In a stern warning, the Central Board of Direct Taxes (CBDT) has said that tax deductors who are found guilty of not depositing tax deducted at source (TDS) in Government's account deliberately beyond the due date, are liable for prosecution and if convicted, they can be sentenced to rigorous imprisonment for up to seven years.
The department in a circular issued on Monday, has observed that several cases have come to its notice where tax deductors, after deducting TDS from specified payments, are deliberately not depositing the taxes so deducted in Government account and continue to deploy the funds so retained for business purposes or for personal use.
“Such retention of Government dues beyond the due date is an offence liable for prosecution under Section 276B of the Income Tax Act, 1961.
The defaulter, if convicted, can be sentenced to Rigorous Imprisonment (RI) for a term which can extend up to seven years,” the circular said, adding that the defaulters would be prosecuted irrespective of the period for which they retained the funds with them.