Inactive Shell Companies Getting the Boot in India

May 1, 2017 Taxation in India

Indian National FlagNEW DELHI – Dormant companies in India are being told to registered, as authorities believe they may be being used for money laundering.

Over the weekend the Ministry of Corporate Affairs of India sent out approximately 200 000 notices to companies which claim to be inoperative, instructing the entities to close down.

The notices come as a result of the recent moves by the government to demonetise selected bank notes, as they were thought to lead to money laundering and black market activity.

The companies which received notices have not filled annual returns for several years, indicating that they did not undertake any business activity.

However, during the demonetisation process it was evident that a number of “inactive” companies were actually participating in money laundering activity by using their established accounts to “wash” funds.

The Prime Minister’s Office has established a Task Force which is specifically charged with monitoring the activities of such inactive companies.

It is believed that authorities will maintain their monitoring activities and check on the inactive companies every 15 days.