As part of the Government policy to crackdown on shell companies, over a third of the 11 lakh active Indian companies face the prospect of their names being struck off or deregistered as they have failed to file their income tax returns for three financial years.
Reportedly, over four lakh companies, which have failed to file returns for 2013-14 and 2014-15 with the registrar of companies, have received notices. These companies have also not filed their returns for the 2015-16 financial year, but the window for filing has not completely shut down.
The Government intends to cancel their registrations if the companies fail to file income tax returns within. To ensure that the defunct companies are unable to undertake transactions, the Ministry of Corporate Affairs (MCA) will make their names public and also share information about the companies and their directors with the Income Tax department, banks and the Reserve Bank of India.
While the Companies Act now provides for companies to seek a “dormant” tag, very few companies have actually opted for it. At the end of March 2015, there were 14.6 lakh companies, but only 10.2 lakh were considered active with just 214 classified as dormant.
