Income Tax department decided to scan TDS of corporate executives
What is TDS?
TDS is a method of collection of tax through which some amounts are deducted by a person at the time of making a payment to the other person. The amount so deducted goes to the Government. It is similar to “pay as you earn” scheme. It provides regular flow of cash to the Government. It is a used to check tax evasion as to increase the tax net.
Who is responsible for deducting TDS?
Every person responsible for makingpayment as provided in the TDS provisions of Income Tax Act is responsible to deduct tax. Principal Officer of a company is responsible for deducting the TDS. It includes the employer where the employment is of a private nature or an employee making payment for the employer.
Tax has to be deducted during payment in cash or cheque or credit to the account of the payee.
Object of scanning TDS:
The department has decided to add further strength to the Tax Deducted at Source (TDS) imposed on salaries of employees for collecting more revenue from tax deducted from salary.
About 40% of the total tax collections are presently coming from the TDS. In the financial year 2012-13, about Rs. 2.5 crore tax was collected from the TDS.
Purpose of taking up the program:
The program aims to increase the collection of tax from people having high income. Collecting more revenue would add to the wealth of Nation as a whole.
By adopting this type of measures the tax collection will increase in the country. This amount can be utilized for welfare of the common people.
Categories of persons whose salary needs to be scanned:
The Central Board of Direct Taxes (CBDT) has directed the TDS commissioners to examine the taxing opportunities of the high ranked executives.
Not only the high ranked executives the department has included in their list of scanning the TDS of the guest lecturers of the universities and other educational institutions.
There is a common belief that the high ranked executives of corporate sectors have a high income but they end up paying little amount of tax by hiding their opportunities to pay tax.
Public Sectors and firms where a large workforce is found are to be carefully observed. PSUs in the country are included in the country due to the huge number of people working in them.
Procedure to be followed:
The scanning is going to be done according to Section 194J of the Income Tax Act dealing with fees for technical or professional services.
