CBDT detects non-compliance by state govt entities in filing returns

The Central Board of Direct Taxes (CBDT) has detected multiple instances of non-compliance by state government entities and local bodies in timely filing of income tax returns, a senior official said. The board has subsequently issued a directive to its zonal heads to ensure that banks do not default on deducting tax at source from these entities. “State PSUs, local bodies are not exempted from filing of income tax returns, but many are not filing returns on time or not filling at all,” the official told ET.

The official said there were also instances of defaults on payment of advance tax by many state public sector undertakings (PSUs). Non-deduction of tax at source on interest income earned by state PSUs has also been detected. Some of the PSUs, authorities and local bodies were also not deducting TDS on payments to their vendors or contractors, as mandated by law.

This non-compliance, the official said, was widespread and not state specific. The board has asked field formations to reach out to state Accountant Generals and collect information on all major contracts and sub-contracts given by various departments and monitor their TDS payments.

The CBDT has also instructed its zonal heads to convene monthly meetings with banks and state Accountant Generals to ensure compliance with TDS provisions.