New Delhi: The Central Board of Direct Taxes (CBDT) on Sunday refuted reports regarding en masse issue of prosecution notices to small companies for TDS default, terming them as “completely misleading and full of factual inaccuracies.”
CBDT clarified that Mumbai Income Tax TDS office has issued prosecution show cause notices only in a limited number of big cases where more than Rs 5 lakh of tax was collected as TDS from employees, and so on and yet the same was not deposited with the Income Tax Department in time.
CBDT also said that some defaulter companies with vested interests are deliberately misleading the media to thwart action against them.
It added that deducting tax from employees and other taxpayers and not depositing the same in the government treasury is an offense punishable under the law.
If the TDS is not deposited in time, the employee would be ineligible for claiming the credit of the tax deducted when he files his own return.
CBDT stated that in the last one month only in 50 big cases prosecution notices have been issued by Mumbai IT TDS office. Out of these, in 80 percent of the cases the TDS tax default is above Rs 10 lakh and in 10 percent cases TDS default is between Rs 5 lakh and Rs 10 lakh. In the remaining 10 percent cases, TDS default is of more than Rs 1 crore as detected in the survey.
Prosecutions have also recently been launched against four big business houses where more than Rs 50 crore of tax was collected by them from the taxpayers and was not deposited with the government on time.
CBDT stated such legal and rightful action is being unfortunately projected in the media in a negative light.
It said in an official release: “It would be pertinent to note that in a country of 130 crore people where around six crore returns are filed every year, only a total of 1,400 prosecutions have been filed so far for various offenses under the Income Tax Act during this financial year. This, by any stretch of the imagination, cannot be termed as mass harassment by the Income Tax Department. Therefore, to say that prosecution notices en masse have been sent to taxpayers for minor defaults is completely incorrect and misleading.”