MCA, CBDT join hands to monitor shell companies

NEW DELHI: The ministry of corporate affairs ( MCA) and the Central Board of Direct Taxes ( CBDT) have teamed up to share data and information on companies to keep a check on activities of shell companies and curb money laundering.

They have signed an agreement to share information such as tax returns, permanent account number (PAN) and financial statements of companies on an automatic and regular basis. According to the agreement, information related to both Indian and foreign companies operating in India will be shared, as will any information available in the respective databases, if required, for the purpose of scrutiny, inspection, investigation and prosecution.

Financial statements filed by corporate entities with the Registrar of Companies, returns of allotment of shares and statement of financial transactions received from banks will also be shared.

The ministry and CBDT had earlier collaborated for near real-time allotment of PAN and TAN (tax deduction and collection account number) at the time of incorporation of companies.

The memorandum of understanding was signed between CBDT and the corporate affairs ministry on September 6 and has come into effect since then, the Competition Commission of India said in a statement.

The purpose of the pact is “to curb the menace of shell companies, money laundering and black money in the country and prevent misuse of corporate structure by shell companies for various illegal purposes”, the statement said.

The government has also set up a Data Exchange Steering Group that will meet periodically to review the data exchange status and take steps to further improve the effectiveness of the two agencies.

The MoU will ensure that both the ministry and CBDT have seamless PAN-CIN (corporate identity number) and PAN-DIN (director identity number) linkage for regulatory purposes.

The government had earlier said that more than 106,000 directors will be disqualified for their association with shell companies.