Employers, who are not collecting and depositing tax deducted at source(TDS) from the salaries of their employees, will have to pay heavypenalty from April 1 onward as the Income Tax Department has decided totighten the noose around them. Sources in the Income Tax Departmentsaid till now no penalty is specified under the Income-tax Act forfailure to collect TDS.However, the Central Board of Direct Taxes(CBDT) has been receiving information from various quarters that in anumber of cases, employers as well as accounting departments in manycorporates were not collecting and depositing the TDS, especially afterthe expansion of the provisions of TDS. In a recent circular, theDepartment has inserted a new section 271CA to provide for imposition ofpenalty on any person who is responsible for collecting tax and hasfailed to collect TDS in accordance with the provisions of Act. Thisamendment will take effect from April 1, 2007, and will, accordingly,apply in relation to the assessment year 2007-08 and subsequentassessment years, sources said.The employers, who fail to collect TDS,will have to pay a penalty equal to the amount of tax which they failedto collect at source and will be imposed by the Joint Commissioner ofIncome Tax.However, employers would be able file an appeal against theorder of the department, if they consider that the penalty has beenimposed wrongfully.The Income Tax Department will also ensure that nopenalty is imposed if the person concerned proves that there was ajustified cause for his failure to collect and deposit TDS taxes. Sources-- HindustanTimes. com » Business » Story