Supreme Court To Hear PIL Seeking Abolition Of TDS System

The Supreme Court is set to hear a Public Interest Litigation (PIL) on January 24, seeking to abolish the Tax Deducted at Source (TDS) system. The PIL, filed by advocate Ashwini Kumar Upadhyay through advocate Ashwini Dubey, claims that the TDS system is “arbitrary, irrational, and violative of fundamental rights”.

The petition asserts that the Supreme Court should declare the TDS system unconstitutional because it violates three fundamental rights enshrined in the Constitution: Article 14 (right to equality), Article 19 (right to profession), and Article 21 (right to life and personal liberty). The petitioners argue that the TDS system disproportionately burdens taxpayers with significant administrative expenditure.

The PIL seeks directions to the NITI Aayog to review the TDS system and suggest necessary changes. Additionally, the petition requests the Law Commission to examine the legality of the TDS system and submit a report within three months.

TDS Framework Under Scrutiny

The TDS framework, under the Income Tax Act, requires payers to deduct tax at the time of payment and deposit it with the Income Tax Department. The deducted amount is adjusted against the payer’s tax liability. However, the petitioners further argue that this system is excessively technical, requiring specialized legal and financial expertise that most taxpayers lack.

The Supreme Court’s decision on this PIL could have significant implications for the TDS system and the taxpayers it affects.

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