India cancels licences of 100,000 firms for 'violating laws'

NEW DELHI • India has cancelled the registration of more than 100,000 companies which were "in violation of laws", Prime Minister Narendra Modi said, in the latest effort by the government against black money and tax evasion.

The decision was taken based on an extensive data analysis conducted by the government after Mr Modi in November announced a sudden ban on high-value banknotes.

More than 300,000 firms had come under the scanner for irregular transactions following the banknote ban, while licences of more than 100,000 firms had been cancelled, Mr Modi said, without naming any company.

"This is not an ordinary decision," Mr Modi said late last Saturday, hours after launching the country's landmark sales tax reform. "Further stern measures will be taken in the coming days against companies which are violating the law."

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While the decision to outlaw 500-rupee (S$10.70) and 1,000-rupee bank notes last year was part of a broader crackdown on corruption, the sudden withdrawal of 86 per cent of currency in circulation left businesses, farmers and households suffering.

Mr Modi defended his decision, calling it a "fight" for the poor. The government's "data mining" exercise initiated after the November decision was still ongoing, he said.

The government will also take action against more than 37,000 identified "shell companies", which were found to be engaged in illegal transactions.

DEFENDING THE NEW MEASURES

The ones who have looted the poor will have to return to the poor.

INDIA'S PRIME MINISTER NARENDRA MODI

"The ones who have looted the poor will have to return to the poor," Mr Modi said.

Meanwhile, Mr Modi's government has vowed that India's new nationwide goods and services tax (GST) launched last Saturday will revolutionise the economy by bringing more businesses into the digital system to enrich state coffers.

Tens of thousands of small traders are, however, fearful of the transition to the new regime, which will require businesses to register with the GST network and file invoices and tax returns online at least once a month.

The GST aims to create a single market in place of a labyrinthine system of more than a dozen national and state levies. Analysts say it will force compliance in a country with a poor tax base and a reputation for avoidance.

REUTERS, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on July 03, 2017, with the headline 'India cancels licences of 100,000 firms for 'violating laws''. Print Edition | Subscribe