Shell companies to be closed?

New Delhi Sept 15: In a move to curb black money and prevent money laundering the ministry of corporate affairs (MCA) and the Central Board of Direct Taxes have signed a pact to share the information mutually.

The information such as tax returns, permanent account number (PAN) and financial statements of companies will be shared on an automatic and regular basis. Information related to both Indian and foreign companies operating in India, any information available in the respective databases, if required, for the purpose of scrutiny, inspection, investigation, and prosecution will also be shared.

Additional information such as Financial statements filed by corporate entities with the Registrar of Companies, returns of allotment of shares and statement of financial transactions received from banks will be exchanged upon request.

Experts say that the agreement will play a key role in prevention in the formation of shell companies because any suspicious activity /transactions can be traced using big data analytics and real time information available.

currently, these companies evade taxes and convert black money into white by not filing returns or submitting fake accounts or duplicate PAN cards or misreporting the income generated from penny stocks.