Surat has replaced Kolkata to become the new hub for shell companies. According to the new list of shell companies by the I-T department, a majority of the firms are Surat-based, reports The Business Standard.

Most of the companies were based in Kolkata in the first list by the I-T Department.

Shell companies help in evasion of taxes and laundering of illegal money. The Modi government has launched a fight against black money and the tax department began going after these companies earlier this year.

The Ministry of Corporate Affairs recently shared data of 5,800 shell firms that made Rs 17,000 crore of suspicious deposits by privately held companies.

In the new list released by the I-T department, more than 80 percent of the 2,138 shell companies are from Surat. These collectively deposited at least Rs 5,000 crore during the demonetisation period.

In the first list, I-T department had named 16,000 shell firms, which were Kolkata-based from 2011-2015.

The I-T probe revealed that Surat was a safer bet for these shell companies for two reasons - first is Surat's flourishing diamond business and secondly because of the city's exposure to overseas market indirectly.

Surat, which operates a parallel diamond business, is an easy hub where traders can ship large amount of money illegally abroad.

A tax consultant told the newspaper that Surat traders know how to launder money via multiple transactions that involved a large of number of companies. This makes it harder to trace the money, the consultant said.

An I-T official said that since Kolkata is already under its radar, companies stayed away from West Bengal and, hence, found another city to redirect illegal money.