Companies won’t have ITR waiver

New Delhi, Feb. 12: Seeking to crackdown on shell companies, the government has proposed to remove exemption available to firms with tax liability of up to ` 3,000 from filing income- tax returns beginning next fiscal.

The Union Budget 201819 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 income- tax returns for any financial year beginning April 1.

“The income- tax departments would now track investments by these companies. The focus will be on those firms that show less profit and also those who file I- T returns for the first time,” a 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 annual audited report, with the ministry of corporate affairs. Of this, about three 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 ` 3,000.

The government has amended the provision with effect from April 1, 2018 and removed the exemption available to companies.

The official said that as many as 5 lakh are companies not filing returns and they could be a potential source of money laundering.

THE CENTRE seeks to remove a clause that allows companies, having less than 3,000 tax liability, to escape prosecution for not filing I- T returns.

NOW MD or director in- charge of company could be prosecuted.