The Mockery of ease of doing business

 

The Chief policymakers of the country are making a sound that they implementing policies to do ease of doing business in the country but we find every time the bureaucrats who draft these policies are actually making a mockery of the term ease of doing business.  This statement becomes more true when we can see the hardship to the business by the following change in TDS rules from July 2021.

Every business required to deduct correct TDS on their payment as default in TDS deduction will have the number of penal consequences like disallowance of expenses on which  TDS not deducted, payment of tax, interest & penalty and prosecution also.  Further incorrect TDS deduction reporting will also question by stakeholders to the trustees who are running the business.

 The government now introducing the following new rules in the TDS with effect from July 1, 2021.

01.  Deduct TDS at a double rate for non-filers vendors.

02.  Deduct TDS at 20% in case vendor PAN not linked with Aadhar

03.  Deduct TDS @ 01.% for purchase of goods or vendor will collect TCS.

No doubt the above new rules will increase the tax collection of the government, but the policymakers had not to think about how business can implement these changes. 

Let us discuss the challenges of new rules one by one. Companies have been asked to deduct TDS at the double rate for vendors who had not to file their income tax return for two years. Now there is no way companies can verify whether their vendors had files income tax return or not.  The companies now sending emails to all their vendors and asking their vendors to provide evidence that they had filed their income tax return for the last two years and this process of collecting information going to be repeated every year. Further companies also required to inform their customer that they had filed their income tax return and hence do not charge double the rate of TDS. The FM should explain to the companies how the new rule match with the vision of government -  ease of doing business.

The individual vendors whose PAN were not linked with Aadhar will be inoperative and hence it as good as there is no PAN. An individual may be a vendor, shareholder or employee of the company and companies required to deduct TDS while making payment to him. Now if the individual PAN  gets inoperative due to non linking with Aadhar, then the company have to deduct TDS at a 20% or higher rate whichever is applicable. Companies here also have to know knowledge how to validate the PAN of an individual and again FM should explain the captioned question.

Continuing with the mockery, there is a new section, where TDS has been introduced on goods. Further, in case the company not required to deduct TDS, the vendor will collect TCX from their customer. The government must take note that software engineers across the globe failed to include this new rule into the ERP and now the whole process became manual which will be prone to error and as mentioned above, companies require to face penal consequences as they were not able to implement successfully the captioned new changes in the TDS rules.

The government has all the rights to collect taxes and increase their revenue but they should burden the companies with compliances that are difficult to comply with.  Hope the government look into your request and came with policies that really make it easy of doing business in the country.