 "Tax")
The Income Tax Department is set to crack down on TDS defaults by government and private sector entities, especially e-retail portals, local bodies like panchayats, as the CBDT has directed its assessing officers (AOs) across the country to undertake at least 30 surveys or on-spot checks.
The directive has been issued by the policy-making body of the tax department as part of its recently issued Central Action Plan (CAP) 2018-19 that acts as the blue print for taxman's action for the entire year.
"Surveys are the most effective tools for detection of non-compliance in TDS (tax deducted at source) and TCS (tax collected at source)...," the CAP, accessed by PTI, said.
"A new target of at least 30 surveys/spot verifications by each AO during the year has been incorporated in this plan," it said.
A survey or on-spot verification is an action where an IT Department team pays a surprise visit to the business premises of an organisation suspected of TDS default and inspects their account books and financial statements.
"Considering that there are hundreds of AOs in the department, this new policy measure would result in thousands of TDS surveys by taxman across the country," a senior official said.
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The action plan has also directed the central processing centre (CPC) of the TDS, the IT Department's repository of all data in this context, to "regularly provide useful reports and inputs to field officers that may be used for identifying survey cases".
The Central Board of Direct Taxes has also directed the AOs to keep a check on cases in the prosecution list where TDS/TCS was not deposited after deduction; trend of TDS payment in stark contrast to other deductors in similar business; cases showing negative trend in payment; tax evasion petitions and habitual late filers/non-filers of TDS statement.
The action plan reasons that monitoring TDS payments and keeping a strict vigil on revenue earned from it is important as TDS collections constituted over 41 per cent (during 2017-18 fiscal) of the total direct tax collections in the country.
"The importance of TDS as a non-obtrusive but powerful instrument for preventing tax evasion, widening the tax base and augmenting revenues has been growing over the years...
"Effective and efficient TDS administration therefore remains a key area, not only for achieving the above mentioned objectives but also for providing better taxpayer service," the action plan said.
In this pursuit, the taxman has been asked to "monitor" top 100 TDS deductors in their regions, monthly TDS remittance from salaries of both the private sector as well as government departments, online retail companies and local bodies.
"E-commerce has emerged as a huge business in the past few years. This involves advertisement on the websites of various organised and unorganised agencies, payments for job work building website, translation of pages, data entry of text, research among others. This area promises to yield significant revenue," the CAP said.
It added that "large scale" non-compliance of TDS provisions by local bodies (especially panchayats) has been noticed in some regions.
"A special drive to ensure compliance by the local bodies can be helpful in boosting revenue," it said.
A special area of TDS default in purchase of immovable assets from non-resident Indians (NRIs) has also been flagged by the CBDT.
"It has been observed in several cases that the buyer of the property only deducts 1 per cent TDS on purchase of immovable property from NRI's which actually requires TDS at the rate of 20 per cent.
"These are high-risk cases which need to be taken up on priority basis," it said.
Some other red flag indicators to keep a check on TDS defaults are: negative growth in TDS payment as against healthy growth in advance tax payment; cases where frequent corrections have taken place and also where the name of deductors is changed on regular basis; cases of sick units or units with negative operating margins; analysis of newspaper reports and information available through the Internet and analysis of case laws decided in favour of the tax department.
The CBDT has also asked the AOs and regional IT Department offices to initiate prosecution action and file charge sheets in appropriate cases.
"There are a number of cases where the deductors have failed to pay the TDS/TCS or have kept the amount with them and paid such amount after substantial time into the credit of the central government...
"Initiating prosecution in these cases is an effective deterrence to non-compliance of TDS/TCS provisions," the action plan said.
