Several edn institutions under I-T scanner for TDS violations

​Hyderabad: The Income Tax Department received information through internal investigation by TDS Section that TDS remittances done by several educational institutions are not commensurate vis-à-vis their remittances for the previous financial year.

These educational institutions offer courses like architecture, fine arts, nursing, engineering, science & arts graduation, school and intermediate education, IIT & NEET coaching centres etc. spread across both government and private sector. The TDS survey was done on 11 such institutions based in Hyderabad.

During investigation it was discovered that there are statutory violations such as non-remittance of TDS deducted, non-filing of returns, TDS not being affected at incorrect rates etc. Further, there had been a spate of grievances from lecturers working with these educational institutes stating that the institutes have failed to issue them Form 16, without which the lecturers are unable to file their income tax returns.

The TDS department surveyed these institutions to unearth TDS default on various above-mentioned counts. It is pertinent to note that TDS revenues pertain to a sizable amount as main revenue source for Income Tax Department amounting to as much as 40 per cent of the direct tax collections and is a major contribution to the central finances from the State. So far, there has been collection of Rs 13,587 crore for Telangana as on date.
As a result of the coordinated survey action, it was found that there was TDS violations on expenditure of nearly Rs 50 crore which amounts to TDS revenues of over Rs 5 crore. 

This amount is excluding the interest and penalty. Additionally, a number of issues, such as the following, were flagged. Non-filing of TDS returns, multiple errors in returns leading to short payment, short deduction, late payment charges and late filing levy, non-deduction of TDS on payments other than salaries and mess charges, re-employment of superannuated professors on contract basis, but designating them as consultants while they performed duties like a regular salaried employee. 

There were no TDS deductions on payment to guest lecturers. Further, the genuine grievances of the lecturers are being resolved by enforcing the remittance of TDS deducted by the institutes against the salaries paid to the lecturers. This would help the lecturers to file their Income Tax returns and avail the credit of prepaid taxes. 

The TDS division of Income Tax Department shall continue such measures with twin objectives of ensuring timely and commensurate TDS remittances and redressing grievance of salaried employees against their defaulting employers. It was brought to the notice that TDS deductions are applicable on all major payments under the following sections of the Income Tax Act, 1961: 

a) Salary- 192; (b) Interest other than interest on securities – 194A, Contracts – 194C, Commission or brokerage – 194H, (e) Rent – 194I, (f) Transfer of immovable property – 194-IA and (g) Fee for professional or technical services -194J.

The Income Tax Department wishes to inform that individuals and organisations are required to deduct tax at source while making payments unless explicitly exempted to do so. They are further required to remit the tax so deducted into the government account within the stipulated time period.

Violations of TDS provisions attracts penalties under section 271C and 272A(2) of the Act. Further, non-remittance of tax into the government account within the prescribed time limits is punishable offence under section 276B of the Income tax Act with rigorous imprisonment for a term which may extend to seven years and with fine. 

It is pertinent to note that there is a rise in convictions on the account of tax violations and in a recent case, a Director of a prominent Delhi based real estate company was sentenced to jail on the account of TDS violations, said Dr Rajendra Kumar, Commissioner of Income Tax (TDS).