Nearly 40,000 taxpayers are being investigated by the Central Board of Direct Taxes (CBDT) in relation to tax deductions they claimed in FY 2022–2023 and 2023–2024.
To find differences in Tax Deducted at Source (TDS) compliance, a 16-step procedure has been put in place.
40,000 Taxpayers To Be Investigated By CBDT
A list of taxpayers who have been flagged by the data analytics unit will be sent notifications so they can correct any mistakes in their tax deposits.
The emphasis is on:
- Repeat offenders
- Significant discrepancies between advance tax payments and tax deductions
- Regular updates to the deductee’s information
- Companies that include dormant or unprofitable entities in audits
Cases involving significant disallowances under the Income Tax Act’s Section 40(a)(ia) will be carefully scrutinized. Deductions are prohibited under this section if TDS is not withheld or sent.
Authorities will also keep an eye on instances in which TDS returns are altered on a regular basis, which will lead to a significant decline in defaults that are reported.
Field Units Directed To Use Data Analytics To Find Irregularities
Field units are directed to use data analytics to find TDS filing irregularities and analyze deductee complaints.
The government has promised that, like previous compliance measures, this initiative will not be intrusive.
The following simplified TDS and TCS regulations were introduced in the Union Budget 2025–2026:
- Simplifying tax rates
- Making deduction thresholds higher
While offering assistance to law-abiding taxpayers, the government seeks to strike a balance between compliance enforcement.
The examination comes after Nirmala Sitharaman, the finance minister, recently introduced the Income Tax Bill, 2025.
By increasing the personal income tax exemption threshold from Rs 7 lakh to Rs 12 lakh, the Union Budget 2025 significantly benefited the middle class.
Recently, Finance Minister Nirmala Sitharaman announced that under the new tax regime, individuals earning up to ₹12 lakh annually (₹12.75 lakh with standard deductions) will not have to pay any income tax. This move is expected to benefit the middle-class segment and increase disposable income.
The Budget also confirmed the introduction of a new Direct Tax Code, replacing the Income Tax Act of 1961. The new code aims to simplify tax compliance, reduce legal complexities, and eliminate the option of choosing between old and new tax regimes.
