Income Tax Department Unearths Rs 3,200 Crore TDS Scam By 447 Companies

| March 5 , 2018 , 10:21 IST

The Income Tax Department has unearthed a scam worth Rs 3,200 crore conducted by 447 companies where they deducted the TDS tax from their employees but did not deposit with the government, instead diverting the funds to further their own interests.

“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 official said to TOI.

According to sources, the TDS wing of the Income Tax department has initiated prosecution against the firms, even issuing warrants in some cases. All of the cases took place between April 2017 to March 2018. The I-T department is also considering adding IPC Sections of cheating and criminal breach of trust against the accused as the TDS evasion amounts to duping of the concerned employees.

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As per the Income Tax Act, companies are under a legal obligation to deduct TDS on behalf of the government and deposit it into a government account in the prescribed time frame. Failing to do so, under Section 276 B, the offences have a minimum punishment of rigorous imprisonment of three months to a maximum of seven years with fine.

“In several of the cases, they diverted the money towards working capital. Some apologised and promised to pay while some said they could not pay because of adverse market conditions. In some cases, of the amount collected from the employees, 50% was deposited with the government and the balance misused by the employer,’’ an official explained.

The offending companies include builders, movie production houses, MNCs, infrastructure companies, start-ups and fly by night operators.