In case of inoperative PANs, tax demands are being raised as per the provisions of Section 206AA of the Income Tax Act 1961, and CBDT Circular No.3 of 2023 dated March 28, 2023, and Circular No. 6/2024 dated April 23, 2024.
ITR Filing: Taxpayers are getting higher income tax demand in case their PAN and Aadhaar were not linked till May 31, 2024. In the case of inoperative PANs, tax demands are being raised as per Section 206AA and CBDT circulars dated March 28, 2023 and April 23, 2024.
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While replying to a query in the Lok Sabha, Union Minister of State for Finance Pankaj Chaudhary said, “In case of inoperative PANs, tax demands are being raised as per the provisions of Section 206AA of the Income Tax Act 1961, and CBDT Circular No.3 of 2023 dated March 28, 2023, and Circular No. 6/2024 dated April 23, 2024.”
However, in the case where salary is below the threshold limit, no tax demands are being raised, he stated. Annual income up to Rs 2.5 lakh is exempt from income tax.
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According to the CBDT circular on March 28, 2023, in case of inoperative PAN, tax will be deducted at a higher rate of 20 per cent.
A PAN becomes operative if not linked with Aadhaar. The extended last date to link PAN with Aadhaar was June 30, 2023. In the case of non-linking, PAN was rendered inoperative.
According to a tax expert, “After June 2023, a higher TDS rate would have applied to the transactions in case of inoperative PAN. To realise that, tax demands have been raised from taxpayers in case of inoperative PAN.”
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In case of inoperative PANs, as the deduction/ collection has not been made at a higher rate, demands have been raised by the income tax department against the deductors/ collectors while processing of TCS/ TCS statements under Section 200A or under Section 206CB of the Income Tax Act, 1961, as the case may be.
However, no higher TDS will be applied on transactions before Mach 31, 2024, if PAN was linked with Aadhaar till May 31, 2024.
According to the CBDT’s Circular on April 23, 2024, no liability of higher tax lies on transactions during FY24 if PAN becomes operative till May 31, 2024, as a result of the linkage of Aadhaar.
The last date to file income tax return (ITR) is July 31, 2024.
