Scrap TCS Provision under Income tax Act
TCS under section 206C(1H) is being levied by Government at the rate of
0.1% (0.075% due to Covid-19 till 31.3.21) on sale of goods under the pretext
of collecting data for purposes of tracking transactions to ensure compliance with
tax laws. E-invoicing was also introduced from 1.10.20 under GST
laws to ensure tracking of transactions to be in compliance with tax
laws. TCS & e-invoicing will track the same data one through direct
tax legislation and another through indirect tax legislation. Is
the intention of the Government to collect data or effectively use the
data? If objective is it to collect data then TCS and e-invoicing can
co-exist but if the objective is for effective usage of data either one of the
legislation should be scrapped most preferably TCS as it is more of a
subordinate legislation having limited data scope whereas e-invoicing is a more
broader scope legislation. Let us the industry be pragmatic and oppose
TCS as this leads to unnecessary chaos for all practical purposes – charging an
additional tax in the invoice, collection from customers, depositing in
customer PAN account, reconciling with 26AS (imagine companies having huge
vendor base reconciling with 26AS will be a huge nightmare). It may
not be a surprise if a provision similar to 40(a)(ia) is also implemented for
failure to collect and pay TCS creating more chaos in tax computation. Here
I am reminded of the 3 “goods years” when we had the “Fringe Benefit Tax – FBT”
which caused more pain than gain for both the industry and Government.
Similarly TCS will cause more pain than gain and it needs to be
stopped ab-initio as it will create more work for business with little gain for
them and creates one more spoke in much used phrase “ease of doing business”.
Faceless Assessment – Relief for AEO-T2 onwards
Faceless assessment is here to stay and I personally feel it is a good move by the Government albeit the difficulties faced by importers (and also officers in some cases). These difficulties are initial blues faced and we are sure over a period of time this will be solved largely. At the moment it takes around 10 days for cargo to be assessed if it goes for faceless assessment and this time taken is unlikely to be reduced in near future, which surely causes inconvenience to industry in its supply chain. To avoid delays in faceless assessment and to ensure officers concentrate more on key cargo it is imperative to reduce the total population of import consignment which is used for selecting cases for faceless assessment.
It is pertinent to note that an entity with AEO status is considered as a secure trader and a reliable trading partner globally. Further AEO-T2 status is awarded to an importer after physical verification of premises and also after detailed study about its processes. With the stringent methodology followed for AEO-T2 certification and also provision for audit also being present my suggestion is to have 100% self-assessment for all AEO-T2 certified importers. This will take away approximately 15% to 20% of big importers out of faceless assessment (the % of import cargo by these AEO-T2 certified importers will be much higher around 30%+?). This bring about a big relief both to industry and officers (Officers usually do not have much challenge with imports of big certified importers) and there will be ease of doing business and improvement in supply chain.
