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The Central Board of Direct Taxes (CBDT) is concerned that banks are not meticulously deducting TDS (tax deducted at source) from State government PSUs, corporations, autonomous bodies and development authorities. Therefore, it has asked for greater sensitisation and education of banks.
These findings have been incorporated in the Central Action Plan for 2017-18 prepared by the CBDT, a copy of which was reviewed by BusinessLine .
TDS is a key revenue collection method for CBDT. Under this, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) has to deduct tax at source and remit it into the account of the Central government.
The contribution of TDS to the overall gross direct taxes collections in FY17 was about 37 per cent. During the year, the CBDT through direct taxes had mopped up ₹8.48 lakh crore.
CBDT has come across a large number of instances where the deductors make ‘PAN’ errors — either no PAN is quoted in the TDS statement against the deductee row, or an invalid number is quoted. Therefore, IT officers responsible for TDS collection could ask the deductors to insist on a valid PAN in case of high-value transactions.
A senior public sector bank official said: “There are instances where some private sector companies have names almost similar to that of State level undertakings.
“Then there are private universities/colleges, which could pass off as government-aided institutions. So, the branch level staff sometimes get confused. There is a need to sensitise the ground level staff about the differences.”
TDS, which is seen as a non-obtrusive but powerful instrument to prevent tax evasion, widen the tax base and augment revenues, has been growing over the years, the document said.
Among other strategies, CBDT has asked the officers to monitor the TDS statements of the top 100 deductors vis-a-vis the deduction made by them in the corresponding period of the previous financial year. It has also asked the officers to collect information from State governments about the plan outlay of all the major contracts and sub-contracts in the various departments and monitor TDS payments from the same.
The document added that large scale non-compliance of TDS provisions by local bodies, especially by panchayats, has been noticed in some regions. A special drive by the IT department will ensure compliance by such bodies.
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