New Delhi: The Ministry of Income Tax is stepping up efforts to ensure compliance with tax relief and payment collection in the Source (TDS/TCS) specification. According to a report by the Economic Times, there are approximately 40,000 taxpayers, including individuals and businesses, including failure to properly deduct and deposit taxes 2022-23 and 2023-24. As part of a national regulatory action, these taxpayers may face a potential breach of contract scrutiny when fulfiling their tax obligations.
The Central Direct Taxation Commission (CBDT) has developed a 16-point plan to identify and monitor TDS non-compliance cases. Meanwhile, the department’s data analysis team has compiled a list of taxpayers that may not be deposited into TD. “We have data from the analytics team and if they miss the deposit tax, we will contact such taxpayers through the seal,” a senior official told the Economic Times.
Authorities will pay special attention to duplicate offenders and circumstances, with a large difference between deductions and advance taxes paid. They will also closely examine cases where the company regularly updates or corrects details of tax deductions. In addition, under-businesses or subsidiaries that exhibit negative profit margins in their financial audits will be subject to closer scrutiny.
The Central Direct Taxation Commission (CBDT) directs tax officials to carefully examine cases of large-scale injunctions under section 40(a)(a) of the Income Tax Act. This section prevents deductions when not deducted or paid to the government’s TDS.
According to a familiar official, “There is a carrot and sticky approach; although our TDS compliance with honest taxpayers has been relaxed, strict litigation will be taken to make the tax system fair and fair for intentional offenders.”
In the 2024 union budget, the government changes TDS and TCS rules by simplifying tax rates and increasing threshold limits on deductions. These changes are designed to help honest taxpayers become easier to comply with. However, officials stressed that strict measures will be taken to use data analysis to identify patterns and differences in TDS transactions.
