The Income Tax Department has set a target of 50 cases per Assessing officer to be picked up for survey/online TDS verification. It has prescribed 16 parameters on which these cases could be picked up. These parameters include negative growth in TDS payment against healthy growth in Advance tax payment, cases of sick units or units with negative operating margins, cases showing a negative trend in payment etc.

These measures are important as the government has set a target of collecting over ₹18.23 lakh crore through direct taxes, 10 per cent more than the actual collection during FY23.

A senior IT Department official said that among various measures to boost collection is continuously improving TDS (Tax Deducted at Sources) mechanism. “As part of continuous improvement, some steps have been prescribed in the Central Action Plan for FY24. Accordingly, enforcement action comprising of survey and online TDS verification has been structured,” the official told BusinessLine.

Further, the effort would be to pick up at least 50 cases per Assessing Officer (AO). These cases will be picked up on reports from various sources, including CPC(TDS) or information from the investigation wing. The official said a list of 16 parameters has been suggested to select cases. These include cases where TDS/TCS is not deposited after deduction, the trend of TDS payment in contrast to other deductors in a similar business, cases showing a negative trend in payment, tax evasion petitions, cases reported by the AO with huge disallowance, habitual late filers/non-filers of TDS Statement and negative growth in TDS payment as against healthy growth in Advance tax payment.

Cases where a lower deduction certificate is availed but higher advance tax deposited could be another parameter. Similarly, cases where deductors availed of lower deductions certificate in FY 2022-23 and have paid substantial self-assessment tax for AY 2023-24, could be considered. Parameters also include cases where frequent corrections have taken place and also where the name of the deductee is changed regularly, cases of sick units or units with negative operating margins, grievance petitions filed by the deductee, TDS evasion found during the search and survey and cases where TDS returns have been revised multiple times in the previous years and where there is a substantial decrease in the default amount among others.

“Based on preliminary examination in selected cases, notice under section 201/201(1A) may be issued,” the official said while adding that timeline is also being given to complete the action. “All the new online TDS verifications initiated in FY 2023-24 should be completed within six months of initiation. Also passing of order under section 201/201(1A) may be completed Within 6 months from the end of the month in which Survey took place or before the end of Financial Year in which survey is conducted,” he said.

Section 201 of the Income Tax Act deals with the consequences of failure to deduct or pay and declares a person defaulter in case of no deduction or tax deposit with the government. For such default, section 201(1A) prescribed penal interest. The rate would be one per cent for every month or part of a month on the due tax amount.