A few days after the Rs 11,400-crore Punjab National Bank (PNB) scam and the Rotomac cases came to light, another massive fraud seems to have surfaced. The Income Tax (I-T) Department claimed on Monday it had unearthed TDS (Tax Deducted at Source) fraud worth Rs 3,200 crore.
The Income Tax Department claimed to have come across a scam where 447 companies deducted Rs 3,200 crore TDS from its employees and diverted it to further their business interests instead of depositing it with the government, reported the Times of India.
The I-T Department's TDS section has started prosecution against the firms, and warrants have also been issued in some cases. The department is examining whether it can add the charges of cheating and breach of trust against the companies because employees were duped, the report said.
The Income Tax Act, 1961, provides for penalties for defaulting in depositing of deducted tax at source. Under Section 276B of the Income Tax Act, the offense is punishable with rigorous imprisonment for a term between 3 months and 7 years, along with a fine.
The 447 firms are under the I-T Department's scanner from various sectors, including builders, movie production houses, infrastructure companies, and start-ups, said the ToI report.
"In the recent verification surveys carried out, it was detected that in about 447 cases, Rs 3,200 crore was deducted by the companies but not deposited into the government account'' an Income Tax official told TOI. This is for the period April 2017 to March 2018.
TDS is a tool to minimize tax evasion and simplify tax calculations. At the time of paying salary to an employee, the employer is required to deduct TDS and deposit it with the government within a specified duration. When the employer or firm fails to deposit TDS with the government, there is a mismatch when the employee files tax returns.