Be prepared to pay higher TDS if you don’t by March 31

If you haven’t linked your permanent account number or PAN to the Aadhaar card, be prepared to pay higher withholding tax (TDS) from next month. The deadline for linking your Aadhaar number and PAN has been extended to March 31. Failure to bind these two documents within the mentioned time frame will impact your debit and credit card payments, online transactions, ATM cash withdrawals, among others.

According to Section 139AA of the Income Tax Act, anyone with a PAN as of July 1, 2017 and eligible to get Aadhaar must bind these two documents. Over the past three years, the Central Board of Direct Taxation (CBDT) has repeatedly extended the deadline for linking the Aadhaar card number with the PAN. If the PAN is not linked to Aadhaar before the maturity date, then the PAN will become inoperative, under Section 114AA(3) of the Income Tax Act. For those applying for new PAN cards, it is mandatory to quote Aadhaar numbers as per Section 139AA of the Income Tax Act.

Be prepared to pay higher TDS if you miss the deadline

If the PAN becomes inoperative, the tax service will consider that the person has not submitted a PAN and therefore liable to the consequences for it. In accordance with Section 206AA(6) of the Income Tax Act, taxpayers who have taxable income must submit their PAN card details. If the PAN provided by the taxpayer is not valid, the deducted person is deemed not to have provided their PAN to the deductor, pursuant to Section 206AA(6) of the Income Tax Act.

So if you miss the March 31st deadline and your PAN card becomes inoperative because it is not linked to the Aadhaar card, then you must pay TDS at the higher rate of 20% as per the article 206AA of the law. The higher rate of TDS will be applicable on interest on fixed deposits, dividends and other income which is currently subject to TDS.

Explaining the new rule for investors, Abhishek Soni, co-founder of Tax2win, said: “If we fail to link Aadhaar to PAN, a higher rate of TDS i.e. 20% , will be deducted from the income eligible for the tax deduction. For example, the TDS rate on FD interest is 10% if the amount of interest exceeds Rs. 40,000 but according to Section 206AA, if the Aadhaar is not linked to PAN, the TDS will be deducted at 20% .

PAN-Adhaar link: Rs 10,000 fine each time you do not provide PAN

According to Section 272B of the Income Tax Act, a penalty of Rs 10,000 may be imposed if the PAN is not quoted or provided as required by the Income Tax Act. Under these provisions, a penalty could be imposed for each non-compliance. A penalty of Rs 10,000 can also be imposed on the defaulter whenever the individual fails to provide the details of the PAN card. These charges will be in addition to other consequences, such as the PAN becoming inoperative due to Aadhaar’s non-intimation, higher TDS rates, etc. said Ruchika Bhagat, Managing Director of Neeraj Bhagat & Co.

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