The tax deducted at source (TDS) wing of the income tax (I-T) department discovered that a direct-to-home (DTH) telecast operator had grossly violated norms by either refusing to deduct TDS for some services or deducting the same at a rate of only 2% even though the applicable rate is 10%.
The TDS violation was detected through a survey that began last Friday on a Mumbai-based prominent DTH operator. The survey detected a TDS evasion to the tune of Rs56 crore in the past three years.
Officials found that distributors are involved between the DTH operator and subscribers. “The distributors collect money from subscribers for providing set top boxes and dish antennas and after deducting their commission, they give the remaining amount to the DTH operator,” said an I-T official.
He added that the DTH operator should have deducted TDS on the commission paid to the distributor at the rate of 10% and should have deposited it with the I-T department, which it failed to do.The authorities found that in the last three years, the DTH operator paid Rs120 crore to distributors and therefore, at the rate of 10% TDS, Rs12 crore should have been deducted.
In another violation, authorities found that distributors sell re-charge coupons to subscribers for which they receive commission from the operator. He added that the operator paid Rs200 crore commission to the distributors for re-charge coupons in the past three years and therefore it should have deducted Rs 20 crore TDS, which they did not.
The third violation was detected in the payment made by the operator to those who install set top boxes and antennas in households. “The operator deducted TDS, but at the rate of 2% instead of 10%,” the official said. The operator paid Rs300 crore to the installation personnel in past three years, on which only Rs6 crore TDS was deducted. “Actually, Rs30 crore worth TDS should have been deducted,” the official said.