According to The Economic Times (ET), the income tax administration is preparing a statewide regulatory action against people and companies that have neglected to deduct and deposit taxes collected at source (TDS/TCS).
Approximately 40,000 people are being investigated for possible tax deduction defaults for the fiscal years 2022–2023 and 2023–2024, according to sources referenced in the story.
To monitor and detect instances of TDS non-compliance, the Central Board of Direct Taxes (CBDT) has created a 16-point strategy. A comprehensive list of taxpayers suspected of not depositing TDS has also been compiled by the department’s data analytics staff.
Speaking to The Ultimate News, a senior official stated, “We have data from the analytics team, and we will reach out to such taxpayers, initially through intimation, in case they have missed out on depositing tax.”
Additionally, the official stated that cases where there is a significant discrepancy between the amount of tax deducted and the amount of advance tax paid will be the focus, as well as repeat offenders.
Businesses that use sick units or subsidiaries with negative profit margins in their financial audits, as well as those that often update or modify deductee information, will be closely examined by authorities.
Under Section 40(a)(ia) of the Income Tax Act, the CBDT has instructed tax officers to thoroughly review situations in which significant disallowances have been submitted. In situations where TDS has not been withheld or remitted with the government, this clause prohibits deductions.
The frequent adjustment of TDS returns, particularly when it results in a significant decrease in the default amount, is another major source of worry for tax officials. Authorities believe that certain companies might be falsifying their tax returns in order to artificially reduce their tax obligations. The tax department has requested that field officers employ data analytics to identify trends and anomalies in TDS payments in order to remedy this.
According to officials cited in the story, this crackdown will be non-intrusive, just like other enforcement campaigns. Before taking any further action, taxpayers will be contacted for clarification.
The government announced modifications to TDS and TCS regulations in the Union Budget 2024, lowering the number of tax rates and raising the deduction threshold limitations. Although the goal of these modifications is to make it easier for honest taxpayers to comply, officials have stated that those who willfully fail to deposit TDS would face harsh consequences.
“There is a carrot-and-stick approach; while we have relaxed TDS compliance for honest taxpayers, strict action will be taken against wilful defaulters to make the tax system fair and equitable,” the official stated to ET.