NEW DELHI: Tax deducted at source (TDS) has become a very effective tool for the government to increase the taxpayer’s base. In a meeting with the Finance Minister Nirmala Sitharaman on Thursday, the tax department informed the minister that due to the introduction of more TDS categories, the number of transactions reported have more than doubled to 144 crore in FY22 from 70 crore in FY16.
“This has also resulted in an increase in the number of unique deductees — almost doubled from 4.8 crore (in FY16) to 9.2 crore (in FY22),” the department of direct taxes informed the finance minister during a review meeting.
The tax department data shows that tax collection through TDS has increased from 33% of the gross direct tax collection in FY16 to 39% in FY22. Over the past few years the government has either brought new transactions under TDS or increased the TDS rates. In Budget 2023, the government increased the rate of TDS on foreign remittances for oversea tour packages from 5% to 20%. TDS is a tax deducted on the source of the income – salary, rent, dividends, etc. In FY22, the government collected `6.34 lakh crore as TDS of total Rs 16.36 lakh crore collected via direct taxes.
Sitharaman apprised of the fact that the personal income tax (PIT) to GDP ratio has increased from 2.11 in FY15 to 2.94 in FY22. The tax department also informed the minister that the introduction of new data sources in Statement of Financial Transactions (SFT) like dividend and interest, securities, mutual funds and information from GSTN in recent years has led to 1,118% increase in reported information.
“This has resulted in addition of information of about 3 crore persons,” said the tax department. She reviewed the pending disciplinary cases against employees/officers and observed that administrative and procedural delays should be minimised.
She directed CBDT to take prompt action in finalisation of such proceedings. Besides this, the minister emphasised that CBDT should ensure timely and appropriate actions on all applications filed by taxpayers and desired a reasonable time frame for disposal of such applications.