when the lapse is by the bank in reporting of my timely loan repayments? — Name withheld on request In the case of a discrepancy or dispute with your Cibil score, especially due to lapses made by the bank in reporting your timely loan repayments, you can take the following steps: To begin with, fill the dis- pute form. You can do this online on the Cibil website. You need to provide all the necessary details and clearly explain the discrepancy. You can also attach supporting documents if you have any. Make sure to keep a copy of this dispute form for your own records, in case you need to furnish it in the future. After you’ve filed the dis- pute, Cibil will investigate to validate your claim with the concerned lender. The lender is given 30 days to respond to your dispute. If the bank agrees that there was an error, m ASK MINT L O A N Do you have a personal finance query? Send in your queries at mintmoney@livemint.com and get them answered by industry experts. How can I get the discrepancy in my Cibil score rectified? laws do not permit such equity shares with DVRs to be directly converted into ordinary equity shares, in which case the conver- sion would have been tax neutral. This perhaps is a lacuna in our corporate law. If preference shares and even debentures or bonds can be converted into equity shares, why can one class of equity shares not be converted into another class of equity shares? In this case, the shareholders are not really disposing of their DVR shares— they are merely getting equivalent value in ordinary equity shares. Why should they be taxed, and again, on the entire reduction proceeds as regular income, not only on the appreciation as capital gains? This is a classic case of a disconnect between corporate laws and tax laws, resulting in a negative outcome for the shareholding public. Per- haps, a relook is required to see whether our corporate laws and tax laws are in sync in treatment of various types of corporate restructuring, so as to facilitate such restructuring, rather than deter it. Gautam Nayak is partner at CNK & Associates LLP. is a provision in the tax laws that permit a conversion of one kind of shares into another kind. Indirectly, this means that such con- version is exempt. However, the said company has also announced that the entire cancellation value of the DVRs would be taxed as dividend income in the hands of the shareholders, and that it would be accordingly deducting tax at source on such amount. This is on account of the fact that the DVR shares would not be automati- cally converted into equity shares, but would be cancelled through reduction of capital, and fresh ordinary equity shares allotted to the DVR shareholders out of the capital reduction pro- ceeds. In case of reduction of capital, to the extent that the company possesses accumulated profits, the payout is regarded as dividend under tax laws. So long as the total accumulated profits are more than the amount being paid towards capital reduction, the amount is taxable as dividend—irrespective of the price at which the shares were issued, whether it was repayment of capital or not, and irrespective of the cost at which the shareholder had acquired the shares. This seems highly unfair to the DVR shareholders, who would be taxed on the amount of capital reduction proceeds, though they may be able to claim a capital loss on account of extinguish- HOW CORPORATE LAWS HAMPER TAX NEUTRALITY ON RESTRUCTURING OF SHARES Corporate laws do not permit DVR shares to be directly converted into equity shares B E Y O N D T H E T A X B O O K G A U T A M N A Y A K We welcome your comments at: mintmoney@livemint.com https://snapfrom.com/ https://instagramvideodownloader.net/ https://instadl.app/ https://instadownload.app/ https://saveig.net/ https://instastoryviewer.net/