The coming Budget is expected to bring more income heads in the ambit of tax deducted at source (TDS).
The scope of TDS may be expanded to include more trades and professions. At present, the TDS net covers income from salary, interest on securities, dividend from domestic companies and prize money from sweepstakes among others.
Budget 2007-08 had brought a few more income heads under TDS, such as award of contracts by individuals for business purposes.
According to government data, tax deduction/ collection at source increased by over 51% until January 15 this year. Meanwhile, the net direct tax collection has continued its 40% growth to be at Rs 2,18,538 crore until January 31.The government is likely to strengthen the administration of TDS as well. Major changes in the TDS system, however, are unlikely. But government sources said revenue leakage and non-crediting of TDS continued to plague the income tax authorities.
?The objective here is not to increase tax collection, but to prevent evasion and try and remove whatever little problems exist in the TDS system on issues of crediting the deducted tax,? a government official said. Commenting on the move, Ernst and Young tax partner Amitabh Singh said, “Most areas are already covered by TDS and I don’t think there is scope for widening the base too much.?