The income tax department has identified a scam worth Rs 3,200 crores. Under this scam, 447 companies deducted tax from their employees' salaries, but they have not deposited the same with the Income Tax Department. Instead, they have used this money to further their own business interests.
This is for the period of April 2017 to March 2018. The list of the offenders includes politically connected builders, movie production houses, infrastructure companies and even some start-ups.
The TDS wing of the I-T department has started legal proceedings against these companies, and they have also issued warrants in some cases. According to the income tax act, the offences attract strict punishment which includes imprisonment of three months to a maximum of seven years with fines.
The income tax department has started the recovery action by seizing bank accounts along with the movable and immovable assets.
What is TDS and what firms must do?
Tax Deducted at Source (TDS) has been introduced by the Government, to collect tax at source, right from where the income is generated. TDS is deducted from employee salaries with the aim of making the employer deduct taxes and pay it to the Government, on behalf of the employee, instead of leaving this job to the employee.
Employers must remit the TDS amount to the taxman's account, within 7 days from the month end. In some cases, TDS can be deposited quarterly. Depositing TDS with the government is very easy. TDS can be deposited through e-payment, or Companies can go to the authorized bank branch and deposit the amount.
What will happen if your employer does not deposit TDS?
If your employer doesn't deposit TDS with the Government, there will be a mismatch and the IT website will show, you have not paid your tax.
SMS alerts every quarter will help track TDS
To know if there are any mismatches in the amount of tax deducted at source from salary, the Central Board of Direct Taxes (CBDT), has launched an SMS alert service, way back in the year 2016. SMS on tax deducted will be sent once in 3 months. SMS will contain the details of TDS deducted, till the month in which the SMS is sent.