TDS CBDT Circular : TDS/TCS Relief Due to Inoperative PAN

CBDT Circular : TDS/TCS Relief Due to Inoperative PAN

CBDT Circular : TDS/TCS Relief Due to Inoperative PAN

CBDT Circular : TDS/TCS Relief Due to Inoperative PAN

  • The Central Board of Direct Taxes (CBDT) issued a circular providing relief to taxpayers who received tax demand notices due to short deduction of Tax Deducted at Source / Tax Collected at Source. This was in response to numerous grievances from taxpayers who deducted TDS at the normal rate instead of the higher penal rate applicable for inoperative PANs due to non-linkage with Aadhaar.
  • Based on the recent CBDT Circular 6/2024 Dated April 23, 2024, the Income Tax Department has provided specific relief regarding the deduction and collection of TDS & TCS in cases where the PAN of the deductee/collectee was inoperative due to non-linkage with Aadhaar.  CBDT Circular 6/2024.

Key Points: TDS/TCS Relief Due to Inoperative PAN

  • The rule requiring deduction/collection of TDS/TCS at a higher rate under section 206AA/206CC will not apply if the PAN is inoperative due to non-linkage with Aadhaar. Instead, the deduction/collection should be done at the normal rate applicable as if the PAN were operative.

Conditions for TDS/TCS Relief Due to Inoperative PAN

  • The transactions subject to TDS or TCS must have been entered into up to March 31, 2024.
  • The PAN of the deductee/collectee must become operative (by linking with Aadhaar) on or before May 31, 2024.
  1. If both the above conditions are met, there will be no liability on the deductor/collector to deduct/collect tax at double the rate. Thus, deductors/collectors will not be required to pay the difference due to short deduction.
  2. Deductors/collectors can file a revised TDS/TCS return once the PAN becomes operative. This will correct the TDS/TCS entries and ensure compliance.
  3. For cases where penal interest was already paid due to short deduction/collection of TDS/TCS caused by the inoperative PAN, it is unlikely that this penal interest will be refunded.

Steps to Address TDS/TCS Short Deduction Due to Inoperative PAN

  • Verify PAN Status: Ensure that the PAN of the deductee/collectee is now operative by verifying it through the Income Tax Department’s e-filing portal.

File Revised TDS/TCS Return:

  • Once the PAN is operative, file a revised TDS/TCS return to correct the entries.
  • Ensure that all corrections are made accurately and that the revised return reflects the correct TDS/TCS amounts.

Communicate with the Tax Department:

  • If a demand notice was received, respond through the TRACES portal or the Income Tax e-filing portal, indicating that the PAN is now operative and provide proof of correction.
  • Attach necessary documents such as the PAN card, Aadhaar linking acknowledgment, and proof of the revised TDS/TCS return filing.

Post-April 1, 2024, PAN-Aadhaar Linkage Compliance :

No Liability with PAN-Aadhaar Linkage by May 31, 2024:

  • If the PAN of the deductee is linked with Aadhaar and becomes operative by May 31, 2024, there will be no liability to deduct or collect tax at the higher rate under sections 206AA/206CC. By taking advantage of the grace period and relief measures, taxpayers can effectively manage compliance and avoid undue penalties. CBDT Circular 6/2024 serves as a tool to navigate the evolving tax landscape with greater ease and confidence.
  • For transactions occurring on or after April 1, 2024, it becomes critical to ensure the validity of PAN linked with Aadhaar. Taxpayers can utilize the facilities provided by the income tax portal to verify PAN-Aadhaar linkage and avoid penalties.

Conclusion:

  • CBDT Circular 6/2024 is aimed at rectifying situations where deductors or collectors were required to deduct or collect tax at a higher rate due to the inoperative PAN of the payee. The CBDT circular offers relief to those who, due to unawareness, deducted or collected tax at a normal rate for transactions conducted up to March 31, 2024.
  • Now, these deductors or collectors have the opportunity to request the payee to link their PAN with Aadhaar before May 31, 2024. By doing so, they can avail the benefit of the extended deadline and reduce the tax demand that may have been raised due to the shortfall in tax deduction or collection. It seems like a proactive measure to mitigate unintended tax consequences arising from PAN-Aadhaar linkage issues.
  • What happened when employer does not provide form 16? 

Disclaimer: The content of this post isn't considered to be professional or legal advice, We aren't responsible for any damages arising from your access to the location content & must not be relied on or used as a substitute for legal advice from a lawyer professional in your jurisdiction. CARajput is among India's big digital compliance services platform which committed to helping people have started & developed their businesses. We had started with the goal of creating it easier for start-ups to start out their business. Our main aim is to assist the businessman with applicable laws & regulations compliance and providing support at each & every level to make sure the business stays compliant and growing continuously. For any query, help or feedback you may in touch on singh@carajput.com or Call or what’s-up on 9-555-555-480

Share This Post

Related Articles

Related Videos


How to File TDS Return Online | File TDS Return | How to File TDS Return Step by Step Procedure

How to file TDS Return Online | File TDS Return | How to File TDS Return Step by Step Procedure

 

Published On: Nov 09, 2021 | By: RJA


TDS REFUND | Steps for claiming TDS refund | Different refund status | tds refund process

TDS REFUND | Steps for claiming TDS refund | Different refund status | tds refund process

 

Published On: Dec 22, 2021 | By: RJA

Need help?

Request a call
from a RJA
Business Advisor.

LET'S TALK

Private Limited Company

Popular Categories

Browse Blogs

Recent Posts

Myths about Chartered Accountants Examination Preparation

Myths about Chartered Accountants Examination Preparation

India Should Implement 2% Wealth Tax & 33% Inheritance Tax to Tackle Rising Inequality

India Should Implement 2% Wealth Tax & 33% Inheritance Tax to Tackle Rising Inequality

Documents Required to Apply for NRI PAN Card

Documents Required to Apply for NRI PAN Card

Is Linking Aadhaar with PAN for NRI's?

Is Linking Aadhaar with PAN for NRI's?

Taxation Aspect of a Hindu Undivided Family (HUF)

Taxation Aspect of a Hindu Undivided Family (HUF)

Connect with a RJA Advisor

Fields marked with an * are required

Enquire Us

Please send us your query and we feel very happy helping you

Testimonials

  • Thank you very much for all your help in setting up my new company and clearing up all outstanding business in my sole trader accounts. For the first time in years I have peace of mind regards my business accounts. Your workforce are a credit to you, the girls at reception are so helpful and Chris has been brilliant. It is very much appreciated.

    A US consultancy group

  • Rajput Jain & Associates. are a tremendous value added to me as an executive and a busy parent. It just makes sense to delegate my tax file to them -- they are proactive, extremely service oriented, and most importantly, I am completely confident they are finding every dollar of tax savings available to me.

    A Leading Service Provider

  • We use Rajput Jain & Associates for all our accounting, Corporation tax, VAT and other compliance needs. The service is professional, courteous and prompt. I would recommend Rajput Jain & Associates to any company requiring a comprehensive accounting and tax service.

    A Leading Consultancy Firm in Dubai

Money Back Guarantee

Not happy with the service? You can request a refund at anytime within 30 days!

24/7 Support

Get support through phone, email, mobile app or live chat - 24/7, 365 days.

EMI Payment

Easily pay online with EMI payments, credit or debit card, net banking, PayPal and more.

Get In Touch--

Rajput Jain & Associates

Add: P-60, Connaught Circus, Connaught Place, New Delhi-110001

Email: singh@carajput.com

Phone: 9555555480

Legal Disclaimer--

The information contained on this website merely provides details of our firm to persons who have shown interest in knowing more about us and is not intended to solicit work or advertise our capabilities in any manner. The information provided on this website is general in nature and should not be used as a basis of decision-making without further professional advice. The third party site links are only provided for ready reference of the users and CA Rajput Jain & Associates neither controls their content nor undertakes any responsibility regarding them.

© 2016 Rajput Jain & Associates. All Rights Reserved | Sitemap

Call Email