After Punjab National bank’s fraud, the income tax department has unearthed Rs 3,200 crore scam. There were 447 companies for period April 2017 to March 2018 has deducted Income Tax from its employees but did not deposit with the Income tax department and used money for their business interests. The companies involved in the TDS fraud are mainly builders, Infrastructure companies, port development companies, MNC, movie production houses, infrastructure companies, start-ups and fly by night operators etc.
These companies are under a legal obligation under the Income Tax Act to deduct TDS on behalf of the government and deposit it into the government account within a prescribed time frame. They diverted the money towards working capital. In some cases, of the amount collected from the employees, 50% was deposited with the government and the balance misused by the employer.
The major offenders are :
- A builder who is a leading and politically connected, diverting Rs 100 crore collected from his employees for business purposes.
- An infrastructure company, part of a port development has diverted Rs 14 crore
- An MNC, which provides IT solutions has not deposited Rs 11 crore.
The TDS wing of the I-T has initiated prosecution against these firms and in some cases, warrants have been issued under the Income Tax Act. The offences attract a minimum punishment of rigorous imprisonment of three months to a maximum of seven years with fine. Prosecution is initiated under Section 276 B. I-T is contemplating adding IPC Sections of cheating and criminal breach of trust as this act amounts to duping its employees.