Center has no data on offshore shell companies of Indians, while task force is in operation since 2017

The Modi government is under fire in the Rajya Sabha for not sharing any information about ‘shell companies’, as despite saying they have no information, the government declared 2,38,223 companies as shell companies between 2018-2021. was marked as

Union Minister of State for Corporate Affairs Rao Inderjit Singh said this in a written reply to a question in the Rajya Sabha on July 27, 2021.

MP Mahua Mitra pointed this out and said it was strange that “the government identified 2,38,223 shell companies between 2018 and 2021, without any specific definition in law.”

In its press release, the Ministry of Corporate Affairs had said, “The term ‘shell company’ is not defined in the Companies Act and generally refers to a company which is not in active business operation or does not have substantial assets”. Which in some cases are used for illegal purposes like tax evasion, money laundering, obscure ownership, benami assets etc.

The Central Government has now told the Parliament that it does not have any data on the offshore accounts of Indians. The revelation, made in response to a question by CPI(M) MP John Brittas, came just after Rahul Gandhi claimed that Rs 20,000 crore had “suddenly arrived” in Adani’s “shell companies”.

According to The Telegraph, in a written reply on March 21, the government said that “data/details are not available on offshore shell companies with ‘ultimate beneficial ownership’ of Indian citizens.”

The newspaper wrote, ‘When asked whether the government has worked to collect details of offshore shell companies owned by Indian citizens, the government said that there is ‘no question’ of such an action, because ‘An offshore shell company is not defined in the Acts of the Ministry of Finance’.

In his question Brittas asked:

1. Details of offshore shell companies whose Ultimate Beneficial Ownership (UBO) is with Indian citizens.

2. Details of action taken so far by the Government to collect details of UBOs of Indian citizens in offshore companies incorporated in tax-haven countries

3. Status of action taken against Indian nationals whose names surfaced through Panama Papers, Pandora Papers, Paradise Papers and other such leaks.

4. Details of foreign governments that have offered to share offshore transactions of Indian citizens with the central government.

5. Details thereof and action taken thereon.

The government said it had no data on this question and also did not say how many Indians were named in the Panama Papers, Paradise Papers, Pandora Papers and other leaked documents.

Speaking in rather vague terms, Minister of State for Finance Pankaj Chowdhary said that by December 31, 2022, ‘undisclosed income of over Rs 13,800 crore has been brought to tax’ in the Panama and Paradise Papers leak cases and the ‘Pandora Papers leak’ In this, more than 250 organizations related to India have been identified.

He also said that ‘undisclosed income of over Rs 8,468 crore has been brought to tax and penalty of over Rs 1,294 crore has been imposed’ due to ‘unreported deposits made in foreign bank accounts in HSBC cases’ ‘, but did not mention who was punished.

In response, it was further written that till December 31, 2022, the tax assessment under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act-2015 has been completed, due to which the tax demand has increased by more than Rs 15,664 crore.

However, the government has now said that it does not have details of offshore shell companies owned by Indian citizens, but in February 2017 it had set up a task force to identify companies commonly known to be involved in illegal activities, including tax evasion. referred to as ‘shell companies’, were to be investigated.

In June 2018, the Finance Ministry had said that the task force had met eight times and had “taken proactive and coordinated steps to check the menace of shell companies”.