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June 26, 2006 12:36 IST
Railways, steel, ship breaking, liquor, parking and toll plazas would come under closer watch of the tax department this year for collection of tax collected at source.
Under the Income Tax Act, TCS [Get Quote] is applicable on profits and gains from the business of trading in alcoholic liquor, forest produce and scrap. Sale of scrap by steel industries like Tata Steel [Get Quote], the railways and ship breaking companies attract this levy.
The tax department mops up around Rs 1,000 to Rs 2,000 crore (Rs 10 billion to Rs 12 billion) every year by way of this tax.
"As per the action plan of the Central Board of Direct Taxes for 2006-07, the department has decided to focus on collection and payment of TCS on sale of scrap by certain industries," an official said.
The government had, around two years ago, included sale of scrap and toll plazas under TCS. A new challan was also introduced by the tax department for the TCS in June 2004.
In March 2005, the government had introduced electronic filing of TCS under Section 206C of the Income Tax Act. The Act contains penal provisions for failure to pay TCS.
Under Section 276BB, if a person fails to collect and pay TCS as required under the provisions of Section 206C, he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend up to seven years with fine.
The CBDT had last year identified around 20 transactions for checking avoidance of TCS and tax deducted at source.
These included payment of interest on belated payment of compensation under the Motor Vehicles Act and the accrued interest on term or cumulative deposits not maturing during the year. Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
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