Income Tax Department Cracks Down On TDS Violations, Recovers Rs 84 Lakh from Cotton Trading Firm

The Income Tax Department has recovered Rs 84 lakh towards Tax Deducted at Source (TDS), including Rs 13 lakh interest, at a major cotton trading company in Chhatrapati Sambhajinagar on Wednesday.

The Income Tax Department (TDS) had carried out a day-long survey to uncover the cases where the taxpayers had not followed the TDS rules. The investigation was a part of the Income Tax Department’s ongoing efforts to improve the TDS compliance to avoid revenue losses.

During the inspection, officials checked whether the company had made the deductions as required under the law. For the same, the company’s books of accounts and financial records were examined by the Income Tax Department’s officials.

The investigation revealed that the firm did not deduct TDS on interest payments of nearly Rs 20 crore, which is a violation of the provisions of Section 194 of the Income Tax Act, 1961. This section covers the mandatory requirement for a company to deduct 10% on interest payments above the prescribed limit. The deductor is required to deduct TDS, and the deposit is with the central government. However, this requirement was not fulfilled by the company.

The tax officials also discovered that the company had deducted TDS on some transactions but had failed to deposit around Rs 71 lakh to the government. This amount was recovered by the income tax department along with the applicable interest.

The Income Tax Department has urged the companies to strictly comply with the TDS provisions by deducting TDS on time and depositing it with the central government. The Companies have been warned that failure to comply with TDS rules will attract strict actions. The Department said that the non-deposit of TDS can also result in further proceedings apart from the imposition of penalty and interest.