CRITICAL ANALYSIS OF CONSTITUTIONAL VALIDITY OF LIABILITY TO DEDUCT TAX AT SOURCE (TDS)
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Abstract
Tax is a levy imposed by a government on the income of citizens of a State for which the government does not directly support the taxpayer. It has been a major source of government’s revenue be it Income Tax, GST, Wealth Tax etc. Government has adopted various methods of tax collection one of which is Tax deduction at source (TDS). It is an instrument designed for quick and smooth collection of tax due to the authorities from the taxpayer. The objective of TDS could be said, in general, to be maximization of revenue collection while minimizing the cost of collection. This approach is generally followed in B2B transaction where the purchaser has to pay the government a certain percentage of amounts directly after deducting the said amount from the purchase consideration. The Government has introduced this method to reduce the cost of collection. But the cost which is reduced for the government is imposed on such businesses who are a mere third party to the transaction, a medium between tax-payee and the government. The government has two agencies for tax collection, one being designated tax officers from the government and the other being private tax deductors. The former is paid for his services rendered to the government while the latter receives no such remuneration; however, the latter can be penalized in forms of fine, punishment for negligence or some other error which is not the case with the former. There is a possible and substantial violation of Article 14. Moreover, Article 23 of the Indian Constitution forbids any kind of Bonded / Forced Labour on Indian people. Which makes us think, whether payment of tax on behalf of the other party comes under the ambit of forced labour? Therefore, this paper aims to investigate the scope of TDS provisions under the Income Tax Act, 1960 in light of Article 14 and Article 23, in order to further investigate the Constitutionality of the provisions and taxation procedure as a whole.
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References
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