The Income Tax Department is gearing up to launch a nationwide crackdown on tax defaulters. With the recent budget announcement making income up to ₹12 lakh per year tax-free (effective from the next financial year), authorities are now focusing on taxpayers who have failed to comply with TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) regulations. The department has identified nearly 40,000 taxpayers under scrutiny for potential violations.

Massive Action Against TDS/TCS Defaulters

Officials have confirmed that the Central Board of Direct Taxes (CBDT) has prepared a 16-point strategy to tackle TDS/TCS defaulters. The campaign will target individuals and companies that have either not deducted or not deposited TDS/TCS correctly during the financial years 2022-23 and 2023-24.

The department’s data analytics team has compiled a detailed list of offenders, enabling authorities to take necessary action.

Key Areas of Investigation

A senior tax official explained the investigation approach, stating:

• The primary focus will be on repeat offenders.
• Cases with a significant gap between tax deduction and advance tax payment will be analyzed.
• Any frequent amendments or corrections in the name of the tax deductor will be reviewed.
• Companies using loss-making or sick units for audits will also come under scrutiny.

Legal Framework: What the Law Says

The Income Tax Act, particularly Section 40(a)(ia), states that deductions will not be allowed if TDS has not been properly deducted or deposited with the government.

Additionally, tax officers will closely examine:

• Cases where TDS returns have been modified multiple times to reduce the default amount.
• Complaints filed by deductors against defaulters.
• Irregular TDS payment patterns using data analytics.

However, officials have assured that genuine taxpayers will not be unnecessarily harassed, unlike previous enforcement campaigns.

Budget 2025: Rationalization of TDS & TCS Rates

The Union Budget 2025 has introduced reforms to simplify TDS compliance:

• Reduction in the number of TDS/TCS rates.
• Increased threshold limits for TDS deductions.

These changes aim to make tax compliance easier while ensuring that defaulters are held accountable.

Government’s Stand on Tax Compliance

A senior official clarified:

• Honest taxpayers will benefit from relaxed TDS compliance rules.
• Strict action will be taken against those who intentionally evade taxes.
• The campaign aims to curb tax evasion, boost government revenue, and strengthen the economy.

Conclusion

With this intensified crackdown, the government seeks to ensure a fair and transparent tax system. While law-abiding taxpayers will find compliance easier, those evading tax responsibilities will face serious consequences.

Stay tuned for further updates on income tax regulations and enforcement actions.