Impact of AIT collection and TDS on business operations: cash flow challenges for GQ Group

Abstract

This report examines the impact of the Advance Income Tax (AIT) and Tax Deducted at Source (TDS) on the business operations of GQ Group. The current AIT and TDS laws create excessive advance deductions that exceed the actual tax liabilities, resulting in cash flow and profitability challenges for GQ Group and other small and medium enterprises (SMEs) in the manufacturing sector. In addition, the tax refund process is lengthy and filled with bureaucratic red tape which can delay refunds for many years. This ties up working capital and further weakens liquidity and profitability. These policies affect SMEs disproportionately as they lack the cash reserve of large businesses. The report shows how impractical these tax policies and rates are and how they are negatively affecting GQ Group’s operations and limiting their growth. The report also recommends lowering the AIT and TDS rates to align with realistic profit margins as well as simplifying the refund process so that it can benefit all businesses, especially SMEs.