The Income Tax Department has issued a final call to taxpayers to link their Permanent Account Number (PAN) with Aadhaar.
Warning them of potential higher tax deductions if they fail to do so before the May 31 deadline, the Department said that the any PAN unlinked with Aadhar would be considered inoperative.
In a recent post on social media post, the Income Tax Department highlighted that failure to link PAN and Aadhar will invite higher tax deductions or tax collection under Sections 206AA and 206CC of the Income Tax Act, 1961.
This could impact transactions entered into before March 31, 2024, for which an inoperative PAN is utilized.
“Please link your PAN with Aadhaar before May 31st, 2024, if you haven’t already, in order to avoid tax deduction at a higher rate,” the post stated.
The Tax Deducted at Source (TDS) is deducted at an escalated rate when the deductee’s PAN has not been linked with Aadhaar, as per existing regulations.
In response to complaints from deductors/collectors who collected TDS/TCS at the regular rate but were required to deduct/collect at the higher rate due to the deductee’s PAN being inoperative, the Central Board of Direct Taxes (CBDT) had issued a circular on April 23.
The Income Tax Department subsequently issued notices to deductors for “short-deduction/collection” of TDS/TCS due to such transactions.
The CBDT clarified that demands have been raised by the Department against the deductors/collectors for failing to deduct/collect tax at the higher rate, while processing TDS/TCS statements under section 200A or section 206CB of the Act, as applicable.
Taxpayers are urged to promptly link their PAN with Aadhaar to avoid potential financial repercussions and ensure compliance with tax regulations.
