Charge maximum penal amount on TDS defaulters : CBDT

The Central Board of Direct
Taxes (CBDT) today directed its field formation to levy the highest penal rate
of tax on TDS (tax deducted at source) defaulters. Following a sharp shortfall
in revenue from TDS collection, the Income-tax Department has launched a massive
drive across the country to detect and inquire into TDS payments of companies —
especially on payments made and salaries disbursed. Tax searches have revealed
that several small and medium-scale companies deducted tax on various payments,
but failed to deposit the amount with the Department. In such cases, it has been
decided by the Board that the departments can charge the highest level of penal
rate of tax — that is 300%. Besides, the Income-tax Department has disallowed
all expenses incurred by third-party administrator companies (TPAs) across the
board. The existing practice is to deduct the expenses from the total earnings
before arriving at the taxable income. Department officials said the decision to
disallow the expenses have been taken since they do not deduct tax while paying
premium to the insurance companies.

The Department has raised
around Rs.117 crore in TDS amount from six TPAs. The disallowance of expenses
comes u/s.40I(a)(i) of the Income-tax Act, 1961 that is invoked for non-payment
of TDS. Officials said a similar amount has been disallowed as deduction from
income.