Subsequently the direct tax to GDP ratio of UK accounts
for 13.27 per cent, Australia's 16.46 per cent while India lags far
behind at 3.26 per cent. The relevance of this data was really to
drive home the point that tax collection in India stands remains in
a dismal state. Hence to raise the level of tax collection as painlessly
as possible, one of the primary ways is through TDS (tax deduction
at source). Avowed to the purpose of raising the tax levels in accordance
with the law and with minimum cost to the society and the government,
strategies that were broadly proposed were as follows:
- Publicity campaign propagating TDS
- Making compliance as easy as possible
- Ensuring awareness of the obligation deductors (agencies) have
towards the government
- Carrying out surveys to analyse how companies are going about
their tasks and help them comply better.
- Also ensure that the Government relies on voluntary compliance.
Going back a bit, in June 2003 the government introduced e-filing
of the returns. 31 June 2003 witnessed a reduction in the number
of returns filed to only three. Now in the New Year, come April
and sec 199 will undergo a change with deductors not having to issue
a TDS certificate to the deductee and instead OLTAS (Online tax
accounting system) will come into play. Also de-materialisation
of TDS certificates will take place with the coming of electronic-TDS.
A significant issue raised at the seminar was that when advertising
agencies make payments to the media are they required to be charged
separately for TDS?
According to the interpretation, when the advertiser pays the advertising
agency, he has to deduct one per cent as TDS. But then advertising
agencies required to pay TDS on advertising commission?
It being, if the advertising agency and the media share a principle
to principle relationship then TDS does not come into play, although
if they share a principle to agent relationship then TDS has to
be imposed. So the commission garnered by the advertising agency
has to first be defined as to whether it is a trade discount or
a commission. The decision is yet to be made although thoughts on
this were invited by the chief commissioner so as a mutual decision
could be arrived at.
Looking at where the tax information network (TIN) is moving this
year, the national securities depository LTD (NSDL) has been entrusted
the responsibility of TIN, the system scalable to offer easy access
to tax administration and tax payers. Tax payers will be provided
the facility of accessing TIN through a secure and confidential
permanent account number (PAN) based identification to ascertain
tax payments credited to their account and the status of their returns
and refunds.
The seminar - which was conducted by Senior Officers from the Office
of the Commissioner of Income Tax (TDS), Mumbai proved useful and
educative not only for finance / accounts people in advertising
agencies but as well as for senior officers of CIT (TDS) as they
not only addressed concerns about TDS but also demonstrated e-TDS
filing and other recently introduced procedures and developments.
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