A TDS survey by the income tax department has found many big corporates defaulting on payment of tax deducted at source (TDS). In one case, the tax department found that a major oil company defaulted on TDS payment of Rs 3,200 crores. The defaults were due to lower or non-deduction of taxes at source.
The tax department also found that a large Delhi-based telecom company has defaulted on TDS payment of Rs 324 crore. The company did not make the required TDS of 10% on a technical contract worth Rs 4000 crore. The department said that the amount is further liable to go up once the enquiry is completed.
Several Delhi-based hospitals were also found to be paying less TDS and tax collected at source (TCS) than required by the law. During the survey at two premier hospitals, one with more than 2500 bed capacity was found that the former was not deducting tax at source on construction contracts, while another hospital with 700 bed capacity was found deducting tax at source on salary paid to the doctors at 10% instead of 30%. TDS defaults of Rs 70 crore and Rs 20 crore, respectively, were detected in the said hospitals. Further investigation revealed that the hospitals were also not deducting TDS (at 10%) from maintenance charges paid for the hi-tech sophisticated operation theatre and diagnostic equipments.
The tax department also found that many hospitals were not complying with the TCS norms, which came into effect from June 1, 2016. As per TCS norms, hospitals are required to collect 1% TCS on any cash payment received in excess of Rs 2 lakh and deposit it to the Government account.
In one case, a Delhi-based real estate company was found not depositing TDS collected in the previous financial year. It was found that the company had not paid TDS liability and interest payable of Rs 214 crore.
In recent times, the Income Tax department has intensified enforcement action against TDS default cases as this contributes to over 45% of the total direct tax collection in the country. The TDS has to be paid to the central government within seven days from the end of the month in which the deduction is made.
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