‘95% of registered realty firms have no PAN’

CAG says I-T dept. has no mechanism to ensure all registered companies have PAN and file returns
In an audit of assessments made by the Income Tax Department on the real estate sector, the Comptroller and Auditor General (CAG) found that a whopping 95% of the companies registered with the Registrar of Companies (RoC) did not have a permanent account number (PAN). In an analysis of the data of the RoCs in 12 States, the CAG also noted that there were several companies that the tax net had failed to capture and that the department had no mechanism to ensure that all the registered companies had PAN or that they filed their income tax returns (ITR) regularly.“RoCs did not have information about PAN in respect of 51,670 (95%) of a total of 54,578 companies for which data was made available to audit,” the report said. “It was difficult for Audit to ascertain from the information obtained from RoCs whether these companies were in the tax net of the ITD or not.” The CAG said that it forwarded the information received from the RoCs regarding the companies without PAN to the Income Tax Department, but received no reply. “Audit attempted to ascertain whether the companies in RoC data with PAN were regular in filing their ITRs,” the report added. “In respect of 840 companies with PAN coming under selected assessment charges, we noticed that 159 companies [19%] were not filing their ITRs.” “From the above, it can be concluded that there is no mechanism with the Income Tax Department to ensure that all the registered companies have PAN and are filing their ITRs regularly,” the CAG said. In order to rectify this, the CAG recommended that the Central Board of Direct Taxes and the Ministry of Corporate Affairs set up an inter-ministerial arrangement so that when a company is registered with the RoC, the application for a PAN is automatically submitted to the tax department.
Automatic updation
“When PAN is issued to the newly incorporated company, it will automatically be sent to RoC Systems for updation,” the CAG further recommended.
“Further, the companies should be compulsorily required to submit a copy of acknowledgement of ITR while furnishing their annual reports in Form MGT-7. This will ensure that companies file their ITRs and at the same time the data of ROC will be in sync with that of ITD.”

Source : https://www.thehindu.com/todays-paper/tp-business/95-of-registered-realty-firms-have-no-pan/article26254184.ece

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