CEAI urges PM to allow deposition of GST, TDS on payment receipt basis

The Consulting Engineers Association of India (CEAI) have written to Prime Minister Narendra Modi urging him to give a re-look at the Goods and Services tax (GST) and Tax Deduction at Source (TDS) collection regimes and allow the sector to deposit taxes after receipt of payments from the Clients.

At present Consultants pay their taxes as conscientious on accrual and Due basis. GST has to be deposited within 30 days of raising of Invoice and not on receipt of dues from the Customers and Clients. Similarly, the TDS has to be deposited by the 7th of the subsequent month irrespective of non-receipt of dues.

“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 Amitabha Ghosal, President, Consulting Engineers Association of India (CEAI).

“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 K.K. Kapila, Chairman, CEAI, Infrastructure Committee.

In the letter to PM, the Consulting Engineers have urged him 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, the association said.

“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,” Kapila added.