12 Mistakes/Practices that would invite TDS/TCS Survey by Income Tax Department. Follow best practices to ensure proper compliance of TDS provisions
The Income Tax Central Action Plan 2018-19 has set a target of at least 30 surveys/spot verifications by each Assessing Officer during the year. CPC (TDS) regularly provides useful reports/ inputs to the income tax officers which may be used for identifying survey cases.
Surveys can be effective tools for detection of non-compliance in TDS/TCS and identifying defaults u/s 40(a)(i)/(ia)/(iii) of the Act.
The following indices have been listed in the CAP 2018-19 for selecting a potential case for survey. As a responsible businessman one should follow the applicable provisions related to TDS/TCS and avoid the following situations.
1. If your case is in prosecution list (where TDS/TCS not deposited after deduction);
2. If your TDS payment trend is in stark contrast to other deductors in similar business;
3. If there is a negative trend in payment under a particular Section as compared to preceding Financial year
4. If a Tax evasion petitions (TEP) has been filed against you for non deduction of TDS);
5. If your Assessing Officer has made a huge disallowance u/s 40(a) (ia)
6. If you are a habitual late filers/non-filers of TDS Statement which is primarily due to late payment or non/short deduction
7. If there is a negative growth in TDS payment as against healthy growth in Advance tax payment;
8. If you make frequent corrections in TDS Statements and also the name of deductors is regularly changed.
9. If you are a sick unit or units with negative operating margins as reported in Tax Audit report u/s 44AB
10. If a grievance petition has been filed by the deductee against you
11. if against you there is some adverse news/information available through media/internet;
12. If analysis of case laws decided against you suggests tds defaults
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