Question

How can a company identify if a shell company has been created and if payments are being made to this company for services or materials that haven't been provided?

Answer 1

Shell company is a company formed to transfer funds in order to claim tax deduction and save tax payment.

For identifying first ask for the bill submitted by the shell companies try to find loopholes in the bill if the bill is above a limit whether TDS has been deducted or not

If deducted whether TDS certificate has been received by our company or not

If the bill has been made check for the service type which shell company was providing whether provided or not.

Certificate of completion from the department which claims that service has been received to them etc

Check whether the payment is above than a market rate if yes ask for the reasons from the management.

These are some of the ways to identify a shell company

Please please upvote it at the end thank you so much