I-T begins nationwide crack down on TDS/TCS defaulters

In a swift move, the Income Tax Department has launched a nationwide crackdown on individuals and businesses that have failed to deduct and deposit Tax Deducted at Source (TDS) and Tax Collected at Source (TCS), sources said.

Taxmen identified around 40,000 such taxpayers, reportedly failed to deduct and deposit TDS and TCS, based on deductions from FY22-23 and FY23-24.

All are currently under investigation and scrutiny. The department has deployed advanced data analytics to focus on repeat offenders, and currently investigating cases with wide divergence in tax deduction and advance tax payment.

The exhaustive list was scrutinised for 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 the audit. 

The Central Board of Direct Taxes has asked field formations to keep a close watch on instances of TDS returns revised multiple times with substantial reduction in the default amount and prepared a 16-point plan to identify TDS defaults. 

“TDS and TCS rates have been rationalised by reducing the number of rates and thresholds above which TDS is deducted with relaxed compliance for honest taxpayer while strict action will be taken against wilful defaulters to make the tax system fair and equitable,” said a senior board member about the ‘carrot and stick approach’ to ensure proper tax deposits.

The assessment officers have been tasked to report cases of huge disallowance under provision that disallows deduction in instances where TDS to be deducted has not been deducted and deposited.