TDS from sale and / or services can be applied in case of all type of supply and services instead of so many TDS/TCS provisions at present and proposed. Advance tax, instead of TDS/ TCS is better option in case of organized payees.

[DEV KUMAR KOTHARI]

Earlier article on proposed  TDS sales and services through  e-commerce:

TDS from sale and / or services of e-commerce participants hosted on 05022020

In this article detailed discussion was made about the proposed TDS provisions.  In this article it is suggested that similar provision can be framed for simplified TDS on all sales and services instead of several provisions at present.  

A combined provision can be made for TDS on all sales and services to cover other provisions relating to sales and services on which TDS is applicable.

TDS from sale and /or services:

On lines of TDS on sale through  e-commerce operators,  TDS can be provided on other sales and services in simplified manner. Several provisions, at present can be substituted by one provision for payments to contractors, agents and brokers, rent, professional and technical fees etc.  This will help in simplification and  widening of  tax base.

Different rates of 0.5% to 5% can be provided for different type of sales of goods and services provided.

GST should not be included in gross value of supply and / or service.

Just like in case of e-commerce, as suggested in earlier articles TDS/TCS provisions can be made simple. Just like covering all supplies and services through e-commerce, TDS or TCS can be made applicable on all payments and credits by anyone if payment or credit during a previous year exceeds Rs. five lakh by a buyer of supplies of receiver of services to any one person in whose case total value exceeds ₹ 5 lakh .  The rate of 1% in case of services and 0.50 % in case of supplies can be applied.

It can be provided that initially TDS/TCS will not apply, however, once payment/ credit in favour of anyone exceeds Rs. five lakh, TDS/ TCS shall be applied in respect of entire amount including earlier payment / credit made from  1^st April of previous year. This will avoid TDS/TCS on small payments and also in cases where it is not likely that payment / credit will not exceed applicable exemption limit. For example, some publishers start TDS/TCS from first payment of few hundred or few thousand rupees, even though it is not likely that payment during entire previous year / FY will not exceed exemption limit. This causes many instances of small TDS/TCS. This can be avoided.

Advance Tax is better option in case of organised assesses:

TDS/TCS provision are good for widening base, however, in case of organised sector who are already in tax net and are bound to regularly  file ROI, advance tax payable by assesse himself can be better option instead of TDS/TCS on his account.

Therefore, TDS/TCS should be applicable only in case of salaries, unorganised small sector payees and should be exempted for large organisations.

An option can be provided to receiver of sales value/ service value to choose and make declaration whether he opt to pay advance tax, if applicable, so that he can be allowed to receive payment without TDS/TCS.   

Other articles on Advance tax vis a vis TDS/TCS can be referred.