Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

MCA likely to amend LLP Act to track down shell companies

Recently, the Ministry of Corporate Affairs (MCA) has found that a number of companies that were converted into LLPs have doubled after the Government enhanced disclosure norms on companies with a view to crack down shell companies.
Since its inception, the MCA has tightened noose on the shell companies however, a few loopholes still remains intact,therefore, the MCA is looking to bring measures to amend the LLP Act whereby only small companies would be allowed to convert into LLPs.
Why such companies opted for conversion?
There is no denial that exemption provided to the LLPs under the LLP Actare more as compared to that of Companies. Due to enhanced disclosure norms, the Companies find it easy to convert into LLPs to enjoy the exemptions available to LLPs. The following exemptions to the LLP are:
    i. No Board Meeting: Unlike companies, the LLPs need not to require hold board meetings in a year.
   ii. No Annual General Meeting: Holding an AGM is a statutory requirement under the Companies Act whereas in case of LLP, no need to hold any AGM.
  iii. No Statutory Auditor: The Companies Act is compelled the Companies to appoint its statutory auditor of the year for period of 5 years. On the contrary, the LLP is exempted to have statutory audit unless turnover and contribution doesn't exceed in a financial year.
In the backdrop, the MCA had identified more than 16,500 shell companies and blacklisted more than 30,000 directors from the corporate sector. Various disclosure requirements have also been introduced by MCA which ACTIVE— Form for verification of physical address of registered office of Companies, DIR—3 KYC for annual KYC of the directors of the company, DPT—3 for disclosure of acceptance of deposits by the companies, MSME—1 form for reporting overdue by companies to MSME, etc. These disclosures have been introduced to trace down shell companies. MCA's move to tighten noose on LLPs will further plug in the loop holes that are used by companies for certain activities such as tax evasion, tax—avoidance and money laundering.
Refer:https://companylaw.taxmann.com

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