FICCI Infra committee for online IT refund & charge Service tax on the lines of TDS

FICCI's National Committee on Transport infrastructure has urged the Union Finance Minister Arun Jaitley to remove delays in refund of High value Income tax (IT) dues by making the process online and tax payer friendly and deduct Service Tax on the lines of TDS,where service taker deposits the tax.

"The Union Finance Ministry has made filing of Income Tax customer friendly through online mechanism. However, the same is not true for refunds. To make the process of refund tax payer friendly FICCI suggests, issuance of an online passbook system linked with the PAN No., where the refunds are credited as dues for each financial year. The same could be used by the tax payer for payment of advance tax for the subsequent year. Such a passbook would lend credit worthiness to the tax payer and the Banks will also willingly lend, if the tax payer wishes to borrow to meet his/her tax liabilities." Said Mr K.K.Kapila, Co-chairman, Ficci's National Committee on Transport Infrastructure and Chairman International Road Federation (IRF) in a letter to the Union Finance Minister.


"Further, refund of Income Tax is a part of the working capital for any business entity, particularly consultants, whose main assets are in the nature of recoverables from clients. Linking the issue of refund to the finalisation of scrutiny assessments leads to avoidable and prolonged delays which adversely affect the working capital funding of the Assessee, particularly, the consultants. This in turn has an adverse effect on the business since banks do not freely sanction working capital advance to the Consultants. It is, therefore, requested to delink the issue of refund from finalisation of the assessment. In case of any demand resulting as a consequence of scrutiny assessment, the Department has all the means at its disposal to recover the dues." Mr Kapila said.

"We also request to charge Infrastructure consultants Service Tax via Tax Deduction at Source (TDS) mode. This would mean that when a Client makes payment to the Consultants for their services, he simultaneously deposits the Service Tax amount with the Service Tax Authorities against the Service Tax account of the Consultants. Regarding the accounting of CENVAT credit the refund can be claimed on same basis as in case of Refund of Income Tax on reconciliation. This mechanism would solve the entire problem, wherein, the Government will be able to collect its revenue faster, than it does at present and ensure full compliance. Besides the Service Tax Payers will heave a sigh of relief." Said Mr Kapila.

"The Government funded infrastructure projects is impeded by discrimination against the Consulting Engineering Companies by levy of Service Tax. The Consulting Engineering Companies provide services relating to Survey, Investigation, Design, Detailed Project Report & also Supervision for implementation of such infrastructure projects. This critical issue originated with the introduction of Point of Taxation Rules 2011 & subsequent amendment in Finance Act 2012. The anomaly & discrimination in implementation of GST for Consulting Engineering Companies providing services for Government funded infrastructure projects are the following:

"As against the earlier provisions of paying Service Tax within 30 days of receipt of payment, the Consultants are being forced to pay Service Tax within 30 days of issuance of invoice itself, even if the invoices remain unpaid for months. Delayed payment of Service Tax further attracts huge interest @ 18%. The notification is thus highly discriminatory, prejudiced and unjust to the Consultants." Mr Kapila said.

Source : Equity Bulls

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