The income tax department is planning a nationwide crackdown on individuals and businesses that have failed to deduct and deposit taxes collected at source (TDS/TCS), officials said.
About 40,000 such taxpayers are under scrutiny based on tax deductions made in FY22-23 and FY23-24.
The Central Board of Direct Taxes has prepared a 16-point plan to identify TDS defaults. Separately, the data analytics team has prepared an exhaustive list of such taxpayers for scrutiny.
“We have data from the analytics team and we will reach out to such taxpayers, initially through intimation, in case they have missed out depositing tax,” a senior official told ET.
Authorities will focus on repeat offenders, investigate cases with wide divergence in tax deduction and advance tax payment, scrutinise cases with frequent changes and corrections in name of deductee and cases where companies have used sick units or arms with negative profit margin in their audit, the official said.
The board has asked assessing officers to report cases with huge disallowance under Section 40(a)(ia) of the Income Tax Act. The provision disallows deduction in instances where TDS to be deducted has not been deducted or not deposited with government.
Tax authorities would also keep a close watch on instances of TDS returns revised multiple times with substantial reduction in the default amount.
The board has asked field formations to also take note of grievances filed by deductees and utilise data analytics to identify patterns and anomalies in TDS payments.
The official added that like earlier drives of the department, this one too will be non-intrusive.
In this year’s budget, the Centre has announced rationalisation of TDS and TCS rates by reducing the number of rates and thresholds above which TDS is deducted.
“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 said.
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