CBDT issued Circular No. 6 on 23rd April, 2024, to address the grievances faced by deductors/collectors who collected TDS/TCS at the normal rate but were required to deduct/collect at double the rate due to the PAN of the deductee being inoperative because of non-linkage with Aadhar. The circular states that if the PAN of the deductee is linked to Aadhar and becomes operative on or before 31st May, 2024, then in such cases, the TDS deductors will not be treated in default (short deduction) for the tax deducted at the normal rate for transactions entered into up to 31st March, 2024. This means that there will be no liability on the deductor/collector to deduct/collect tax at double the rate due to the PAN being inoperative, and such deductors will not be required to pay the difference.
It has been noted that many notices have been issued to deductors for shortfalls in tax deduction due to the PAN of the deductee being inoperative. Therefore, where notices have been issued for short deduction for this reason, it is advisable to reach out to the deductee and ensure their PAN is linked with Aadhar immediately and, in any case, on or before 31st May, 2024. It is important to understand that this relief is applicable only for transactions up to 31st March, 2024.
For transactions on or after 1st April, 2024, it is crucial to ensure that the PAN of the deductee is linked to Aadhar and is valid. The circular also highlights that the facility to verify the validity of PAN is available on the income tax portal.
It is advisable for affected parties to refer to the annexed copy of the circular for more information.
