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Saturday , 21 October 2017
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Government targets 7 lakh shell companies to eliminate black money

Taking its fight against black money to the next level, the government is planning to close down nearly 6-7 lakh shell companies. These are dormant companies and it has been noticed that tax evaders often use these companies to hide black money. Post the demonetization of Rs 500 and Rs 1000 currency notes, many of these companies had deposited huge amounts of cash and carried out high-value transactions. This has put them under the scanner of Income Tax authorities.

However, the task to weed out the shell companies will not be easy, as there are around 15 lakh registered companies in India. The companies suspected of hiding black money constitute around 40% of the total registered companies in the country. Due to the massive effort involved in cleansing the system, the government has sought help of multiple agencies. Leading the way is the Central Board of Direct Taxes (CBDT). As per a senior CBDT official, they have gathered information about companies that have made high-value transactions post demonetization.

Many of these companies have not filed their annual returns with the Registrar of Companies (RoC). If these companies are effectively targeted, it would mark the end of institutional money laundering in the country.

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