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TDS default: Tax department issues over 850 prosecution notices

LiveMint logoLiveMint 22-02-2017 PTI

Bengaluru: The income tax department has issued over 850 prosecution notices to firms in the private and government domain in Karnataka and Goa on charges of delay in remitting tax deducted at source (TDS) funds to the exchequer.

A senior official said notices where the tax department files court cases for default in TDS payments have been issued to defaulters who have deducted tax from the payees such as employees, professionals, contractors and others and have then delayed the remittance of tax in government coffers or the I-T department.

“The department has issued 859 prosecution show cause notices to various deductors which includes private entities, government agencies and public sector undertakings (PSUs) in Karnataka and Goa region. In 48 cases, the prosecution has been sanctioned and complaints have been filed in special economic offences courts,” the department said in a statement.

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It said in 223 cases, deductors have filed applications for compounding of offences by paying taxes, apart from interest and penalty, at the rate of 3% per month from the due date of payment of TDS to the actual date of payment of TDS amount as compounding fees amid charges.

Such action, the official said, has been initiated in other parts of the country as well and the data is being compiled. In Delhi, Central Board of Direct Taxes (CBDT) chairman Sushil Chandra had recently written to the field offices of the department to step up an action and check TDS defaults by firms and employers, especially in cases where such payments have dropped by more than 15% as compared to last time.

With the current financial year drawing towards a close, the CBDT boss issued the directive so that TDS collections, which form a substantial chunk in the overall direct tax collections, meet the set regard of Rs3.50 lakh crore.

The I-T department has netted Rs2.85 lakh crore revenue till 31 January 2017 under the TDS category. As per rules, all sums deducted as income tax shall be paid to the credit of the central government within seven days from the end of the month in which the deduction is made or before the prescribed dates.

Failure to adhere to the above provisions are liable to attract prosecution proceedings under section 276B of the Income Tax Act, 1961 besides interest and penalty. The official said the courts have also cracked down on such instances in the past and in one case in Bengaluru, the court had convicted the defaulters to three years of rigorous imprisonment with a fine of Rs50,000 each for the delayed payment of TDS to the government account.

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