NEW DELHI: The income tax department has launched a nationwide campaign against suspicious outward foreign remittances, focusing on shell companies, persons behind them, and professionals associated with them. It has identified 394 entities that transferred large amounts outside India over the past three years, including 117 entities located in states along India’s land borders. It has also identified 36 professionals for scrutiny.
The tax department said on Tuesday that it has uncovered a nationwide network of entities engaged in remitting funds abroad during a search operation targeting a group of fictitious charitable trusts involved in providing accommodation entries against bogus donations and contributions.
Preliminary ground verification found that many of such entities had either filed no income-tax returns at all or filed returns reporting very small turnovers.
“The turnovers had no apparent correlation with the large amounts of money being remitted abroad,” it said, adding that the transactions did not appear to match the stated purposes of the remittances, including payments for freight, software imports and consulting services.
It was also found that some of these entities were not operating from the addresses declared by them.
The tax department is also looking into the role of a small group of professionals, including chartered accountants, who issued Form 15CB, which is a CA’s certificate on the taxability of a foreign remittance.
A former Enforcement Directorate official told TMS that suspicious foreign remittances are already under the ED’s lens, particularly those involving cash purchases of real estate abroad.
According to the official, such transactions are sometimes carried out in the names of drivers and domestic workers to circumvent the Reserve Bank of India’s Liberalised Remittance Scheme, under which individuals are permitted to remit up to $250,000 a year. The ED had earlier detected a similar modus operandi in cases involving under-invoicing.
CAs under the radar
As part of the drive, the I-T department is examining the role of CAs who issued Form 15CB certificates. The I-T department said CAs are required to properly examine the underlying transactions and relevant facts before certifying remittances
Border point
The tax department has identified certain entities located in districts along India’s land borders. They transferred significant amounts of money abroad within the past three years. Many of them have not filed tax returns
