Aadhaar-PAN linking update: Pay penalty for not deducting higher TDS amount if PAN and Aadhaar not linked by this date
Income Tax Department has urged taxpayers to link PAN with Aadhaar by May 31, 2024, to avoid higher tax deducted at source (TDS) or tax collected at source (TCS). In a post on social media platform X on May 28, 2024, the tax department said, “Kind attention taxpayers, please link your PAN with Aadhaar before May 31st, 2024.”
“Linking your PAN with your Aadhaar by May 31 ensures you don’t face higher tax deduction/ tax collection under Section 206AA and 206CC of the Income Tax Act, 1961, due to an inoperative PAN for the transactions entered into before March 31, 2024,” it added.
Inoperative PAN of the deductees: What CBDT said earlier
The TDS is deducted at a higher rate when a deductee’s (whose tax has been deducted) PANs have not been active or inoperative.
TDS on salary: How to avoid higher income tax under new, old tax regime
On April 23, 2024, the CBDT published a circular to resolve complaints from deductors/collectors (who have deducted the tax) who collected TDS/TCS at the regular rate but were required to deduct/collect at double the rate due to the deductee’s PAN being inoperative (unlinked with Aadhar) since April 1, 2023. The deductors got tax notices from the Income Tax Department for committing the default of «short-deduction/collection» of TDS/TCS due to such transactions.
“In such cases, as the deduction/collection has not been made at a higher rate, demands have been raised by the Department against the deductors/collectors while processing of TDS/TCS statements under section 200A or section
