Budget 2020-21: MSMEs in Bihar seek reduction in 'Compounding Fee' from 3% to 1.5%
Patna, Jan 27 (KNN) As the government had sought feedback/ suggestions of people from all sectors across India for the Budget 2020, ideas, suggestions and requests are pouring in from Micro Small and Medium Enterprises (MSMEs).
Bihar Industries Association (BIA) has too submitted a memorandum to Finance Ministry seeking Reduction in Compounding Fee payable for delay payment of TDS deducted.
As per the BIA's memorandum accessed by KNN India, the industry body suggested Finance Ministry to reduce the rate of compounding from 3 per cent to 1.5 per cent per month.
''Since total liability (i.e compounding Fee plus interest) on the assessee in case of compounding comes to 4.5 per cent per month (i.e. 54 per cent annually), which creates undue hardship on the assessee. It is therefore suggested to reduce the rate of compounding from 3% to 1.5% per month or part thereof,'' BIA suggested in the memorandum.
TDS (Tax Deducted at Source), is a system introduced by Income Tax Department, under which the person responsible for making specified payments such as salary, commission, professional fees, interest, rent, etc is liable to deduct a certain percentage of tax before making payment in full to the receiver of the payment.
Currently, fee for compounding offences under section 276B or 276BB is 3 per cent per month or part of a month. The period of default for calculating compounding fee in the category shall be calculated from the date of deduction to the date of deposit of tax deducted at source. Further Interest @ 1.5 per cent per month or part of the month u/s 201(1A) is also liable from the date of deduction to the date of deposit of tax deducted at source. Apart from these, a penalty for late filing for TDS u/s 234E is Rs 200 per day is applicable.
''Further (OTS) one time settlement scheme should be introduced to settle all pending issue and demand related to TDS,'' memorandum read further.