The income tax (I-T) authorities have constituted a high power committee to recover about Rs 10,000 crore in tax deducted at source (TDS) that is evaded all over the country every year.
The contribution of Mumbai in this would be close to Rs 3,000 crore. The committee would be holding its first meeting in Bangalore on Tuesday to discuss ways and measures that would help recover this amount.
The committee comprises Member (Revenue) Central Board of Direct Taxes (CBDT), Chief Commissioner of I-T, Bangalore, Commissioner, TDS, Mumbai, Delhi, Chennai and one additional commissioner of I-T.
A senior officer in Mumbai I-T department said that the committee would submit its report to the CBDT Chairperson who would have further discussion with the finance ministry.
The officer said that the committee would discuss various lacunae in I-T law, besides identifying the difficulties faced by officers while implementing TDS on assesses. "The committee would also discuss ways to make the administration more active and also the suggestions that could be given on legislative level," the officer said.
Some provisions are likely to come in the forthcoming budget that would help increase the TDS collection.
Mumbai contributes the largest TDS, which is about 28 per cent of All India collection. Another senior officer said that one of the areas where TDS is evaded heavily is during elections and outdoor programmes of spiritual leaders. The officer said that during elections heavy expenditure is made on campaigns. "They spend on hiring of vehicle, printing of banners, hoardings and pamphlets, and also organise rallies for which pandals are created. All this involves payments to people."
Similar is the case of various outdoor programmes of religious leaders where too pandals are created and banners printed. Not only the department is losing TDS, but also the entire income of the recipient of cash like the hoarding, banner and pamphlet printer are hidden as they accept money in similar way from others too.
If the political parties and other programme organisers deducts the TDS while making payment or at least inform the department about the payments, it would be easy to recover tax.
Yet another area where the department is experiencing heavy TDS evasion is in shipping business. Sources said that many companies hire ships and do not deduct TDS. Officers also pointed out that the share of TDS in overall direct tax collections in developed countries comes to an average of 70 per cent. In India it is just 30 per cent.
The officer said that the major reason is evasion accompanied by certain lacunae in the I-T Act that makes things easy for tax evaders. Repeated attempts to contact CBDT Chairperson Indira Bhargava went futile.