Data pact targets shell firms
New Delhi, Sept. 14: A formal data sharing mechanism between the tax authorities and the corporate affairs ministry is now in place to crack down on shell companies.
The income tax department and the ministry of corporate affairs (MCA) have signed a pact to regularly share data, including PAN and audit reports of firms, the government said today.
The pact aims at curbing the menace of money laundering, black money and the misuse of corporate structure by shell companies, a finance ministry statement said.
The agreement for Automatic and Regular Exchange of Information was signed between the MCA and the Central Board of Direct Taxes (CBDT) on September 6 and took effect the same day, it said.
Under the pact, the tax authorities will now relay audit reports of corporate houses and specific information from their I-T returns along with PAN data to the MCA.
Besides, financial statements filed by firms with the Registrar of Companies, returns of allotment of shares and statement of financial transactions received from banks will now be shared between the two departments.
“A Data Exchange Steering Group has also been constituted for the initiative which will meet periodically to review the data exchange status and take steps to further improve the effectiveness of the two agencies,” it added.
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.
“The information shared will pertain to both Indian companies as well as foreign firms operating in India,” the statement said.
The data will also be shared for the purpose of carrying out scrutiny, inspection, investigation and prosecution.
The government has already said that over 1.06 lakh directors will be disqualified for their association with shell companies.
The MCA is in the process of cancelling the registration of 2.09 lakh 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.