MUMBAI: Companies in India are receiving notices from Income tax offices, asking them to justify transactions they have made, restricting their right to claim refunds after paying due tax. This demad has irked many foreign and local companies.
Even if salaried individuals are spared of scrutiny notices, many companies are grappling with demands they find strange and irrational. And, it’s more than holding back tax refunds.
Several wholly-owned Indian subsidiaries of foreign companies that have received capital infusion from parent have been slapped with notices from the income tax (I-T) department which is asking these companies to justify the transaction. The tax office is describing such share subscription by a foreign parent as “unexplained cash credit” for which the Indian unlisted firm must pay tax on the fund it receives.
