The income tax department has unearthed a massive TDS scam which has revealed that 447 companies cheated the government of Rs 3,200 crore as they didn’t deposit the sum with the government which they had deducted as TDS from their employees.
A report on the matter reveals that the money was diverted to meet their other business obligations. The TDS wing of the income tax department has swung into action after the revelation. A leading media publisher reported that the TDS wing of the department has initiated prosecution against these firms, under Section 276 B of the Income Tax Act, which entails imprisonment from three months to seven years.
The department is mulling to add IPC sections of cheating and criminal breach of trust. The offenders are reported to be mostly builders. One of the offenders is a leading builder who diverted Rs 100 crore income tax deducted from salaries of its employees for business interests. Other companies who are involved in the scam are movie production houses, infrastructure companies and start-ups.
An IT company has not deposited Rs 11 crore, whereas a port-development firm has not deposited Rs 14 crore. An I-T official told TOI that a sum of Rs 3,200 crore was held by these companies between April 2017 and March 2018.
The department intends to arrest some of these people. The department has also initiated action by attaching bank accounts. The source said that the money was used as working capital in several cases.
While some employers have promised to pay, some are unable to pay. In some cases, 50 per cent of the TDS deducted from employees was misused.