Conversion of black money into white money has been in trend for big fish. We all have heard that accommodation entry is through unlisted entity either through equity or loan but when amount is in million, evaders use secure route and that route is, route of listed companies.
Middleman provide them a platform to buy stock at a cheap price and make a arrangement and increase the price of share. Once the price got increased and match the evader requirement, he exits by selling shares at high price. Though the transaction looks simple but high complexities are involved because it is regulated by SEBI. Somehow middlemen manage to route this transaction.
Why evaders choose to route their money through stock exchange? The answer is simple. it saves income tax once shares are sold at profit. Before 2017 long term capital gain (LTCG) was exempted and short term capital gain was taxable at the rate 15% which is quite nominal. after 2017 LTCGs are taxable at 10%. So evaders try to take benefit of lower rate of taxation.
You can see the screenshot of a penny stock company. The price was stable for few years and suddenly it took a jump. Price is 10 times high with no reason.