Shell companies crackdown: MCA to nail several accounts, take stern action

The Serious Fraud Investigation Office has also started probe into a few cases related to these companies.

New Delhi: Seeking to crackdown on shell companies, the ministry of corporate affairs (MCA) will take stern action against several people associated with this company, sources have told Zee Media.

Sources have further said that the MCA has recieved details of transactions of various shell companies.

Shell companies are characterised by nominal paid-up capital, high reserves and surplus on account of receipt of high share premium, investment in unlisted companies, no dividend income and high cash in hand. Also, private companies as majority shareholders, low turnover and operating income, nominal expenses, nominal statutory payments and stock in trade, minimum fixed asset are some of the other characteristics.

The Serious Fraud Investigation Office (SFIO) has also started probe into a few cases related to these companies.

To recall, the government on Monday proposed to remove exemption available to firms with tax liability of up to Rs 3,000 from filing IT returns beginning next fiscal.

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 3 lakh companies show ‘nil’ income.

In September last year, government struck off names of over 2.09 lakh firms from register of companies for failing to comply with regulatory requirements and initiated action to restrict operations of their bank accounts.