BREAKING NEWS: The CBDT (Central Board of Direct Taxes) Chief has announced that the shell companies would be removed from the website of MCA (Ministry of Current Affairs) with an aim to curb corruption and black money. Strict actions are taken against such uncertain companies and firms.
The Indian Government with the pledge to fight Black Money and Corruption has involved oneself in the move to abolish all the dormant sources, particularly the Shell Companies and other illegal and illicit sources.
These companies had managed to escape around with huge cash after the demonetization drive, during the two months when the mass was permitted to deposit their old 500 and 1,000 notes. The Central Board of Direct Taxes (CBDT) confirmed that within the country, about 15 lakh companies are registered, and cleansing the shell companies, which is more than 40% of the total, is a tedious task.
Several measures are being taken to check if an operating firm is legal or if it is a shell company. The CBDT department has issued several teams and committees for such monitoring purposes. The CBDT has even stated that if 6-7 lakh companies are unregistered, then the complete ‘Black Money Scandal’ could be given a halt.
What is Shell Company ?
To define, a shell corporation is a firm without active part in business operations. These types of corporations are not necessarily illegal, but they are sometimes used for illegal works, such as to masquerade business possession from enforcement of law or the public mass. This particularly helps to relax a corporation of the heavy levying of taxes.
A committee comprising of members of various regulatory ministries has been set up under revenue secretary, Hasmukh Adhia, and corporate affairs secretary, Tapan Ray to observe action taken against shell companies.
According to sources, each and every firm and company are under their vigilance, and if any such illegal company exists, the person responsible should inform them otherwise strict actions are to be taken against their illegitimate deeds.
The ‘Demonetisation Drive’ led by the Namo Government on November 8, 2016, was a step towards deriving illicit cash from such fraud and illegal companies. Some sources have claimed that about 3,900 crores of rupees have been cleansed off from such illegal and fraud shell companies, being operated by various business firms.
The Finance Ministry are also known to have set some guidelines regarding the illicit deeds of shell companies which show income out of India, but the actual business is within India. According to the norms, a company or firm is permitted to be engaged in business outside India if the income is not greater than 50% of the total income generated. The company should have less than 50% of the total assets in India. Also, less than 50% of hired employees should be a resident of India or permanently situated in India.