Pranab Naik* was puzzled when the letter first arrived. It was a show-cause notice from the Income Tax (I-T) department. Naik, who runs an eight-year-old content company, had received the notice for a delay in payment of tax deducted at source (TDS).

Naik admits there was a five-month delay in paying TDS. “It happened around 2016-17, between the demonetisation and GST period,” Naik says. The delay was on account of the company lacking working capital during this time.

“We had no money as we haven’t raised fresh capital for a while, and the working capital failure was compounded by the fact that payments were getting delayed from our clients, and in some cases, clients had just stopped working because they were trying to recover from demonetisation,” he says. “This was specific to us because we are a consumer product company,” he adds.

Even so, the notice was something of a shock. Because though the TDS amount was large—around Rs 1 crore (~$140,500)—Naik had voluntarily deposited the amount along with the late fees incurred almost a year before the tax department put him on notice.

Naik is one of many business owners feeling the heat as the tax department gets increasingly litigious. Of late, there’s been a huge jump in the number of prosecution proceedings initiated by the I-T department. A January 2018 press release by the Ministry of Finance (MoF) states that for FY18, till the end of November 2017, the department filed prosecution complaints for various offences in 2,225 cases. This is a 184% increase from the corresponding period for FY17, where 784 prosecution complaints were filed.

These complaints have been filed on various counts—for offences where the I-T department feels there has been a wilful attempt to evade tax or payment of any tax, a wilful failure in filing returns of income, failure to deposit TDS or delay in doing so.

The crackdown on TDS payment though is a relatively new phenomenon, and one that has very serious implications on the business ecosystem in the country. “TDS was one subject, which until a few years was not really within this structure and notices were never sent this aggressively,” says Rohit Golecha, senior manager at accounting firm Banshi Jain & Associates in Mumbai.

In an October 2018 report by the English daily The Times of India, AA Shanker, principal chief commissioner of Income Tax for the Mumbai region, said that the tax department has been rigorously pursuing TDS default cases. “Since last year, we have filed more than 800 prosecution cases. We are also carrying out investigations, including surveys, to detect TDS default cases,” he said.

AUTHOR

Sidhartha Shukla

In his earlier stint at Moneycontrol, the website owned by the Network18 group, Sid wrote on cryptocurrencies, cybersecurity, business, and finance. Born in Raipur, Chhattisgarh, Sid has spent most of his life in Jalandhar, Punjab. He has a BSc in Mathematics from St Xavier’s College, Mumbai. Sid is a comic book nerd and a big fan of Alan Moore, Neil Gaiman and Brian Azzarello. He can be reached at sidhartha at the rate the-ken.com

View Full Profile

Subscribe to read this story

The Ken is the only business subscription you need. Questions?

 

Premium

  • 5 original and reported longform business stories every week
  • Access to ONLY India edition
  • Close to 250 exclusive stories every year
  • Full access to over 5 years of paywalled stories
  • Pick up to 5 premium subscriber newsletters
  • 4 original and reported longform business stories each week
  • Access to ONLY Southeast Asia edition
  • Close to 200 exclusive stories every year
  • Full access to all paywalled stories since March 2020
  • Pick up to 5 premium subscriber newsletters

Rs. 2,750 /year

$ 120 /year

India Edition
Subscribe Subscribe
Most Asked For

Borderless

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories

Rs. 4,200 /year

Subscribe
 

Echelon

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 5 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories
  • Bonus annual gift subscription
  • Priority access to all new products and features

Rs. 8,474 /year

Subscribe
Or

Questions?

What kind of subscription plans do you offer?

We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription

What do I get if I subscribe?

The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.

The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.

What topics do you usually write about?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.

How many newsletters do you have?

We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.

You can see the list of newsletters that we publish over here.

Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.

Do you have a mobile app?

Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.

Is there a free trial?

You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.

The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.

Do you offer any discounts?

Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.

Do you offer refunds?

No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Just write to us at support@the-ken.com with details. We’ll help you out.

I have a few more questions. How can I reach out to you?

Sure. Just email us at info@the-ken.com or follow us on Twitter.