SC dismisses PIL seeking scrapping of 'tax deducted at source' framework

A two-judge bench of the Supreme Court remarked that the petition was poorly drafted and unsuitable for consideration, advising the petitioner to move the PIL to the Delhi High Court

The Supreme Court on Friday dismissed a public interest litigation (PIL) seeking the abolition of the tax deducted at source (TDS) framework under the Income Tax Act, noting that such a system is implemented in many countries.

 

A bench comprising Chief Justice Sanjiv Khanna and Justice Sanjay Kumar declined to entertain the plea filed by lawyer Ashwini Upadhyay, who was advised to approach the Delhi High Court instead. The bench remarked that the petition was ‘very badly drafted’ and unsuitable for consideration by the apex court.

 

“Sorry, we will not entertain it… It is very badly drafted. However, you can move the Delhi High Court,” stated Chief Justice Khanna, emphasising that the TDS mechanism is a common practice globally.

 

The PIL, filed through advocate Ashwani Dubey, had sought the abolition of the TDS framework, arguing that it was “arbitrary and irrational” and violated fundamental rights, including the right to equality.

 

What is the TDS system?

Under the Income Tax Act, the TDS system requires the payer (deductor) to deduct tax at the time of making payments such as salaries, rents, or commissions to the payee. This deducted amount is then deposited with the income tax department and adjusted against the payee’s tax liability. The framework, introduced to curb tax evasion, applies when payments exceed specified thresholds.

 

The plea had named the Centre, the Ministry of Law and Justice, the Law Commission of India, and NITI Aayog as respondents in the case. It argued that the TDS system placed undue financial and administrative burdens on taxpayers and payees alike.

[With PTI inputs]