The income-tax department has commenced a series of raids on divisions of the state’s electricity department unofficially citing irregularities in tax deduction at source (TDS), while the excise and customs department has sought details on sale of power to consumers.
Officials in the electricity department told TOI that they received notices from the IT department around a fortnight ago asking for files pertaining to turnkey projects such as erection of sub stations and power lines.
“The notice states that we should hand over the required files and documents. The reason why the raids are being conducted was not stated. We have unofficially been told that the TDS should have been 11% (10% + surcharge) under Section 194 J of the Income Tax Act,” an electricity department official said.
I-T officials orally informed the electricity officials that the TDS for the execution part of these projects should have been almost 11% as the engineering nature of the work meant it should attract the rate levied on professional works. The current TDS levied on turnkey projects is 2% for supply of materials as well as execution of works.
The I-T department has raided division 4 and division 8 at Margao, division 10 at Panaji and on Thursday moved to the electricity department’s offices at Mapusa.
In another development, the excise and customs department has asked the electricity department for details on sale of power to consumers. “Right now, we do not know the intention behind this,” the electricity department official said. The department currently pays 12% as service tax as consultancy fees. “We told the I-T department that sale of power to consumers is similar to sale of goods and does not require service tax to come under its ambit,” he added.
Power minister Aleixo Sequeira confirmed the events. “They have sought files and we have given it to them. We are consulting chartered accountants on this.”