IT dept detects TDS defaults of hundreds of crores; major telecom, hospital chains in list

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Published: March 5, 2020 3:30 AM

Additionally, an enquiry has revealed that the hospitals were also not making the required TDS payment at 10% from the maintenance charges paid for the hi-tech sophisticated operation theater and diagnostic equipment.

During the investigation based on data analytics, the department also found that the real estate group mentioned above had defaulted on outstanding TDS liability and interest payable of Rs 214 crore. During the investigation based on data analytics, the department also found that the real estate group mentioned above had defaulted on outstanding TDS liability and interest payable of Rs 214 crore.

The income tax department has detected defaults on tax deducted at sources (TDS) by prominent companies, including a telecom operator, several large hospitals, a real estate group and a major oil company. The defaults run into hundreds of crores, the department said in a statement.

TDS payments to the government is about 45% of the total direct tax collection. According to the rules, TDS has to be paid to the central government within seven days from the end of the month in which the deduction is made.

The telecom operator is found to have defaulted Rs 324 crore on TDS payment. “The company did not make the required TDS payment of 10% u/s 194J of the Income-tax Act, 1961 on technical contracts worth Rs 4,000 crore. The amount is further liable to go up once the enquiry is completed,” the department said in a statement, without naming the operator.

Similarly, two premier hospitals with 2,500 and 700 bed capacity have committed TDS default of Rs 70 crore and Rs 20 crore, respectively. While one hospital was guilty of not making any TDS on construction contracts as statutorily required, the other one was deducting tax at the rate of 10% only on salary paid to the doctors, instead of the present TDS rate of 30% applicable for salary payments.

Additionally, an enquiry has revealed that the hospitals were also not making the required TDS payment at 10% from the maintenance charges paid for the hi-tech sophisticated operation theater and diagnostic equipment.

“Furthermore, it was seen that many hospitals were still not complying with the TCS norms which came into effect from June 1, 2016 under which, on any cash payment received in excess of Rs 2 lakh, the hospital was required to collect TCS at the rate of 1% and deposit it to the government account,” the department said.

During the investigation based on data analytics, the department also found that the real estate group mentioned above had defaulted on outstanding TDS liability and interest payable of Rs 214 crore. Major TDS default related to the payment of interest on outstanding loans.

The company had taken huge loans on which interest payments were credited from time to time, TDS was duly deducted during various financial years but was not deposited to government account, the department said.

It added that since it was a case of non-compliance, interest at the rate of 1.5% for every month or part of the month is to be paid from the date on which such tax is deducted to the date on which such tax is actually deposited to government account.

In another action by the TDS wing of the department, default of approximately Rs 3,200 crore was detected in the case of a major oil company, which included short deduction of tax and non-deduction of tax, respectively.

While short deduction of tax pertained to TDS for several years on payment of fee for technical services for installation and maintenance of high tech oil refineries, payments for chemical process of re-gasification and transportation of LNG, default of not deducting TDS was found for composite contracts involving service and purchase of products on which TDS at 2% rate should have been deducted, the department said.

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