40,000 taxpayers under lens for deductions, CBDT targets TDS defaulters
New Delhi, Feb 26, 2025
The focus will be on habitual violators, cases showing significant gaps between tax deductions and advance tax payments, instances involving frequent revisions to deductee details
Nearly 40,000 taxpayers are being examined based on tax deductions claimed during the financial years 2022-23 and 2023-24, according to a report by The Economic Times.
The Central Board of Direct Taxes (CBDT) has devised a comprehensive 16-step strategy to pinpoint discrepancies in Tax Deducted at Source (TDS) compliance, the report said. Meanwhile, the data analytics unit has compiled a detailed roster of taxpayers flagged for review.
"Using insights from our analytics team, we’ll first notify these taxpayers, giving them a chance to rectify any oversight in tax deposits," a senior official told ET.
The focus will be on habitual violators, cases showing significant gaps between tax deductions and advance tax payments, instances involving frequent revisions to deductee details, and situations where businesses have incorporated unprofitable or dormant entities in their audits, added the official.
Cases with substantial disallowances under lens
The board has directed assessing officers to flag cases with substantial disallowances under Section 40(a)(ia) of the Income Tax Act, which denies deductions if TDS is either not withheld or not remitted to the government.
Tax officials will also monitor cases where TDS returns are repeatedly amended, resulting in a notable decrease in reported defaults.
Field units have been instructed to pay attention to complaints raised by deductees and leverage data analytics to spot trends and irregularities in TDS submissions.
The official added that similar to past initiatives, this effort will adopt a non-invasive approach.
Simplifying TDS rules
In Union Budget 2025-26, the government outlined plans to simplify TDS and Tax Collected at Source (TCS) rules by streamlining rates and raising thresholds for deductions.
“There’s a balanced strategy here — easing TDS rules for compliant taxpayers while cracking down on deliberate evaders to ensure a just and balanced tax framework,” the official said.
This comes weeks after Finance Minister Nirmala Sitharaman introduced the Income Tax Bill, 2025. Earlier this month, Sitharaman presented the Union Budget 2025, providing significant relief to the middle class. One of the most notable measures was the increase in the personal income tax exemption limit from Rs 7 lakh to Rs 12 lakh.
[The Business Standard]
