A senior revenue department official told The Financial Express that Finance Act 2001 had significantly increased the ambit of the TDS provisions and hence there was a need to put in place a scrutiny mechanism to enforce compliance.
He added that one of the critical areas in coming years in respect of TDS was taxation on perquisites where the Finance Act 2001 besides broadening of its coverage, had put the responsibility of providing details about the perquisites paid to an employee, on the employer.
According to the guidelines on valuation of perquisites issued by the CBDT last month, the employer will have to furnish a new Form 12BA stating the nature and value of perquisites in case of employees drawing salary above Rs 1.5 lakh. In other cases, the information will have to be provided in Form 16.
The official said that while there was a need to educate executives regarding the requirement of TDS provisions in view of the new scheme of taxation of perquisites, compliance to them can be ensured if there was a scrutiny mechanism in place.
Though the Central Board of Direct Taxes (CBDT) has not estimated how much of revenue will come from the changes in the norms for taxation of perquisites in 2001-02, it is hopeful that once the new regime gets crystallised, strict vigil coupled with further changes can generate substantial tax from this segment.
Another new area included under the TDS ambit this year TV and other game shows will also be under the strict vigil of the CBDT, said the official.
He added that reduction in the limit of interest on time deposits in banks for TDS from Rs 10,000 per year to Rs 5,000 per year, too, was expected to yield in significant TDS collection. To achieve the expected results, there is need for effective monitoring coupled with proper scrutiny of Form 15H received from the banks, he added.
Under the new mechanism, the CBDT would also engage in verification of TDS under Section 195 allowing remittances made abroad through the RBI on the basis of certificates of the chartered accountants. As a precursor to the enforcement of new scrutiny mechanism on TDS, the CBDT has already instructed its senior officials to monitor collection of 100 top tax deductors range-wise on a month-to-month basis.
The official said that the Income Tax officials would match TDS returns with the returns of the deductees to find out short-deduction or non-deduction. He added that the board was currently streamlining the TDS wings throughout the country for this purpose, and was also computerising them on a priority basis.
According to him, if needed, TDS surveys under the supervision of commissioners would be launched in a major way to detect defaulters.