Tech & Taxes: I-T lens on mismatch in TDS and claims

economictimes.indiatimes.com:

claims can drag both under the taxman's glare.

The Income Tax (I-T) department is using a fine-tooth comb to nab discrepancies in the tax deducted at source, or TDS, by companies and the declarations by its employees in the annual I-T returns. What's underway is a line-wise reconciliation of the two sets of numbers under different heads — house rent allowance, medical insurance, outgo on home loans, tax saving investments under 80c etc.

Around early December, several companies in Mumbai, Delhi and other big cities have been served notices under Section 133C which was introduced in 2014-15, empowering authorities to call for information to verify details.

The companies are being asked to either 'confirm the information' or 'furnish a correction statement', two persons aware of the exercise told ET.

The aim of the department is to track cases where tax has escaped with either the company deducting less TDS than it should have or employees claiming refunds through extra investment declarations — not stated earlier during the year but later included while finalising the ITRs.

«The section 133C (introduced in 2014-15) has been sparingly used so far. But recently many companies have received notices under this section.

This would pave the way for a line-wise verification. It's a smart use of technology by the department with the system making such granular level verification of the reportings by both sides — the deductors in their withholding tax returns as well as the taxpayers in their ITRs.

The department is probably well aware of the limitations — such an exercise is not feasible manually for covering a large number of taxpayers. So, a system-related verification is being done to identify the gaps,» said Rahul Garg,