The Central Board of Direct Taxes (CBDT), the apex body on direct taxes in India, has issued a circular saying that in case of demise of deductee/ collectee on or before May 31, 2024, before the linkage of PAN and Aadhaar, no higher tax will be levied.
PAN-Aadhaar Linking Update: Taxpayers who have not linked their PAN with Aadhaar have been levied higher TDS up to as high as 20 per cent. Now, the Central Board of Direct Taxes (CBDT), the apex body on direct taxes in India, has issued a circular saying that in case of demise of deductee/ collectee on or before May 31, 2024, before the linkage of PAN and Aadhaar, no higher tax will be levied.
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“Several grievances have been received from the taxpayers where they have cited instances of demise of the deductee/collectee during the said period (i.e. on or before 31.05.2024) before the option to link PAN and Aadhaar could have been exercised. In such cases, tax demands are standing against the deductor/collector as a result of failure to link PAN and Aadhaar of the deceased person,” the CBDT said in the Circular No. 8/ 2024 dated August 5, 2024.
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. After June 2023, a higher TDS rate would have applied to the transactions in case of inoperative PAN.
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“In order to redress such grievances of the taxpayers, the Board, hereby specifies that in respect of cases where higher rate of TDS/TCS was attracted under section 206AA/206CC of the Act pertaining to the transactions entered into upto 31.03.2024 and in case of demise of the deductee/collectee on or before 31.05.2024 i.e. before the linkage of PAN and Aadhaar could have been done, there shall be no liability on the deductor/collector to deduc/collect the tax under section 206AA/206CC, as the case maybe. The deduction/collection as mandated in other provisions of Chapter XVII-B or Chapter XVII-BB of the Act, shall be applicable,” the CBDT said in the latest circular.
According to the Circular No. 6 of 2024 on April 23, 2024, the income tax department had provided a window of opportunity to the taxpayers upto May 31, 2024, for linkage of PAN and Aadhaar for the transactions entered into upto March 31, 2024, so as to avoid higher deduction/collection of tax under section 206AA/206CC of the Income-tax Act, as the case maybe.
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According to this circular, 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.
According to the CBDT Circular No.3 of 2023 dated March 28, 2023, in case of inoperative PAN, tax will be deducted at a higher rate of 20 per cent.
