More steps to track shell firms
New Delhi: The government has proposed to remove exemptions available to firms with a tax liability of up to Rs 3,000 beginning next fiscal.
In a move to crack down on shell entities, firms with lower tax liabilities will also have to file returns.
Budget 2018-19 has also rationalised the income tax 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.
"The income tax departments will 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 file their returns, including annual audited report, with the ministry of corporate affairs. Of this, about 3 lakh companies show "nil" income.
Section 276CC of the income tax act provides that if a person wilfully fails to furnish in time the return of income, he shall be punished with imprisonment and fine. However, no prosecution can be initiated if the tax liability does not exceed Rs 3,000.
The government has now amended this provision with effect from April 1, 2018 and has removed the exemption available to companies.
"To prevent abuse of the said proviso by shell firm 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 to a company," it said. PTI