This updates discusses about the inconsistencies in the provision contained in section 46 of the revised Draft GST Law regarding Tax Deducted at Source.
CBEC has released revised Draft GST Law on 26th November 2016. The law is slated to be presented before Loksabha in the coming days. It’s not the final blueprint and is bound to change on the basis of suggestions received from various quarters. In this series of updates, we would be putting forth various issues in the Revised Draft GST Law which needs consideration. The entire objective is to bring before the readers certain issues in the present revised GST Law which may be raised at appropriate platforms.
13.1 Time limit for furnishing of certificate of tax deducted at source to the deductee:
The Draft GST Law provides that the certificate of tax deducted at source has to be issued within five days of crediting the amount so deducted to the appropriate Government. This provision requires rethinking as time limit for issuance of certificate has been provided as 5 days from the date of crediting of the amount to the credit of appropriate government and not 5 days from the date of filing of the return. Thus, if a person has deposited the due tax to the credit of the government on 2nd of July then even though the last date of filing of the return would be 10th July but he would have to furnish the certificate to the deductee by 7of July.
13.2 The law is not clear that how certificate of tax deducted at source would be generated i.e. whether after filing of the return or through separate procedure. If the certificate would be generated after filing of the return, then the provisions of this section would tantamount to last date of filing of return would be 5 days from the date of crediting of the amount to the credit of the appropriate government or if the certificate would be generated by a separate procedure then the same should have been avoided and should have been integrated with the return.
13.3 Late fee for failure to furnish the certificate of tax deduction at source to the deductee with the prescribed time limit:
The deductor shall be liable to pay by way of a late fee one hundred per day from the day after the expiry of the five day period until the certificate is provided to the deductee. Further the late fees under this sub-section shall not exceed Rs 5000/-.
However, it seems firstly the late fees for delay in providing certificate to deductee is separate from the penal provisions for delay in filing of the returns. The total late fees under this sub-section would not exceed Rs 5000/-. However, it seems that there is a drafting error as the intention of the law makers would have been to provided that late fees for each default shall not exceed Rs 5000/- but the limit has been provided with reference to the total late fees under the sub-section shall not exceed Rs 5000/-.
13.5 Another issue is that when all the returns would be filed electronically and cash ledger of the deductee would be updated electronically, then the requirement for the furnishing of the certificate to the deductee and late fees on failure to do so seems inappropriate. Tough penal consequences should be imposed on failure to deposit the due tax within time and consequential late filing of the return.
Comments: The provision needs to be rationalized and the date of issue of certificate needs to be linked with the last date of filing the return of Tax Deduction at Source.