Foreign Shell Firms Owned by Indians: Modi Govt Clueless

The Narendra Modi government has no data on the number of offshore shell companies owned by Indians despite admitting two years ago that were 2,38,223 such firms between 2018-2021.

The government’s statement comes after former Congress MP Rahul Gandhi said during a March 25 press conference that “somebody has invested Rs 20,000 crore in the Adani Group through shell companies” and alleged that he was disqualified from the Lok Sabha after asking questions about Gautam Adani that had “scared” Modi.

According to a Financial Times report this month, 50% of Adani’s $5.7 billion (around Rs 20,000 crore) FDI inflow was from “opaque overseas entities with connections to Group”.

“There is a deep relationship between Narendra Modi ji and Mr Adani—Rs 20,000 crore has suddenly arrived in Mr Adani’s shell companies. Where has this money come from?” Rahul had asked.

The government’s statement on being clueless about the number of offshore shell firms owned by Indians, according to a report in The Telegraph, was in response to a question asked by CPI(M) Rajya Sabha member John Brittas on March 21.

“The data/details regarding offshore shell companies owned by Indian citizens is not available,” Union minister of state for finance Pankaj Chaudhary said in a written reply.

Brittas had asked about: “(a) The details of offshore shell companies whose ultimate beneficial ownership (UBO) are held by Indian citizens

“(b) The details of actions so far taken by government to collect the details of UBO of Indian citizens in offshore companies incorporated in tax-haven countries

“(c) The status of actions taken against those Indian citizens whose names were revealed through Panama Papers, Pandora Papers, Paradise Papers and such other leaks

“(d) The details of foreign governments who have offered the Union government to share the offshore dealings of Indian citizens and

“(e) The details thereof and the actions taken thereon.”

Chaudhary said that “an offshore shell company is not defined in the Acts administered by the ministry of finance. Data/ details regarding offshore shell companies owned by Indian citizens are not available”.

However, in a written reply to a question in the Rajya Sabha on July 27, 2021, Union minister of state for corporate affairs Rao Inderjit Singh had said that the government had identified 2,38,223 shell companies between 2018 and 2021.

Regarding details of actions so far taken by the Centre to collect the details of UBO of Indian citizens in offshore companies incorporated in tax-haven countries, Chaudhary said: “In view of (a) above, specific action does not arise.”

Chaudhary also didn’t reveal the number and details of Indians whose names figured on the Panama Papers, Paradise Papers, Pandora Papers and other such leaked documents.

“Undisclosed income of more than Rs 13,800 crore has been brought to tax” in the Panama and Paradise Papers leaks cases as on December 31, 2022, and that “more than 250 India-linked entities have been identified in Pandora Paper leaks”, he said.

“Undisclosed income of more than Rs 8,468 crore has been brought to tax and penalty of more than Rs 1,294 crore levied” on account of “deposits made in unreported foreign bank accounts in HSBC cases”, the government said without revealing details of the delinquents.

As on December 31, 2022, “Assessments under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, have been completed in 408 cases, raising tax demand of over Rs 15,664 crore,” it added. But Chaudhary didn’t reveal the number and details of the unfinished cases.

According to Chaudhary, 648 disclosures involving undisclosed foreign assets worth Rs 4,164 crore had been made in the one-time compliance window of three months that closed on September 30, 2015, under the Act and Imposition of Tax Act, 2015. The amount collected through taxes and penalty in such cases was about Rs 2,476 crore, it added.

The government only outlined in general terms the procedures adopted in tackling foreign exchange violations and the laws passed and investigative units constituted to curb the stashing of black money abroad without giving the details sought by Brittas, The Telegraph reported.