Supreme Court Rejects PIL to Scrap TDS: A Debate on Tax Fairness

The Supreme Court refused to entertain a PIL seeking to abolish the TDS framework under the Income Tax Act, stating it is widely applicable globally. The petitioner argued that TDS is arbitrary and burdensome, urging judicial review. The court suggested the Delhi High Court as an alternate venue.

The Supreme Court declined to consider a public interest litigation (PIL) on Friday, calling for the discontinuation of the Tax Deducted at Source (TDS) framework under the Income Tax Act. A bench led by Chief Justice Sanjiv Khanna, alongside Justice Sanjay Kumar, noted that TDS is a standard practice worldwide and cited existing favorable judgments.

The PIL, filed by advocate Ashwini Upadhyay, contested the mandate that requires tax deduction during payment, arguing the system is arbitrary and violates constitutional rights. Highlighting administrative and financial burdens, the plea sought reforms from bodies like the Law Commission and NITI Aayog.

While the Supreme Court rejected the petition due to poor drafting, it opened the door for filing in the Delhi High Court. The plea argued that TDS disproportionately affects lower-income groups and imposes undue burdens on taxpayers, suggesting it constitutes forced labor under Article 23.

(With inputs from agencies.)