Four lakh shell companies feel the heat of deregistration over non filing of income tax returns, reports TOI.
Over a third of the 11 lakh active Indian companies could be deregistered as they have failed to file their returns for three financial years.
Quoting the sources, the report said that starting last month, notices are being sent out to over four lakh companies, which have failed to file returns for 2013-14 and 2014-15 with the registrar of companies.
Meanwhile, the companies are being given time span of 30 days to do the needful. If any of the firm would fail to file the returns, its name would be strike off by the government.
To ensure that the defunct companies are unable to undertake transactions, the ministry of corporate affairs (MCA) will make their names public and also share information about the companies and their directors with the income tax department, banks and the Reserve Bank of India, added the report.
The Companies Act now allows firms to have a "dormant" tag, however, very few companies have actually opted for it.
At the end of March 2015, there were 14.6 lakh companies, but only 10.2 lakh were considered active with just 214 classified as dormant.
The sources said told TOI, that just the threat of names being struck off has prompted several companies to file their returns.
The government has launched a drive against shell companies after it found that many of those were depositing cash during demonetisation.
The Centre also has set up a taskforce to make a roadmap to ensure that they are not used as vehicles for tax evasion and money laundering.