In a major breakthrough, the TDS wing of the Income Tax Department has unearthed default of tax deducted at source (TDS) of Rs. 324 crore in the case of a major telecom operator in Delhi, Finance Ministry said on Wednesday.
"The company did not make the required TDS of 10 per cent u/s 194J of the Income-tax Act, 1961 on technical contracts worth Rs. 4,000 crore. The amount is further liable to go up once the enquiry is completed," a statement from Finance Ministry read.
The statement informed that several hospitals of the city were found openly flouting the norms of TDS and tax collected at source (TCS) and were paying less tax to the Income Tax Department.
"During the survey, at two premier hospitals, one with more than 2,500 bed capacity and the other with 700 bed capacity, it was found that the former was not making any TDS on construction contracts as statutorily required u/s 194C/ 194J, while the latter was deducting tax at the rate of 10 per cent only on salary paid to the doctors, instead of the present TDS rate of 30 per cent applicable for salary payments," the Ministry said.
Enquiries during the survey revealed that the terms of appointment between the hospital and the doctors indicated an employer-employee relationship on which the hospital was required to deduct tax at 30 per cent instead of 10 per cent as was being made by the hospital, the statement read.
According to the statement, the TDS defaults of Rs. 70 crore and Rs. 20 crore respectively were detected in the said hospitals.
"Further enquiry revealed that the hospitals were also not making the required TDS at 10 per cent from the maintenance charges paid for the hi-tech sophisticated operation theatre and diagnostic equipments," the statement read.
"In another TDS survey conducted on a prominent Real Estate Group in Delhi in the first week of the March, 2020, after credible data analysis of previous years, analysis of TDS compliance patterns by the various group companies, their ITR filings and tax auditor reports and real time data generated by CPC-TDS, it was seen that the deductor having already deducted tax in earlier years, had not deposited the deducted taxes in government account," said Finance Ministry.
During the survey, verification and analysis indicated outstanding TDS liability and interest payable of Rs. 214 crore. Major TDS default related to the payment of interest on outstanding loans.
The Real Estate Company had taken huge loans on which interest payments were credited from time to time, TDS was duly deducted during various financial years but was not deposited to Government account.
In another action by the TDS Wing of the Department, TDS default of approximately Rs. 3200 crore was detected in the case of a major oil company pursuant to survey u/s 133A of the Act, said Finance Ministry.
The defaults included short deduction of tax and non deduction of tax respectively. Short deduction of tax pertained to TDS u/s 194J for several years on payment of Fee for Technical Services for installation and maintenance of high tech oil refineries, payments for chemical process of re-gasification and transportation of LNG.
"The Income Tax Department has, in recent times, stepped up enforcement action against TDS default cases as this category of revenue contributes to over 45 per cent of the total direct tax collection in the country. As per Rules, the TDS has to be paid to the credit of the central government within seven days from the end of the month in which the deduction is made," the statement from Finance Ministry read.