Flurry of tax notices puts private companies' directors in a spot of bother

Section 179 of the Income Tax Act imposes vicarious liability on directors to recover tax dues of private firms

Directors of private limited companies are being slapped with tax notices, holding them liable for dues/disputes pending at the company’s end.

The number of such notices has risen exponentially over the past few weeks, said four people familiar with the matter. This is on the back of mounting pressure on tax officers, with the end of the financial year approaching.

The amount being demanded typically ranges from Rs 5 crore to Rs 20 crore. In many instances, the directors are being asked to pay up in 10-15 days. The flurry of notices may compel directors to quit and prompt a rethink among