A new tax return form released by the Income Tax department could bring many investors and directors of unlisted companies under direct scrutiny of the taxmen. According to the newly released form, assesses have to provide details of their investments and directorial positions that they hold in unlisted companies in their tax return forms.
This directive has not only caused concern amongst people who have such investments but those who only operate as nominal directors are worried too. The Economic Times reported that many such people are rushing to sell or transfer their shares and resigning from these boards before they have to file returns.
They fear a mismatch in declared and actual income, if close scrutiny is done by the tax department officials.
“The way the enhanced details of the shareholding in private companies in India and abroad are sought by the tax department, going ahead they could be looking to cross verify this with the Registrar of Companies or other secondary records,” Paras Savla, partner at KPB & Associates was quoted as saying by the paper.
Savla said that the taxpayers should take steps to make sure that they disclose all the necessary information in the tax return or else there could be penal consequences under both the Income Tax Act but also the Black Money Act.
The directive said that the assesses must furnish these details for the last fiscal year ended March 31. Meanwhile, assesses hope that if they quit their positions or shareholding, they would be spared the close scrutiny.
The final consequence of this move by the tax department, however, remains to be seen.