RWAs in Chandigarh oppose imposition of TDS on park maintenance by MC

There are around 1,800 neighbourhood parks in Chandigarh and of these, nearly 700 are being maintained by the RWAs

The resident welfare associations (RWAs) of the city have opposed the municipal corporation’s (MC) renewed action of imposing TDS (tax deducted at source) on them for maintaining neighbourhood parks.

Representative image/HT

MC has been asking the local RWAs maintaining neighbourhood parks and public toilets either to get themselves registered with the income tax department or else seek exemption from payment of income tax, otherwise MC would start deducting TDS from their bills of payment.

There are around 1,800 neighbourhood parks in Chandigarh and of these, nearly 700 are being maintained by the RWAs. They are paid ₹2.48 per square metre, and the rates haven’t been revised since 2013.

In June 2020, the MC sent memos to all RWAs, imposing 2% TDS liability on them, and making it mandatory for them to get PAN (Permanent Account Number) to pay the TDS. It is reported that if RWAs do not get PAN, they will be considered as individuals and will be liable to pay 20% tax as per the provisions under the Income Tax Act.

“TDS deduction on receipts of reimbursement of expenditure incurred by welfare societies on maintenance of neighborhood parks is totally illogical and unjustified. There was no such condition in the MOU signed by us with the MC,” said JP Yadav, president of Sector 37 RWA.

Vinod Vashisht, convener of City Forum of Residents Welfare Organisations (CFORWO), said “We have gone through the MOU issued by the MC to the concerned RWAs and relevant provisions of the I-T Act. Payments to RWAs by MC for maintenance of parks do not come under the purview of TDS.”

“All our members are extending voluntary honorary services in maintaining the green cover in the city. Neither are we vendors of the MC, nor are they our customers. How can such an activity be considered under the purview of income tax?” said Som Nath Saini, president of Sector 27 RWA.

“Imposing TDS at 20% on a society like ours having no PAN or Aadhaar is totally uncalled for. Our society has no profit function and we don’t want to remain unconstructively occupied in I-T works,” voiced Kuljinder Sra, general secretary of Sector 33 RWA.

“The central government has reduced the rates of TDS on various non-salaried transactions by 25% with effect from May 14, 2020, hence, sending TDS notices for activities not covered under the purview of IT Act, are totally uncalled for,” said Vashisht.