crack down on shell companies
The income tax (I-T) department and the Ministry of Corporate Affairs (MCA) have signed a pact to regularly share data, including PAN and audit reports of firms, to crack down on shell companies
Why?
The pact aims at curbing the menace of money laundering, black money, and misuse of corporate structure by shell companies
Automatic and Regular Exchange of Information
A memorandum of understanding for Automatic and Regular Exchange of Information was signed between the MCA and the Central Board of Direct Taxes (CBDT)
The MoU will ensure that both the MCA and the CBDT have seamless PAN-CIN (corporate identity number) and PAN-DIN(director identity number) linkage for regulatory purposes.
Under the pact, tax authorities will now relay audit reports of corporate entities and specific information from their I-T returns, along with PAN data, to the MCA.
Besides, financial statements filed by corporate entities with the Registrar of Companies, returns of allotment of shares, and statements of financial transactions received from banks will now be shared between the two departments.
A data-exchange steering grouphas also been constituted for the initiative.
The information shared will pertain to both Indian firms as well as foreign ones operating in India
The data will also be shared for the purpose of carrying out scrutiny, inspection, investigation and prosecution.
The MCA is in the process of cancelling the registration of 209,000 companies that have not been carrying out business activities for a long period.
Besides, banks have been asked to restrict operations of these companies’ bank accounts by their directors or their authorised representatives.
The income tax (I-T) department and the Ministry of Corporate Affairs (MCA) have signed a pact to regularly share data, including PAN and audit reports of firms, to crack down on shell companies
Why?
The pact aims at curbing the menace of money laundering, black money, and misuse of corporate structure by shell companies
Automatic and Regular Exchange of Information
A memorandum of understanding for Automatic and Regular Exchange of Information was signed between the MCA and the Central Board of Direct Taxes (CBDT)
The MoU will ensure that both the MCA and the CBDT have seamless PAN-CIN (corporate identity number) and PAN-DIN(director identity number) linkage for regulatory purposes.
Under the pact, tax authorities will now relay audit reports of corporate entities and specific information from their I-T returns, along with PAN data, to the MCA.
Besides, financial statements filed by corporate entities with the Registrar of Companies, returns of allotment of shares, and statements of financial transactions received from banks will now be shared between the two departments.
A data-exchange steering grouphas also been constituted for the initiative.
The information shared will pertain to both Indian firms as well as foreign ones operating in India
The data will also be shared for the purpose of carrying out scrutiny, inspection, investigation and prosecution.
The MCA is in the process of cancelling the registration of 209,000 companies that have not been carrying out business activities for a long period.
Besides, banks have been asked to restrict operations of these companies’ bank accounts by their directors or their authorised representatives.
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