Evasion of TDS by companies is set to become more difficult

TDS evaders likely to face stiffer provisions

Evasion of tax deduction at source (TDS) by companies is likely to become more difficult, with a number of deterrence provisions likely to be recommended by the R V Easwar panel on tax simplification.
 
The 10-member committee is also likely look at the discretionary powers of tax officials for high value cases, suggesting assessment by a group of officers in these, instead of a single one. Its second report is expected to out by the month-end and seems likely to be incorporated in the Union Budget proposals on February 1. The committee had wide consultations with revenue officers and business chambers in Ahmedabad, Bengaluru and Mumbai. “In discussions with revenue officials, it has emerged they are very sympathetic to the grievances of a taxpayers. A strong view also came out that there is a need for stringent deterrent provisions against evasion of TDS by employers,” said a source. Kingfisher Airlines was found to have done the TDS on salaries but did not deposit the money with the government. The income-tax department demanded Rs 302 crore towards TDS and interest of Rs 70 crore for assessment years 2010-11, 2011-12, and 2012-13. The unpaid TDS cannot be recovered from the employees, came the instruction, after notices were sent to the latter in this regard. “There is a near consensus on it, that there should be very stringent action in such cases against the employer. There is no fault of the employees here,” the source said. No payment also hurts the employer, as the government will not give a credit or refund for that amount.
 
To improve transparency in assessments, the panel might suggest high value assessments be done by a group of officers.  For instance, a query raised by one officer, while replies are independently examined by a second, and so forth. It will cut human interface, as a tax official will not know the case being dealt with (except the preliminary notice stage) and the taxpayer will not know the tax officer dealing with the case. It could be started on an experimental basis, for some identified cases.
 
The committee was set up by Finance Minister Arun Jaitley in October last year, to identify the provisions and phrases in the Income Tax Act, which have given rise to litigation on account of interpretive differences and which impact ease of doing business. It is to suggest alternatives to ensure predictability in tax laws without substantially impacting the tax base or revenue collection.