In a recent decision, the Securities Appellate Tribunal (SAT) ruled that income tax paid on unlawful gains cannot be used to offset disgorgement orders imposed by the Securities and Exchange Board of India (SEBI). The ruling highlights that tax obligations and regulatory penalties serve different purposes and must be treated separately. This clarification strengthens SEBI's enforcement framework by ensuring that entities cannot reduce their disgorgement liabilities by claiming tax payments on the same gains. The decision underscores the importance of compliance with market regulations and the distinct roles of tax authorities and market regulators in India. SAT says income tax paid on unlawful gains cannot offset SEBI disgorgement.