Now, taxmen to probe Satyam
Income Tax department is planning to seek access to the documents seized or to be seized from the company and its auditors PWC by various state agencies including Andhra Pradesh CID and serious fraud investigation office.india Updated: Jan 15, 2009 20:06 IST
Both Satyam and its original promoter Ramalinga Raju may have to face another big problem. Income Tax department is planning to seek access to the documents seized or to be seized from the company and its auditors PWC by various state agencies including Andhra Pradesh CID and serious fraud investigation office.
The department is likely to see whether Satyam has paid taxes on inflated income shown by him or has claimed exemption under under section 10 (A) of the Income tax Act, said an official.
Under Section 10 A of the I-T act, a software company can claim deduction on Income Tax on profits and gains derived from export of software. The deduction is in the proportion that the export turnover of the undertaking bears to the total turnover of the company.
For example, if a company gets 80% of its income from exports, then it will not be required to pay any tax on this income. Therefore, the tax will be only on 20% of the income.
Moreover, the company will also get income tax benefits on profits derived in units based in various tax free zones.
Raju has confessed that he cooked up Satyam books and had shown inflated profits. Now inflated income and profits do not come form operations of the company. Therefore, inflated profits must be taxed separately. Inflated profits cannot get exemption under any section of I-T Act, said an IT expert.
IT department is also likely to examine whether Raju has siphoned off money from the company to his fictitious companies and whether proper tax has been paid on such benefits accruing to him.
2007-08 Income: Rs 8,740 crore out of which rs 8,220 crore was exports. Profit before tax Rs 1,918 crore. Profit after tax was Rs 1,687 crore. Tax paid Rs 230 crore.