FM seeks special audit of railways, defence

Concerned over huge leakage of taxes in central Government departments, the Finance Ministry has asked the Comptroller and Auditor General(CAG) to conduct a special audit in railways and defence ministries.




"The Income Tax deposited by all central Government departments through TDS, which includes salary of Government employees and contractual work, was meagre at Rs 1,800 crore in 2006-07, indicating huge revenue leakage," a senior official of Central Board of Direct Taxes (CBDT) said.



Despite being top spenders in the central Government, Railways and Defence Ministries contributed less than Rs 900 crore through TDS to the exchequer.



"As such, we have asked CAG for special audit of railways and the defence departments," the official said.



The CAG has been asked to look into TDS deposited by these two ministries. Their TDS contribution was significantly disproportionate to the money spent on contracts awarded for production, maintenance and other works, the official informed.



As per the Income Tax Act, it is mandatory for every entity to deduct TDS on contract worth Rs 20,000 in a single payment or Rs 50,000 in aggregate during a financial year. The TDS has to be deposited in the exchequer every quarter.



With the central Government's total expenditure pegged at over Rs 6,80,000 crore during 2007-08, CBDT wants to plug in loopholes in TDS collections by assessing what went wrong in previous years. Of this, defence would account for Rs 1,12,696 crore, while railways is estimated to have a working expenditure of more than Rs 49,000 crore.