The income tax department will conduct nationwide regulatory action for those taxpaying entities that did not deduct and deposit taxes collected at the source (TDS/TCS).
Under the sources cited in the report, nearly 40,000 taxpayers (individuals and businesses) are being investigated for possible defaults in tax deductions for the fiscal years 2022-23 and 2023-24.
The data analytics of the Central Board of Direct Taxes (CBDT) team has curated a complete list of taxpayers who are assumed to have missed or neglected the TDS deposits. CBDT for finding the cases of TDS non-compliance has made a 16-point strategy to discover and manage them.
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If taxpayers fail to deposit the tax, then the income tax department will reach out to these defaulters through intimation first, reassuring them that the process will be non-intrusive in approach. The official said, “We have data from the analytics team, and we will reach out to such taxpayers, initially through intimation, in case they have missed out on depositing tax.”
As per the officials, it was mentioned that the main focus of the department will be on repeat offenders and situations where there is an influential distinction between the tax deducted and the advance tax remitted.
The authorities scrutinize the cases where the companies have amended or rectified deductee information. Also, the department inspects the matters where the businesses are explaining their financial losses via using the unproductive units or subsidiaries in their financial reports.
It was directed by the CBDT to the tax officials to review the instances where the disallowances have been observed u/s 40(a)(ia) of the Income Tax Act – under which deductions are not permitted in situations where TDS has not been deducted or remitted to the government.
“There is a carrot-and-stick approach; while we have relaxed TDS compliance for honest taxpayers, strict action will be taken against wilful defaulters to make the tax system fair and equitable,” the official knowledgeable with the case cited.
The government in the Union Budget 2024 has revised the TDS and TCS regulations, lessening the number of tax rates while raising the threshold limits for the deductions.
But such adjustments were objected to make it simpler for honest taxpayers to adhere with those who objected to evading filing TDS, officials mentioned that stringent measures will be taken via using data analytics to find the patterns and anomalies in the TDS payments.
