Gifts by firms over Rs 20,000 now under TDS net, cos fret about compliance burden

Ahead of the Budget, the Union Finance Ministry has brought gifts or benefits provided by businesses to individuals of value over Rs 20,000 under the tax deducted at source (TDS) ambit.

From free airline tickets or a music system or free dining vouchers, anything gifted above Rs 20,000 by companies will now be liable to deduct TDS following the directive aimed at increasing the tax base.

'Will add to burden'

However, the industry honchos say the move will add to their burden.

Sanjivv Shiv Kapoor, CEO, of SP Kapoor & Co, a chartered accountancy firm, says that even as the tax base is widening, it will add to the compliance burden, especially for small businesses.

"Moment I am deducting TDS for people, a number of deductions will go up. Penalties are very harsh in TDS. This should not have been across the board for all companies but companies with a certain turnover."

The government has also expanded the scope of reporting payments of over Rs 50,000 to individuals involved in specified activities like event management, production of TV programmes, and sports event management.

The entertainment industry pays a GST rate of 18 percent.