What is TDS?
TDS (Tax deduction at source) is the certain amount deducted by a person or firm while making payment to another. Provisions of section 192 and 194 series relate to TDS on salary, rent, interest, commission, professional fees etc of the Income Tax Act 1961.
What is the purpose of this?
The concept of TDS was introduced to keep a check on complete evasion of tax payable by the person receiving some payment or earning some kind of income.
What employer needs to do after deducting Tax?
The employer or any other deductor of TDS is legally duty bound to deposit the prescribed amount deducted in name of TDS with the GOI.
The time limit prescribed for deposition of TDS deducted is normally the 7th day of next month. For the TDS deducted on salary for the month of March, the due date of deposit is 30th April. Assessing officer taking prior permission of joint commissioner may on request allow deductors to deposit TDS quarterly.
What defaulters did?
Defaulters deducted TDS from employees salary and from others at the time of payment but did not deposit the same with government treasury. As per sources, 447 companies/ firms deducted TDS and instead of further rendering it to government employed the funds for satisfying working capital needs or other business interests. The firms include builders, one leading being politically connected making a default of Rs 100/- crores. Further defaulters include Infrastructure companies default ranging up to 14 crores and an MNC not depositing 11 Crores with the requisite authorities. Movie production houses, startups and fly by night operators are other offenders contributing to the fraud of Rs.3200 crores.These figures showing deployment of public fund for private purposes are for the period from April 2017 to 31 March 2018.
Is depositing TDS with government really tough??
Not really!! In fact it’s as easy as making an online payment on e-commerce websites or depositing cash in banks. TDS can be deposited in cash at authorized bank branches or can be paid through e payment online in the fraction of seconds.
What Cost employees would pay for employers fraud??
Employees would be facing many difficulties at the time of filing Income Tax Return:
- No tax deduction will be shown in their account(26AS)
- Tax department will ask employees to pay tax
- Receive notices for non-payment of taxes
Else, fight litigation
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What would be Legal consequences on these defaulters?
These defaulters would face Prosecution under section 276B of the Income Tax Act. Would face rigorous imprisonment ranging from 3 months- 7 years for the default.
What steps are taken by the government to help people?
From 2016 the government has launched SMS alert system to help you keep a watch over your TDS deposition.
SMS alerts are sent every quarter from the Income Tax Department for tax deposited in your account .Just Match TDS deducted in Salary Slip with the SMS and see if it matches. In case, of any mismatch, contact your employer immediately.
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