The India Cellular and Electronics Association (ICEA) has sought postponement of the implementation of the Tax Collected at Source (TCS) to April 1, 2021 against the earlier deadline of October 1.
The industry body in its letter to Finance Minister Nirmala Sitharaman has cited likely cash flow implications, clashing with the TCS implementation with the roll out of the mandatory GST e-invoicing norms among others.
ICEA on behalf of the ESDM (Electronics System Design & Manufacturing) sector requests your kind self to consider postponing the implementation of proposed TCS to next financial year starting from 1st April, 2021, IANS reported.
The letter written by ICEA Chairman Pankaj Mohindroo noted that financial year 2020-21 is more or less fully affected by the COVID-19 related fallout in terms of a sharp drop in revenues and excess cost of operations due to strict implementation of health-related safety measures and social distancing in work place, dormitory and transportation.
“In the light of the above, possibility of taxable profit will be remote. Hence TCS deduction will result into refund situation for financial year 2020-21. We request TCS implementation to be postponed to next financial year to avoid unnecessary hardship to the industry in terms of cash flow blockage in this already challenging time,” ICEA said.
The ICEA also said that the nation is going for an e-Invoicing mechanism with effect from October 1, 2020 which in itself is a huge task in terms of systems modification to connect with GSTN portal. Adding TCS implementation also along with e-Invoicing will be highly challenging and necessary focus for e-Invoicing implementation may not be possible.
The ICEA listed a number of issues in which the industry requires clarification including questions such as whether TCS would be charged on the value including GST and whether TCS is applicable on security deposits, advances and others received from dealers and buyers.
Due to COVID-19 all major companies in the sector are functioning with the work from home setup for non-production related functions to help reduce the burden of handling people in the factory and to ensure social distancing. In this background implementing major reforms like TCS will be highly challenging especially along with e-Invoicing implementation on October 1, 2020.