The CBDT has issued a document titled “Standard Operating Procedure For Prosecution In Cases Of TDS/ TCS Default“. The SOP sets out in a systematic manner the procedure for identification of cases of TDS/ TCS default, the procedure for launching prosecution and the time frame for completing the entire process. The role of the different TDS authorities in addressing the issue of prosecution and compounding of TDS cases is also set out in detail.
Note: This has to be read with the CBDT Guidelines For Compounding Of Offences Under Direct Tax Laws
Signalling mandatory prosecution in all cases above Rs. 1 lac default is unreasonable. In fact having mandatory clause should be avoided. There can be an assessee that deposits lacs or crs of TDS yet one failure to deposit late TDS should not subject it to prosecution process. Those who are habitual defaulters only should face prosecution and not those who make one odd lapse.