Govt tightens noose on TDS

NEW DELHI: Models, artists, authors, players, coaches and doctors are set to face additional scrutiny from the tax department with an internal document circulated by the Central Board of Direct Taxes asking its field offices to ensure that tax is deducted at source (TDS) on all payments made to them.

An eye on these professionals comes along with instructions on routine suspects, the companies. "It is important that TDS is paid on payments to these categories since it may be difficult to trade the funds later given the unorganised nature in some of the segments," said an official.

TDS has helped the government generate substantial resources, which was estimated at Rs 70,000 crore last year, accounting for 27% of the Centre's gross tax revenue.

Travel agents, those leasing property and payment of fees by hospitals to consultant doctors are among a host of transactions that are under the lens.

In addition to the checks, the government is also going to use surveys as one of the most crucial tools to maximise its revenue collections. The exercise would also be applicable to advance tax payments.

The focus on surveys, which are a step short of searches or raids, enables the tax department to check books of accounts and inventories. Last year, surveys are estimated to have generated an additional Rs 1,500 crore revenue for the government compared to only Rs 211 crore in 2005-06.

Sources said that the tax department's action plan, which was discussed with income tax chief commissioners, last month, has for the first time laid so much emphasis on surveys in these two areas.

Officials said the idea was to enhance advance tax collections so that government had better liquidity and officials could also brace for a better mop-up through other means towards the end of the year.

CBDT has asked chief commissioners to pay special attention to companies enjoying benefits under section 10A and 10B since this fiscal onwards they have to pay MAT.

Government wants the taxman to stick to basics. So, top 100 companies of India Inc would be monitored by chief commissioners for advance tax payment.

For TDS, CBDT wants a check on loss making companies, to ensure that there is timely deposit of tax, and industry and trade are sensitised about the need to deduct tax on salaries and perks.