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I-T department to set up body for collection of TDS
April, 17th 2007

The Income Tax department will set up commissionerates for tax deducted at source (TDS) in the country to deepen coverage and check tax evasion. 
 
There are huge revenue leakages due tax deducted not getting reported, and sometimes no deduction at source in many cases because of being inadequately informed on tax matters, a finance ministry source said. 
 
The ministry is taking immediate action to create a proper TDS structure by strengthening existing TDS commissionerates and opening new ones in all metro and tier II cities. 
 
All the commissionerates will also file the TDS data electronically, so that such information is verified with the tax returns filed by tax payers. 
 
A lot of state autonomous bodies, working for profits, are not filing TDS returns, the source said. Similarly, a company or individual, who is filing TDS for service provided in Delhi, is not reporting TDS paid at a non-metro place. That is because they are unable to get a TDS certificate for tax paid at those locations. 
 
This results in tax leakage as the same is misappropriated. 
 
Besides strengthening of TDS mechanism, surveys will be conducted to find out evasion of TDS, which the department has found very helpful to detect tax evasion. 
 
According to sources, 4-5 years back the department found that British Airways, Maruti and some Korean car majors were paying some of their staff partly in rupee and partly in foreign currency. 
 
There was a recovery of Rs 600 crore after survey as under Indian laws, the TDS must be on the entire remuneration if services are provided here. 
 
At the moment, only six commissionerates are there : New Delhi, Mumbai, Kolkata, Chennai, Hyderabad and Bangalore. Hyderabad and Bangalore were added in the last one year only. 
 
The proposed new commissionerates will come at cities like Pune, Ahmedabad, Chandigarh and all other state capital cities, sources said. 
 
The department is in the process of recruiting 760 inspectors and tax assistants while 40 officers will be appointed as Income Tax Officers through internal promotions to handle TDS commissionerates. More recruitment will also be made as and when new offices are set up. 
 
The department will take steps to ensure that TDS is collected on all transactions specified and at the right tax rate. 
 
A huge jump in revenue collections will come from TDS going forward, sources said. 
 
About 40 per cent of the direct tax collections or Rs 92,000 crore is collected under TDS mechanism. 
 
The total direct tax collection is expected to cross Rs 230,000 crore in 2006-07.

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