Shell cos crackdown: Govt removes exemptions from ITR filing
NEW DELHI: Seeking to crack down on shell companies, the government has proposed to remove exemption available to firms with a tax liability of up to Rs 3,000 from filing I-T returns beginning next fiscal.
The Union Budget 2018-19 has rationalised the I-T Act provision relating to prosecution for failure to furnish returns.
Thus, a managing director or a director in charge of the company during a particular financial year could be liable for prosecution in case of any lapse in filing I-T returns for any financial year beginning April 1.
“The income tax departments would now track investments by these companies. Also, the focus will be on those firms that show less profit and also those who file I-T returns for the first time,” a senior finance ministry official said.
There are around 12 lakh active companies in the country, out of which about 7 lakh are filing their returns, including the annual audited report, with the ministry of corporate affairs.
Of this, about 3 lakh companies show ‘nil’ income.
The Section 276CC of the Income Tax Act provided that if a person wilfully fails to furnish in due time the return of income, he shall be punishable with imprisonment and fine.
However, no prosecution could be initiated if the tax liability of an assessee does not exceed Rs 3,000.
The government has amended the provision with effect from April 1, 2018, and removed the exemption available to companies.
“In order to prevent abuse of the said proviso by shell companies or by companies holding benami properties, it is proposed to amend the provisions... so as to provide that the said sub-clause shall not apply in respect of a company,” it said.