Tax collection revision requested for Consulting Engineering Companies (CECs)
This points to restoring earlier point of taxation, wherein service tax is to be paid in a specified time after receipt of payment from Service Receiver. Charging of Service Tax via TDS route, where Client (Service Receiver) both government, and Private sector deducts Service Tax payable from the Bills of the Service Provider and deposits the same with authorities against Service Tax account of Service provider is encouraged.
Union Minister MoRTHS requests Union Finance Minister to charge Consulting Engineering Companies Service Tax via Tax Deduction at Source (TDS) mode. That way, when a Client (service receiver) makes payment to Consultants for their services, he/she simultaneously deposits Service Tax amount with Service Tax Authorities against Service Tax account of Consultants. It is akin to deducting TDS under Income tax payment in India.
Gadkari says as against earlier provision of paying Service Tax within 30 days of payment received, Consulting Engineering Companies are being forced to pay Service Tax within 30 days of issuance of invoice itself, despite invoices remaining unpaid for months. Delayed Service Tax payment further attracts 18 pct interest. Delayed payment beyond 30 days and beyond 12 months is payable at 30 pct interest rate as per 2014 budget. The prevailing tax system holds CEC’s in a chokehold, as they’re borrowing money to pay service tax.
Consulting Engineering Companies provide Survey, Investigation, Design, Detailed Project Report services, alongwith supervision to implement infrastructure projects. The suggested Service tax payment for CECs will keep deterrents at bay and fast track infra projects.
K K Kapila, chairman FICCI Infrastructure Committee says the proposal will solve Service Tax payment problems for authorities, and do away with financial burden imposed on Consulting Engineering Companies to a large degree. Indian Government can collect revenues at ease through TDS structure, and it encourages defaulters to comply. Overall, the industry will further grow, and serve economy growth.