I-T radar on IIT, IIM clients; payment to surgeons

Consultancy services taken from the elite IIMs and IITs and cash payments made to surgeons of large multi-speciality hospitals have come under the tax scanner as a country-wide Income Tax department probe has found that these transactions are largely escaping the tax net.

An elaborate 'analysis probe' conducted by the I-T department's snoop apparatus has found that a number of services, which also includes large and small Public Sector Undertakings (PSUs) and state government enterprises, are a large catchment area to realise taxes under the Tax Deducted at Source (TDS) category and should be essentially tapped now.

A communication to keep a track on these potential tax generating areas has recently been sounded by the department to its Chief Commissioners (CCs) and Director Generals (DGs) during a recently held conference of the department brass and the CBDT in the national capital.

According to the I-T data, while the Indian Institutes of Management (IIMs) and Indian Institutes of Technology (IITs) render consultancy services to a host of government and non-government sectors, the beneficiaries (clients) of these services do not deduct the TDS on the payments made to these elite institutions.

The report stated the consultancy offered by these elite pan-India institutes as "commercial".

The I-T found that on an average an IIM undertakes about 40 fresh consultancy projects in an year on a host of subjects. While some are related to giving advice to clients on specific issues and problems, others include training modules for the staff of the client company, while some are related to orient maximum output from a desired project of the client firm.

The IITs too undertake similar projects but their consultancy services are higher on the technical and statistical fronts, the I-T found.

The analysis probe also reported that big hospitals are making "huge cash payments" to doctors, particulary surgeons, without deducting the requisite TDS and this is an area to be tapped by the I-T.

The department, which is poised to chase the projected direct tax collection target of Rs 5.7 lakh crore for the current fiscal, will now also scan the annual reports of state governments and PSUs brought out by the Comptroller and Auditor General (CAG) to check if TDS and other taxes are being deducted and are dropped in the governments revenue kitty.

Another large area which will be under the taxman's lens for TDS payments are the "huge payments" made by Non-Governmental Organisations (NGOs) for conducting a host of programmes in the service sector.

Other regular areas which will see an increased scrutiny of the tax department would be the TDS received from paymemnts made in liue of transfer of immovable properties and acquisition of land.

The I-T top brass, during the conference, also decided to closely monitor cases of quoting "wrong PANs" (Permanent Account Numbers) to avoid TDS.