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The Supreme Court on Friday (January 24, 2025) refused to entertain a petition to scrap the tax deducted at source (TDS) framework under the Income Tax Act, saying the system was prevalent in many countries.

A Bench headed by the Chief Justice of India Sanjiv Khanna allowed advocate-petitioner Ashwini Upadhyay to approach the Delhi High Court.

The plea sought to scrap the TDS system, calling it “arbitrary and irrational”, and violative of various fundamental rights, including equality.

It challenged the TDS framework under the Income Tax Act, which mandates the deduction of tax at the time of payment by the payer, and its deposit with the Income Tax Department. The deducted amount is adjusted against the payee’s tax liability.

The plea had named the Law Ministry, the Law Commission, and NITI Aayog as respondents.