New Delhi: It is official now. The Income Tax Department in a recent notification has asked the taxpayers to link their Permanent Account Number (PAN) with Aadhaar by May 31 to avoid tax deduction at a higher rate.
It is to be noted that as per the current regulations if a taxpayer’s PAN is not linked with his or her Aadhaar, Tax Deducted at Source (TDS) is mandated to be deducted at twice the usual rate.
“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,” the I-T Department said on social media platform X, formerly Twitter.
In April, the Central Board of Direct Taxes (CBDT) said the deductees (whose tax has been deducted) need to link their PAN and Aadhaar by May 31, 2024, so the deductor (who has deducted the tax) is not liable to pay a penalty for not deducting higher TDS.
The CBDT circular further said: “With a view to redressing the grievances faced by such deductors/collectors, the Board, in partial modification and in continuation of the Circular No. 03 of 2023, hereby specifies that for the transactions entered into up to 31.03.2024 and in cases where the PAN becomes operative (as a result of linkage with Aadhaar) on or before 31.05.2024, there shall be no liability on the deductor/collector to deduct/collect the tax under section 206AA/206CC, as the case maybe, and the deduction/collection as mandated in other provisions of Chapter XVII-B or Chapter XVII-BB of the Act, shall be applicable.
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