The Central Board of Direct Taxes (CBDT) on Monday clarified that the Mumbai Income Tax TDS office has issued prosecution show-cause notices only in a limited number of big cases where more than Rs 5 lakh of tax was collected as TDS from employees etc., and the same was not deposited with the Income Tax Department in time.

The clarification follows former Union Finance Minister P Chidambaram attacking the income tax department in a chat with editors in Bengaluru on Sunday for turning criminalising what he thought were civil liabilities on entrepreneurs. “A young lady entrepreneur employing six people missing to deposit her TDS (tax-deducted at source) in time does not make her a tax thief,” he had said. He called the department’s action as “tax terrorism.”

It was this government that has conferred extraordinary powers on even the lowest level income tax officers, he said. “The Income Tax Act has been criminalised in ways that are unacceptable. That is why industries, businesses,especially small and medium enterprises regard this government, especially the IT department’s action, as tax terrorism,” Chidambaram had said.

The CBDT said that some defaulter companies and vested interests are deliberately misleading the media to thwart action against themselves. Having deducted tax from employees and other taxpayers and not depositing the same in time in the Government Treasury is an offence punishable under the law. It also affects the interest of the employees from whose salary the tax has been deducted by the unscrupulous employers who have not deposited the same in time in the Government Treasury. If the TDS is not deposited in time, the employee would be ineligible for claiming credit of the tax deducted when he files his own return.

In a press release, the CBDT also stated that in last one month, only in 50 big cases prosecution notices have been issued by Mumbai IT TDS office. Out of these, in 80% of the cases the TDS tax default is above Rs. 10 lakh and in 10% cases, TDS default is between Rs. 5 to Rs.10 lakh. In the remaining 10% cases, TDS default is of more than Rs. 1 crore as detected in the survey. Prosecutions have also recently been launched against 4 big business houses where more than Rs 50 Crore of tax was collected by them from the tax payers and yet not deposited with the Government in time. But such legal and rightful action is being unfortunately projected in the media by the vested interests as if the Department is going overboard to harass small employers.

Source : Times of India