data sharing

Corporate affairs ministry, CBDT to share info to curb money laundering

gst-sec-money-afp (File photo) Representational image

Stepping up its efforts against shell companies and money laundering, the ministry of corporate affairs (MCA) and central board of direct taxes (CBDT) have signed a memorandum of understanding which will facilitate sharing of data and information between the two agencies.

“It will enable sharing of specific information such as Permanent Account Number (PAN) data in respect of corporates, income tax returns of corporates, financial statements filed with the registrar by corporates, returns of allotment of shares, audit reports and statements of financial transactions received from banks relating to corporates,” the ministry of corporate affairs (MCA) said on Thursday.

The MOU will ensure that both the MCA and CBDT have a seamless PAN and CIN (corporate identity number) and Pan and DIN (director identity number) linkage for regulatory purposes. This sharing of information will not just be restricted to Indian corporates, but will also include foreign firms operating in India.

“In addition to regular exchange of data, CBDT and MCA will also exchange with each other, on request, any information available in their respective databases, for the purpose of carrying out scrutiny, inspection, investigation and prosecution,” it added.

The MOU comes on the back of several steps initiated by the government as well as regulatory agencies in recent months to crack down on shell companies, which many times turn out to be fictitious entities used as a front to convert black money to white.

The registrar of companies had last week revealed that over 2.09 lakh such companies had been “struck off.” There were also indications that the list would only grow as more companies are identified.

Separately, the department of financial services had, through the Indian banks association, advised all banks to take immediate steps to put restrictions on bank accounts of such shell companies.

Meanwhile, a data exchange steering group has been constituted for the information sharing initiative between MCA and CBDT. The group will meet periodically to review the data exchange and take additional steps to improve the effectiveness of the two agencies.

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