The Income Tax Department of India has recently announced a new target for its Assessing Officers to conduct surveys and online verification of Tax Deducted at Source (TDS) in 50 cases each. This initiative aims to strengthen tax collection efforts and improve compliance among taxpayers. The department has outlined 16 parameters to identify cases for scrutiny, including factors such as negative growth in TDS payments, sick units with negative operating margins, and suspicious payment trends.
With the government setting an ambitious goal of collecting over ₹18.23 lakh crore through direct taxes in the current fiscal year, the Income Tax Department has been actively devising strategies to boost revenue generation. One of the key focus areas is enhancing the TDS mechanism, which plays a vital role in ensuring accurate tax deductions at the source. The department aims to identify potential irregularities and take appropriate enforcement actions to curb tax evasion.
A senior official from the Income Tax Department emphasized the importance of continuous improvement in the TDS mechanism. To achieve this, the Central Action Plan for the fiscal year 2023-24 includes specific steps, including survey and online verification of TDS filings. These measures are designed to streamline the process and identify cases that require further investigation.
The 16 parameters outlined by the department serve as red flags for potential tax irregularities. Cases where there is a significant difference between the lower deduction certificate and the higher advance tax deposited will be closely examined. Additionally, cases where lower deductions were claimed in the previous fiscal year but substantial self-assessment tax payments were made for the current assessment year will be considered for scrutiny.
Other parameters include frequent corrections in TDS returns, regular changes in the deductee's name, cases involving sick units or units with negative operating margins, grievances filed by deductees, instances of TDS evasion discovered during searches and surveys, multiple revisions of TDS returns in previous years, and substantial decreases in default amounts, among others.
The official emphasized that based on the preliminary examination of selected cases, notices under Section 201/201(1A) of the Income Tax Act may be issued. Section 201 deals with the consequences of failure to deduct or pay taxes, and a person can be declared a defaulter if there is no deduction or deposit of tax with the government. Section 201(1A) further prescribes penal interest for such defaults.
To ensure the timely completion of the survey and verification process, the department has set specific timelines. All new online TDS verifications initiated in the fiscal year 2023-24 should be completed within six months of initiation. Moreover, orders under Section 201/201(1A) should be passed within six months from the end of the month in which the survey took place or before the end of the financial year in which the survey is conducted.
The Income Tax Department's latest initiatives reflect the government's commitment to strengthening tax compliance and achieving its direct tax collection target. By implementing stricter measures and utilizing technology-enabled verification processes, the department aims to create a more transparent and efficient tax system, ultimately benefiting the country's economic growth and development.
CAclubindia
