The Consulting Engineers Association of India (CEAI), an apex body of Consulting Engineers in the country in a letter to Mr Narnedra Modi, Prime Minister of India have urged him to have a re-look at its Goods and Services tax (GST) and Tax Deduction at Source (TDS) collection regime for Consulting and services Community and urged him to allow the sector to deposit GST and TDS after receipt of payments from the Clients.
“At present Consultants pay their taxes as conscientious Professionals and Firms and feel utterly frustrated as both Goods & Services Tax (GST) and Income Tax Deducted at source (TDS) as they have to be deposited on accrual and Due basis. Goods & Services Tax (GST) has to be deposited within 30 days of raising of Invoice and not on receipt of our dues from the Customer/Client. “said Mr Amitabha Ghosal, President, Consulting Engineers Association of India (CEAI).
“The Consulting engineering companies are engaged in the Service Sector and are totally dependent for our survival on timely receipt of dues from the clients. Banks are reluctant to advance finance to Professionals, and in any case are averse to funding payment / deposit of GST and Income Tax. Delays in receipt of dues from clients adversely affect our financial situation, leading to delays in deposit of GST along with interest” said Mr Ghoshal.
“Any delay in deposit of GST leads to threats of Cancellation of GST Registration and/or Prosecution, etc. This is in spite of the fact that we pay interest on delayed deposit of GST despite our tight Liquidity situation. Similarly, the Tax Deduction at Source (TDS) has to be deposited by the 7th of the subsequent month irrespective of non-receipt of dues by a Professional Firm from its clients, on time. Due to financial limitations, there arises situations of delayed deposit of TDS. Here again, in spite of depositing TDS along with interest, we are subject to receipt of Prosecution Notices from the Income Tax department “ said Mr K K Kapila, Chairman, CEAI, Infrastructure Committee.
“The Consulting Engineers have urged the Hon’ble Prime Minister to intervene and to direct the Finance Ministry not to initiate prosecution proceedings against such law-abiding firms/professionals, unless malafide intentions are blatantly visible. Equating all Service Providers and their business requirements to be similar is a very myopic approach. For instance, an Infrastructure Consultant, who as part of the Service Sector, contributes immensely to the development of the country as well as earns valuable forex reserves, are required to pay GST within 30 days of raising invoice, months ahead of realising the actual payment from the Client. A Shopkeeper, who is also part of the Service Sector network, realises immediate payments as soon as a sale is done and therefore, it is possible for him to pay the GST in the 30 day cycle. “said Mr Kapila.
“Consulting Engineers have requested the Prime Minister to help the consulting community by facilitating a more customised and positive approach to various stakeholders of the Service Sector network, so that the ultimate objective of revenue generation is achieved, without distress to anyone. An urgent correction is needed to save the Consultancy Sector which is on the verge of collapse. The consulting firms in the service sector should be permitted to deposit GST and Tax Deducted at Source on payment receipt Basis. “Mr Kapila added.
“The above suggestions will help the Consulting Companies to tide over the problems of payment of GST/TDS to the Government and relieve their financial burden. It will also help the Government to collect tax revenues effectively.” Mr Kapila said.