Assocham Calls for Streamlined TDS and Tax Neutrality in Pre-Budget Proposal

Industry body Assocham advocates for a simplified Tax Deducted at Source (TDS) system with a uniform rate to ease tax compliance. In its pre-Budget memorandum, Assocham suggests decriminalizing some TDS defaults and emphasizes tax neutrality for mergers and demergers, enhancing flexibility for Indian businesses and investors.

In a push for tax reforms, the industry body Assocham has recommended the introduction of a single TDS rate of 1 or 2 percent on all payments made to resident assessees, highlighting the need to mitigate litigation concerns related to interpretational issues and enhance compliance ease.

Addressing the finance ministry in a pre-Budget memorandum, Assocham has also urged the decriminalization of certain TDS defaults. According to Assocham President Sanjay Nayar, criminal proceedings should be reserved for cases where taxpayers have unjustly profited at the government's expense, rather than for technical breaches.

Further, Assocham stressed the provision of tax neutrality for amalgamations and demergers, which currently benefits companies but not for slump exchanges. This push aims at simplifying capital gains exemptions and facilitating smoother business reorganizations to avoid lengthy processes, thereby optimizing business operations.

(With inputs from agencies.)