Government prepares to strike off registration of over 2 lakh companies

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Defunct or Inactive Companies - Fast Track Exit Scheme / Strike off of companies under Companies Act, 2013
Defunct or Inactive Companies – Fast Track Exit Scheme / Strike off of companies under Companies Act, 2013

The government plans to cancel the registration of more than two lakh companies that have not been carrying out business for a considerable period of time, amid stepped up efforts to tackle the black money menace.

More than two lakh companies, spread across various states, have been served with show cause notices as they have not been carrying out any operation or business activity for a prolonged time.

The Corporate Affairs Ministry’s move also comes against the backdrop of overall efforts by the authorities to crack the whip on shell companies, suspected to be used for money laundering activities.

The Registrars of Companies (RoCs) in various states and union territories have issued notices to more than two lakh firms under the Companies Act, 2013, according to information available with the Ministry.

These notices have been issued under Section 248 of the Act, which is implemented by the Ministry. This section pertains to striking off names of companies on certain grounds.

With the issuance of notices, the companies concerned have to explain their position and if the responses are not satisfactory, then their names would be struck off by the Ministry.

Data showed that RoC Mumbai has issued notices to more than 71,000 companies while RoC Delhi has served notices to over 53,000 firms, among others.

As per the regulations, an RoC can seek explanation from a company if the latter has not commenced business within one year of getting incorporated under the Act.

Notice is also issued if a particular company has not been carrying out business for at least two continuous financial years and has not applied for dormant status.

Such entities are given a time of 30 days to submit objections if any.

The Ministry has power to remove or strike off the names of such entities from the “register of companies” if the response is not satisfactory.

Earlier this month, the Ministry had amended the Companies (Removal of Names of Companies from the Register of Companies) Rules.

There are more than 15 lakh registered companies in the country.

 

After PM Modi Order, Enforcement Directorate’s crackdown on Shell Companies begins across 100 cities

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Enforcement Directorate is carrying out searches at 100 locations to detect shell companies.

Weeks after the Prime Minister Narendra Modi’s office ordered a crackdown on shell companies used to launder money, the Enforcement Directorate on Saturday carried out nationwide searches across 100 locations targeting nearly 300 shell companies.

Sources said Saturday’s ED raids on shell firms across more than a dozen states was a direct fallout of the coordinated action against these firms. Among the cities where the Enforcement Directorate teams were conducting raids are Kolkata, Chennai, Delhi, Ahmedabad, Chandigarh, Patna and Bengaluru. In Chennai, officials said searches were being carried out at 13 locations linked to 8 companies.

The PMO had last month identified paper companies, which do not conduct any operations but are used to launder money and evade taxes by other firms, as a big challenge to PM Modi’s war against black money.

As part of this exercise, the government had also decided to create a database of shell companies and their directors. A task force chaired jointly by the Revenue Secretary and Corporate Affairs Secretary was mandated to coordinate action against these dubious companies.

That the 1,155 shell companies detected over the last three years had been used as conduits by over 22,000 beneficiaries to launder money, one government official said, indicated how important it was to target shell companies. These companies face charges of dubious transactions running into more than Rs. 13,300 crore.

It is not clear if today’s multiple ED raids on shell firms are linked to the government’s finding that over 550 people had laundered Rs. 3,900 crore through such companies after the November 8 ban on the high-denomination notes.

An official report had earlier pointed that only 6 lakh of the 15 lakh registered companies file annual return. While it was possible that many of them may be defunct, officials said it could be possible that some of these could be involved in dubious transactions.

The Special Investigation Team to fight Black Money set up on the Supreme Court’s directions had also pointed that proactive detection of shell companies was going to be a key to the success of the government’s campaign.

Source: http://www.ndtv.com/india-news/after-pm-order-crackdown-on-shell-companies-begins-across-100-cities-1676030

India giving World Bank all evidence of improved ease of doing business

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India is providing detailed evidence to the World Bank on ease of doing business as it seeks to break into the top 100 countries on the bank’s index from its current rank of 130.

Officials said logs of construction permits, containerised cargo movement at ports and setting up of a company are being provided to World Bank as part of the Narendra Modi government’s efforts to ensure it does not miss any point to score to improve India’s rank.

World Bank officials had a few queries for the Department of Industrial Policy & Promotion (DIPP) when they met on August 1 after completing field inspection and verification of claims over the 14 parameters on ease of doing business.

While the World Bank does not share its findings, one observation made by its team was that people were carrying paperwork to the offices of the Employees’ Provident Fund Organisation even as registration was made free of all physical touch-points. “We clarified that it is only for claims that one needs to file the papers,” said a senior DIPP official, who did not wish to be identified.

Besides, DIPP is now gathering its own evidence for cases where it feels respondents have not have kept in mind the assumptions made by the World Bank study.

“In case of construction permits the study is limited to warehouses or buildings on the outskirts or setting up of a company parameter is only for domestic enterprises and not how long it takes for a foreign entity,” the official said.

DIPP is taking a proactive approach to provide evidence on its part even after the field investigations have been wrapped by the World Bank team. Final rankings will be announced in October. The ranking considers business environment in Delhi and Mumbai. India compares unfavourably even with countries such as Mexico, which is ranked 38, and Russia, which is at 51. Prime Minister Modi has set a target for India to be in the top 50 in three years.

Specific areas DIPP has targeted are starting business, insolvency procedures, construction permits, ease of trade across borders and electricity connections. According to the department, total number of days required to start a business has been reduced to 12 from 29 in the past year. A team of researchers spent two weeks in Delhi and Mumbai talking to actual users and stakeholders to study and verify implementation of reforms, officials said.

Source : http://economictimes.indiatimes.com/articleshow/53716006.cms

EPF Act to be amended to include firms with 10 workers

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New EPF Act may oblige small firms with 10 or more staff to deduct PF from workers’ salary

Government plans to amend the Employees Provident Fund Act to bring more workers under the ambit of retirement fund body EPFO by reducing the threshold for coverage of firms to 10 workers, Lok Sabha was informed today.

Labour and Employment Minister Bandaru Dattatreya said the plan is to amend the law so that firms with ten employees can also be brought under the ambit of EPFO to ensure more workers come under the umbrella of social security.

At present, it is mandatory under the Employees’ Provident Fund and Miscellaneous Provisions Act for firms having 20 or more workers to subscribe to social security schemes run by the Employees’ Provident Fund Organisation.

In his written reply, he said no proposal is under the consideration of the government to allow EPFO subscribers to contribute voluntarily towards pension scheme in addition to their employers’ mandatory contribution.

He said effort is on to bring more unorganised workers under the ambit of various social security schemes for which more projects are being unveiled. “There is more focus on these workers,” he said.

Responding to the ‘plight’ of beedi workers following the introduction of 85 per cent pictorial norm on tobacco products, Dattatreya said the Labour Ministry is working to impart vocational skills to beedi workers.

He said several representations were received regarding “adverse consequences” of the Health Ministry’s notification prescribing 85 per cent pictorial warning on tobacco products.

He said at a meeting chaired by him in April, concerns were raised by stakeholders. The report of the meeting was conveyed to the Health Ministry.

He said beedi workers are covered under group insurance scheme and provided assistance of Rs 10,000 in case of natural death and Rs 25,000 in case of accidental death. Rs 1500 is also provided for the funeral of deceased workers.

Financial assistance of Rs 5000 is given to widows or widowers of beedi workers under social security schemes for wedding of their first two daughters.

Source: http://economictimes.indiatimes.com/articleshow/53489861.cms

Paperless I-T assessment: CBDT plans to take project to more taxpayers

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After successfully completing over 1,000 scrutiny I-T assessments under a maiden taxpayer-friendly paperless inquiry system, CBDT is set to extend the initiative as it is mulling seeking taxpayers’ consent to opt for the scheme at ITR filing stage itself.

Central Board of Direct Taxes (CBDT), the policy-making body of the Income Tax department, had launched a pilot project last year to reduce taxpayers’ visit to the tax office and their interface with the taxman.

Under the project, the first set of e-communications were decided to be mailed to the assessees in DELHI, Mumbai, Bengaluru, Ahmedabad and Chennai region.

As per official data accessed by PTI, the department in these five cities has completed scrutiny assessments in 1,001 cases till now, after a total of 6,481 assesses were contacted of which 1,812 responded positively.

A senior official said the biggest “challenge” in achieving better success in this new project was obtaining the consent of the taxpayers.

The Assessing Officers (AOs) found that while in some cases the taxpayer could not be reached as their personal email ids were with their CAs or authorised representatives, in a few other cases the assessee withdrew his consent to join the scheme, the official said.

“It is now being mulled if the I-T department can print a footnote on the Income Tax Return (ITR) or on the scrutiny notice itself that the taxpayer is invited to participate in the exercise over email in a paperless manner.

“The results are encouraging and the CBDT wants to make this an institutional system for scrutiny assessments henceforth,” the official said, adding the scheme is expected to be widened and rolled out with new features within this financial year.
The success of the project, initiated last year, is evident from the fact that CBDT recently added two more cities (Hyderabad and Kolkata), to the existing five metros, under the paperless assessment system exercise.

With this project, CBDT aims to end corruption and bring hassle-free experience for the taxpayers who undergo a time-consuming scrutiny assessment procedure which entails production of a number of documents and financial statements.

The department, however, says it brings only about 1 per cent of cases under the said procedure.

An official notification had been issued earlier which spells out the procedure, formats and standards for ensuring “secured transmission” of emails between the AO and the assessee stating all communication between the two sides will be done in PDF file format and over bonafide email ids.

This followed an amendment in the I-T Act in December last year, which allowed emails to become the new mode of interaction between the AO and the tax-paying individual.

Under the new procedure, the taxman will send emails, for issuing notices and summons, through the government registered ‘@incometax.gov.in’ email domain and the attached PDF document will have his or her designation and signature.

In response to such I-T notice, taxpayers will have to submit the details called for, in a Portable Document Format (PDF) through their email id registered with the department.

The notification states, “Any email, in response to the notice issued by the AO, received from the primary email address of the assessee, shall be considered as a valid response to the notice.”

In the same notification, CBDT had also mandated that the taxman will maintain an audit trail of all e-communication with a taxpayer in the IT department’s central database for future reference and as record management of the entire transaction.

The new directives also allow a taxpayer to physically submit a reply to such e-notices in case of a technical problem in their email. “This shall be treated as adequate compliance,” it had said.

The project was launched after CBDT had asked the I-T department to “initiate the concept of using emails for corresponding with taxpayers and sending through emails the questionnaire, notice etc at the time of scrutiny proceedings and getting responses from them”.

“This would eliminate the necessity of visiting the Income Tax offices by the taxpayers, particularly in smaller cases, involving limited issues and where taxpayer is able to provide details required by the AO without necessitating his physical presence,” the order had said.

Source : http://economictimes.indiatimes.com/articleshow/53061801.cms

 

JPMorgan Chase & Co gets RBI approval to open 3 new branches

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JPMorgan Chase & Co today said it has received Reserve Bank’s approval to open three more branches in the country.

The bank will open new branches at New Delhi, Devanahalli (near Bengaluru) and Paranur (near Chennai) in the next few months, it said in a statement.

“We are seeing an increasing level of cross-location and cross-border activity among our clients as they capture business opportunities driven by the country’s economic growth.

These branches will further enhance our capability to better serve our clients in India and overseas,” JPMorgan Chase Bank India MD and CEO Madhav Kalyan said.

JPMorgan will provide all existing products and services through these new branches, including cash management, trade finance and foreign-currency payments.

At present, the bank serves its clients from Mumbai branch.

“Our strategy is to follow our clients’ priorities. The expansion endorses our long-term commitment to India, a key market for JPMorgan, as well as for many of our clients,” JPMorgan South & South East Asia CEO Kalpana Morparia said.

Source: http://economictimes.indiatimes.com/articleshow/53008936.cms

SEBI begins proceedings to recover Rs 55,000 crore from defaulters

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The Securities and Exchange Board of India (Sebi) has initiated recovery proceedings against defaulters to collect more than Rs 55,000 crore, largely on account of its clampdown on illicit money-pooling schemes.

Ever since it was given powers in October 2013 to recover penalties and investors’ money collected fraudulently, Sebi has initiated nearly 900 recovery proceedings, of which more than 200 have been fully completed.

The amount involved in these proceedings stands at Rs 55,015 crore, including Rs 52,959 crore in the last financial year. This include a total of Rs 52,912 crore in cases related to collective investment scheme (CIS) and deemed public issues and another Rs 47 crore to recover penalties.

More than 2,500 attachment notices have been issued during the period under review, including over 600 in 2015-16.

Interestingly, an amount of Rs 250 crore has been recovered in 207 cases. Promising high returns to the investors, several firms have raked in unauthorised funds through various mechanisms. The capital was raised through realty schemes and ‘buffalo purchase’, among others. Also, funds have been garnered by issuing securities to investors without complying with public issue norms.

To recover pending dues, Sebi has attached properties, bank and demat accounts of the defaulters. Besides, the regulator has sold shares attached in recovery proceedings in various defaulters in 744 trading sessions and realised an amount of over Rs 11 crore.

Through amendments in the Securities Laws Act, the government had enhanced powers of Sebi to take action against illegal money-pooling activities. It has been empowered to recover penalties imposed by the Adjudicating Officer, amount directed to be disgorged and money ordered to be refunded to the regulator.

The recovery powers include attachment of bank as well as demat accounts, sale of assets of the defaulters and arrest and detention of the defaulter.

The Act also provides for setting up of a special court to expedite the cases filed by Sebi. The government in consultation with the high courts have set up special courts in Mumbai, Kolkata and Chennai.

Besides, constitution of a special court in Delhi is in progress. However, a designated court is already dealing with Sebi cases.

 

Source: http://www.business-standard.com/article/markets/sebi-begins-proceedings-to-recover-rs-55-000-crore-from-defaulters-116061400476_1.html