According to officials, the payments made to vendors of raw materials under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in Bihar are subject to a 2% tax deduction at source against the bill of 2.50 lakhs and above. The officials found Goods and Services Tax (GST) evasion by the vendors.
The MGNREGS was launched in the year 2005 which guarantees a minimum 100 days of paid work to rural households in a fiscal year with a concentration on the building of public assets including roads, canals, and other infrastructure.
According to the allegations, the AG office audit team discovered during a random check in the Banka district that the programme officers had not deducted any TDS from payments given to vendors who delivered a variety of materials like dirt, stone chips, bricks, and TMT bars for MGNREGS activities.
The deduction was in accordance with the direction of the Ministry of Rural Development. However, the officials reported to the ministry that there was no software for deducting the TDS.
To inform programme officers of MGNREGA of the regulations governing the deduction of TDS while making payments against materials to suppliers, the department organised awareness programmes.
The officials stated that after receiving the Permanent Account Number (PAN) and Goods and Services Tax Number (GSTN), all of the data will be recorded in the programme in 2 or 3 weeks.
As the officials noted Goods and Services Tax evasion by the vendors, it was decided to levy 2% TDS before making payment to the suppliers.
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