New Delhi : Finance Minister Nirmala Sitharaman on Thursday defended taxes collected or deducted at source (TCS, TDS) at the time of transactions, saying these are adjusted later in the regular tax liability of the parties and the provision is aimed at formalizing the economy. are on purpose.
Addressing industry representatives at a conference in Hyderabad, Sitharaman promised to look into requests for relief for micro enterprises in the area of credit. Responding to a suggestion that micro enterprises are not able to deal with norms relating to non-performing assets and provisions of the SARFAESY Act, which allow lenders to recover dues without going to court, the minister said the government above” suggestion.
One suggestion was to give a different treatment to micro enterprises as compared to other classes of borrowers. The government is expanding the scope of TCS and TDS as part of increasing surveillance of economic activities with a view to broadening the tax base. In the Finance Bill, 2023, the government proposed that payment of interest on listed debentures, which were earlier exempt from TDS, would be subject to TDS.
Sitharaman said that TDS and TCS are not new taxes and these are adjusted against the tax liability of a party. “I appeal to all of you to explain the purpose of why we have TCS/TDS. They are not a new tax. The flow of money through transactions will not be predictable.
With the TDS and TCS provisions, “at least we will know who is the giver and who is the taker.” You’re going to have to pay taxes and that’s when you’re going to have to sort it out. I would request those people who have an area of influence like yours to talk about the ways and measures taken by the government to formalize the economy. If you start appealing against TDS/TCS, this country will never be formal,” the minister said.
Finance Secretary TV Somanathan told the industrialists that important announcements have been made in the Union Budget for FY24 to help small businesses get their dues quickly.
“An amendment is being made in the Income Tax Act, by which, if payment is not made to the MSME within the stipulated time, the amount cannot be deducted by the paying organization unless the payment is already is done. It’s a strong incentive for large companies to pay because if they don’t, the expense will be disallowed until it’s paid,” Somanathan said.
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