The Eashwar committee recommendations for revising threshold limits of TDS and lowering the tax withholding percentage are very sensible. The government will do well to incorporate them in the ensuing budget proposals. These limits were set years ago and the value of the rupee has gone down significantly since then, making them seem almost laughable. The committee, while hiking the limits, has not been consistent. For instance, it has recommended the limit of receipts from technical or professional fees to be revised to Rs 50000 while that of receipts from brokerage or commission has been set as Rs 15000 only. One feels that the latter figure is too low. As this is business income, the limit should have been Rs 50000 and the withholding rate should have remained 10%, like in fee from professional services.
While the recommendations, if adopted, will address a long overdue grievance, one feels that to make the act user friendly, there should be an in-built mechanism where these threshold limits get updated every three years by a set percentage. This is the way several agreements are drafted, like rent agreements for instance where the rent is increased by 10 or 20 percent every three years. If tax laws were to update by themselves in this regard, it will be a huge relief to taxpayers and will obviate the need to set up committees to look into this.