Large scale anomalies have been unearthed by the income tax authorities which reveal several corporate entities have either not been deducting TDS (tax deducted at source) or defaulted on not depositing the deducted amount in the treasury, reports Financial Express.
The law is clear in the matter. Whenever any payment is made to an outside party, the relevant rate of tax applicable must be deducted from the payment and deposited through the proper challan. Most banks accept TDS payments nowadays. At the end of the financial year, a certificate (Formm16, usually) is issued with details of TDs deducted through the year and the references of the TDS deposited. This is used by the assesses to reflect in their income tax returns and take credit for the tax paid.
The latest finding by the income tax department is that several companies which include large hospitals, a telecom operator and a real estate company.
Each case is unique in the sense that some have deducted the money but not deposited. Some have not been deducting TDS from their contractors though they should have and in some, the rate at which the TDS has been detected is lower than that prescribed under law.
The most damaging part of this whole thing, as far as the income tax department is concerned is that the amounts involved runs into several thousand crores.
In the case of the telecom operator, whose name has not been disclosed, the company gave away technical contracts worth Rs 4,000 crore and an amount of Rs 324 crore has been detected as the TDS default. There are two hospitals, one with a 2,500-bed capacity and another 700 beds. Their TDS default amounts are quoted at Rs 70 crore and Rs 20 crore respectively. One of these hospitals has been deducting TDS at 10% from the payments made to their doctors while they should have deducted at 30% as per the tax slab in force.
The hospitals have given out contracts for maintenance of highly sophisticated operation theatre and diagnostic equipment. However, when payments were made to these contractors, no TDS was deducted.
In a third default, the hospitals were found to have failed to collect 1% where they receive more than Rs 2 lakh in cash payments for treatments from patients. This is a new requirement since 2016. This is a move aimed at discouraging cash transactions and encouraging digital payments.
The TDS liability of the real estate company is said to be Rs 214 crore.
The largest one in this list is an oil company that has defaulted Rs 3,200 crore on account of TDS. This amount included short deduction and non-deduction, both.
The department will now have to get after these companies and recover the amounts from them and an interest of 1.5% per month may also be become payable.