Income Tax Department Freezes Bank Accounts Of Cognizant
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In what could be termed as the biggest shock after the Facebook Data leak controversy, the bank accounts of the IT giant Cognizant (American MNC) have been frozen by Income Tax officials.
‘Few bank accounts of Cognizant has been frozen today. The company failed to pay Rs 2,500 crores of DDT (Dividend Distribution Tax) to the government as per the Income Tax Act. The amount is due for the FY 2016 – 2017. Within few days, the FY 2018-2019 is about to begin.
The DDT issue arose after Cognizant purchased its own shares from a shareholder in May 2016. Both the parties came to a compromise. An American Company and a Mauritius company were holding the shares previously with 46% and 54% of shares respectively.
It deduced 10% as a tax on the remittance to the US Company, but did not deduct the same on remittance to the Mauritius Company’, said an IT official.Reacting on this, Cognizant issue a press note. ‘Until the further hearing, the HC ordered the IT Dept. not to take further actions. Cognizant has paid all applicable taxes on the transaction. The IT Department’s actions are without merit and contrary to law’.Only time can tell whether this is a politically motivated attack or a genuine one.