Income Tax Dept to crack down on 40,000 TDS/TCS defaulters:

Income Tax Dept to crack down on 40,000 TDS/TCS defaulters The income tax department is launching a nationwide crackdown on individuals and businesses that fail to deduct and deposit taxes collected at the source (TDS/TCS), according to officials. Approximately 40,000 taxpayers are being investigated based on tax deductions made in FY22-23 and FY23-24. The Central Board of Direct Taxes has developed a 16-point plan to identify TDS defaults. Separately, the data analytics team has compiled a comprehensive list of these taxpayers for scrutiny. "We have data from the analytics department and we will reach out to such taxpayers, firstly through intimation, in case they have missed out depositing tax," the official added. Authorities will focus on recurring offenders, investigate cases with wide discrepancies in tax deduction and advance tax payment, scrutinise cases with often changes and corrections in the name of the deductee, and cases where companies used sick units or arms with a negative profit margin in their audit, according to the official. The board has directed assessing officials to report cases involving significant disallowance under Section 40(a)(ia) of the Income Tax Act. The provision prohibits deductions in cases where TDS has not been deducted or not deposited with the government. Tax officials would also maintain close watch on instances when TDS returns were revised many times with a significant reduction in the default amount. The board has directed field formations to monitor grievances submitted by deductors and use data analytics to discover patterns and irregularities in TDS payments. The official highlighted that, like previous initiatives by the department, this one will be non-intrusive. In this year's budget, the Centre announced a rationalisation of TDS and TCS rates, decreasing the number of rates and thresholds at which TDS is deducted. "There is a carrot-and-stick approach; while we have eased TDS compliance for honest taxpayers, strict action will be taken against those who deliberately default to make the tax system fair and equitable," the official further explained.