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Income-tax department slaps notices on 1,000 firms over TDS returns
September, 03rd 2015

The income-tax department has served 1,000 notices on corporate houses and promoters of small firms and start-ups in Mumbai for not filing returns on tax deducted at source (TDS) on payment made to their employees.

According to tax sleuths, the department has asked all of them to explain the reasons of not filing TDS returns and furnish details of TDS payments of three consecutive financial years till 2015.

The total number of non-filers in Mumbai region in last fiscal stood at 5,500, of which they have took priority cases for scrutiny, according to the data available with the TDS department.

"The penalty provision under Section 271H says that a deductor should pay penalty of minimum Rs 10,000 to Rs 1 lakh for not filing the TDS statement within one year from the specified date within which it was supposed to file the statement," a senior I-T official told dna.

"These are the priority cases where the said companies and individuals have not deliberately filed TDS return for more than a year. There are also cases where companies have deducted TDS but not submitted to the government or not deducted either," the official said.

According to the sources, if similar notices are sent to companies across the country, industry may have to cough up over Rs 1,000 crore.

TDS norms says the persons/firms required to deduct and pay TDS are also required to file quarterly returns. For delay in filing of TDS returns, each company or promoter has to pay a late filing fee of Rs 200 per day for every day of delay (subject to maximum amount being the TDS amount in consideration).

The department is also closely examining the government firms after it got several cases of government institutions were TDS payments were pending from long.

"It is noticed that businesses availing state-run firms had interpreted the law to their own convenience," this would not refrain department for taking actions," said an I-T official.

Recently, the tax department has used its discretion to recover Rs 74 crore from the Brihanmumbai Municipal Corporation's exchequer after the civic body failed to respond to its tax notices. The BMC apparently has not deposited some money collected as tax deducted at source (TDS) with the I-T.

TDS should be deducted on payments such as salaries, interest, professional fee, rent, brokerage and commission and dividends. Tax deducted needs to be deposited with the government before the seventh of the subsequent month, for all months except for March, and within April 30 for the month of March.

dna has learnt that tax deductors who default in depositing TDS by due date will be liable for prosecution. It is clarified that defaulters who have retained the TDS deducted and failed to deposit the same in the government account within due date will be liable for prosecution, irrespective of the period of retention.

However, the offence can be compounded by chief commissioner having jurisdiction on the case, either before or after the launching of prosecution proceedings. In the recent past, several defaulters have submitted petitions for compounding of such offences and compounding orders have also been passed by the competent authority in suitable cases.

With effectively eight months remaining in 2015-16, the Mumbai region has so far collected Rs 150 crore. "We will ensure that big I-T defaulters are not let off after paying penalties but also prosecuted in a court of law," said the official, adding that this year's target is double the last fiscal's collections.

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