Individuals trying to evade taxes by getting a lower tax deducted at source may soon get a call from the tax collector. The finance ministry is planning to crack the whip on those trying to conceal their income and evade taxes through the system of tax deduction at source (TDS).
The Central Board of Direct Taxes (CBDT) has mooted a proposal to strengthen the penal provisions against such people. The ministry is planning to introduce cash penalties as well as initiate legal proceedings and prosecute those it finds guilty of evading taxes through TDS.
In addition, it is also set to permit evoking section 131 of the Income Tax Act, which gives the power to summon the person, investigate and enquire into his income, and impound and retain account books and documents of the person.
Official sources said that the proposal is at present being whetted by the law ministry, and it is likely to be implemented in coming months.
As another part of this initiative, the CBDT has also written to all state finance ministers and state chief secretaries that there should be a quarterly deduction of TDS, instead of the current practice of book adjustments. States are now expected to timely credit their TDS collections to the Centres account.
These steps would be in line with a number of measures the CBDT has already taken this fiscal to strengthen and restructure its TDS machinery. It has created 12 new TDS commissionerates and a director to monitor them in its efforts to strengthen the TDS mechanism.
It has also begun audits of many government departments, such as railways and defence, where TDS collection is low to find out the causes for this.