Introduction:
Provisions of Tax
Deduction at Source (TDS) contained in Chapter XVII-A of Income-tax Act,
1961 (“the Act”) impose a heavy burden on tax payers, especially
businessmen. Readers are aware of highly damaging consequences of
defaults in respect of contraventions of these provisions – viz. section
201, 40(a)(i), 40a(ia), 271-C, 272A, 276 B and so on. Having regard to
the complications in implementation and the harsh consequences of
default, law-makers in their wisdom have generally kept the common man
viz. individuals and Hindu Undivided Families (HUF) out of the
obligation to deduct tax. However, under certain circumstances, even
individuals and HUF’s are required to comply with these provisions.
These situations are:-
(a) payments of salaries
(b) payment to non-residents ; and
(c) if the individual/HUF’s business or profession was subject to tax audit u/s. 44AB under turnover criterion.
The unfairness:
Obligation
in respect of payment to non-residents is to some extent reasonable
since it entails the outflow of money from the country.
The Act
in certain sections also provides exception so that an individual/HUF,
though otherwise liable to deduct tax is not required to do so on
payments for personal purposes. Thus, s/s. (4) of section 194.C (payment
to contractors) exempts payments made exclusively for personal purpose.
(e.g., repairs/painting of the businessman’s residential house). So
also, the 3rd proviso to s/s. (1) of section 194.J (payments to
professionals) grants similar exemption. Hence, payments to lawyers,
architects, doctors for personal purposes by businessman will not
attract TDS provisions.
As against this, no such exemption is provided in respect of the following payments:-
Section 192 – Salaries (say salary payable to personal attendant for a patient/disabled person)
Section 194A- Interest other than interest on securities (say interest on housing loan taken from friends, relatives, etc.).
Section 194H- Commission or brokerage (say brokerage on sale/purchase of house/car/other assets) Section
194I – Rent for residential house, or rent for personal car/other assets.
There
appears to be no logical reason for such discrimination. Due to such
inconsistencies, the study and implementation of law also becomes
difficult.
Suggestion:
Similar exceptions should be provided in aforesaid sections as well.
