I-T Dept Uncovers A Rs 3,200 Cr Scam; 447 Companies Divert TDS To Fulfill Business Obligations

The Logical Indian Crew

March 5th, 2018

Courtesy: India Today, Indiatimes, TOI | Image Credits: News Nation.

The Income Tax Department has uncovered a scam of Rs 3,200 crore where about 447 companies failed to deposit the Tax Deducted at Source(TDS) collected from the employees, with the government. It is reported that TDS collected from the employees was used by the companies to further their business interests.

The TDS wing of I-T has decided to prosecute the defaulters under Section 276B of the Income Tax Act, under which the offences attract imprisonment of three months to seven years, with fine.


447 companies failed to deposit TDS

TDS  is a means to collect income tax in India under Indian Income Tax Act, 1961. Any payment covered under these provisions will be paid after deducting prescribed percentage.

Reportedly, most of the offenders are builders. One of them is a leading builder, who diverted Rs 100 crore TDS deducted from the salaries of the employees for business interests. Apart from builders, the other accused include movie production house, infrastructure companies and startups. 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 The Times of India,”In the recent verification surveys carried out, it was detected that in about 447 cases, Rs 3,200 crore was deducted by the companies but not deposited into the government account.”

This is for the period from April 2017 to March 2018.

The Income Tax department has initiated recovery actions by attaching the bank accounts apart from movable and immovable assets.

An I-T official said,”In several of the cases, they diverted the money towards working capital. Some apologised and promised to pay while some said they could not pay because of adverse market conditions. In some cases, of the amount collected from the employees, 50% was deposited with the government and the balance misused by the employer.

The Income Tax Department is also contemplating  adding IPC Sections of cheating and criminal breach of trust as this act amounts to duping its employees.

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