The income tax department has announced that no action will be taken for the short deduction of TDS if the taxpayer links their PAN with Aadhaar by May 31. According to income tax regulations, if a Permanent Account Number (PAN) is not linked with Aadhaar, TDS must be deducted at double the applicable rate.
In a circular, the Central Board of Direct Taxes (CBDT) addressed grievances from taxpayers who received notices for defaulting on TDS/TCS deductions due to inoperative PANs. To address this, the CBDT specified that for transactions until March 31, 2024, and cases where the PAN becomes operative by linking with Aadhaar before May 31, 2024, there will be no liability on the deductor/collector to deduct/collect tax at a higher rate.
Acknowledged that the circular provides relief to tax deductors in cases where the PAN of deductees is inoperative due to non-linkage with Aadhaar. Sehgal advised promptly ensuring PAN-Aadhaar linkage to avoid notices for short deduction before May 31, 2024, providing considerable relief to deductors from depositing or collecting TDS/TCS at elevated rates.
The absence of a utility to verify the operative status of a PAN, suggesting that greater relief could have been provided if applicable from the current period along with the introduction of the utility.
Read more at: The finance ministry issued a notification requiring Aadhaar and PAN numbers