CBDT offered exemption from tax demand resulting from inoperative PAN
As per the CBDT Circular No. 6 dated 23-04-2024, Many taxpayers have complained that they have received notices stating that they failed to comply with the terms of the “short- deduction/collection” of TDS/TCS when conducting transactions in which the PANs of the deductees and collectors were non-functional.
When processing TDS/TCS statements under section 200A or section 206CB of the Act, depending on the circumstances, the Department has initiated demands against the deductors/collectors because the deduction or collection has not been made at a higher rate.
The CBDT has offered exemption from tax demand resulting from inoperative PAN non order to resolve the problems of deductors/collectors, provided that the following requirements are met:
- Transaction (which pertaining to TDS or TCS) were entered into up to dated 31.03.2024, and
- The Dedutee’s or Collectee’s PAN become operative (as a result of linkage with Aadhaar) on or before 31.05.2024.
If the aforementioned requirements are met, the deductors/collectors will not be considered in arrears for taxes deducted at the regular rate for transactions completed through March 31, 2024, and they won’t be obligated to deduct/collect taxes at higher rates specified under section 206AA/206CC for transactions completed through March 31, 2024.
The tax demand that was made will thus no longer be available on the portal.
Important note:
The extension till May 31, 2024, is for the payee’s PAN and Aadhar to be linked in order to provide relief for transactions made through March 31, 2024, only.
For transactions occurring on or after 01.04.2024, it is essential to ensure that the PAN of the deductee is linked to Aadhaar and remains valid on the date of deduction, if inoperative then the deductor/collector must deduct/collect tax at a higher rate under section 206AA/206CC.
This circular is an important step that the CBDT has taken to address grievances and help those deductors and collectors who were forced to deduct or collect tax at a higher rate because the payee’s PAN was non-operative but who instead deducted or collected tax at a normal rate because they were unaware of transactions completed up until March 31, 2024.
To Download Official Circular, please visit https://www.incometax.gov.in/iec/foportal/sites/default/files/2024-04/Circular%20no%206%20of%202024%20on%20TDS%20TCS.pdf
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