Consequences of PAN Becoming… — F.No. 275/4/2024-IT(B)

In CBDT updates

Consequences of PAN Becoming… — F.No. 275/4/2024-IT(B) | CBDT circular · Complied AI

AI summarychecked against the official textHow briefs are prepared

What changed

The Central Board of Direct Taxes modifies Circular No. 3 of 2023 to relieve tax deductors and collectors from higher tax deduction liabilities under specific conditions. Tax deductors and collectors face no liability to deduct or collect tax at a higher rate under section 206AA or section 206CC for transactions entered into up to 31.03.2024. This relief applies only if the PAN of the deductee or collectee becomes operative through Aadhaar linkage on or before 31.05.2024. Regular tax deduction or collection rates under other provisions of Chapter XVII-B or Chapter XVII-BB of the Income-tax Act apply in these cases.

What you must do

Link PAN with Aadhaar on or before 31.05.2024 so the PAN becomes operative for transactions entered into up to 31.03.2024

Key dates

Date of Circular No. 3 of 2023: 28 Mar 2023
Date from which consequences took effect under Circular No. 3 of 2023: 01 Jul 2023
Cut-off date for transactions to qualify for relief from higher TDS/TCS deduction: 31 Mar 2024
Deadline for PAN to become operative via Aadhaar linkage to avail relief: 31 May 2024

Law this touches

Filings this may affect

Monthly TDS payment to the GovernmentTax deducted at source in a month has to reach the Government by the 7th of the next month. March deductions get until 30 April.Next due7 Nov 2026Deductions for April to February

Matched on the filing’s own terms in this document. Check that it governs your filing before you act.

See the full compliance calendar

Who is affected

Taxpayers who failed to intimate their Aadhaar number leading to their PAN becoming inoperative
Deductors and collectors facing demands due to short-deduction or short-collection of tax while carrying out transactions with persons having inoperative PANs

Exceptions

There is no liability on the deductor or collector to deduct or collect tax at a higher rate under section 206AA or section 206CC for transactions entered into up to 31.03.2024 if the PAN becomes operative on or before 31.05.2024

If you do not comply

Tax refunds are not made to a person with an inoperative PAN
Interest is not payable on tax refunds for the period beginning with the date specified under rule 114AAA(4) until the PAN becomes operative
Tax is deducted at a higher rate under section 206AA where tax is deductible under Chapter XVII-B
Tax is collected at a higher rate under section 206CC where tax is collectible under Chapter XVII-BB

Ask about this circular

Written automatically from the official document. It is not a professional review, so check material decisions against the official record.

Document text

Prepared for reading; wording retained from the source.

Official source

F.No. 275/4/2024-IT(B) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes

Circular No.6 [unclear in source] 2024 New Delhi, th[unclear in source] ril [unclear in source], 2024

Sub: Partial modification of Circular No.3 of 2023 dated 28.03.2023 regarding consequences of PAN becoming inoperative as per rule 114AAA of the Income-tax Rules, 1962- reg.

Circular No. 3 of 2023 dated 28.03.2023 issued by the Board details the consequences of PAN becoming inoperative as under:

"Consequent to the notification substituting rule 114 AAA of the Income-tax Rules, 1962 (the Rules) vide notification no. 15 of 2023 dated 28th March, 2023, it is hereby clarified that a person who has failed to intimate the Aadhaar number in accordance with section 139AAA of the Income-tax Act, 1961 (the Act) read with rule 114AAA shall face the following consequences as a result of his PAN becoming inoperative:

(i) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made to him;
(ii) interest shall not be payable to him on such refund for the period, beginning with the date specified under sub-rule (4) of rule 114AAA and ending with the date on which it becomes operative;
(iii) where tax is deductible under Chapter XVI[unclear in source]-B in case of such person, such tax shall be deducted at higher rate, in accordance with the provisions of section 206AA;
(iv) where tax is collectible at source under Chapter XVI[unclear in source]-BB in case of such person, such tax shall be collected at higher rate, in accordance with the provisions of section 206CC. "

As per sub-rule (4) of rule 114AAA of the Income-tax Rules, 1962, the above consequences shall have effect from the date specified by the Board. The Board vide Circular No. 03 of 2023 dated 28th March, 2023 had specified that the consequences shall take effect from 1st July, 2023 and continue till the PAN becomes operative.
Several grievances have been received from the taxpayers that they are in receipt of notices intimating that they have committed default of 'short-deduction/collection' of TDS[unclear in source]TCS while carrying out the transactions where the PANs of the deductees/collectees were inoperative. In such cases, as the deduction/collection has not been made at a higher rate, demands have been raised by the Department against the deductors/collectors while processing of TDS[unclear in source]TCS statements under section 200A or under section 206CB of the Act, as the case maybe.
With a view to redressing the grievances faced by such deductors/collectors, the Board, in partial modification and in continuation of the Circular NO. 3 of 2023, hereby specifies that for the transactions entered into upto 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 206A[unclear in source]/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.
Hindi version to follow.

[Image omitted. See the official document.] (Sunil Kumar) Under Secretary to the Government of India Tele: 23095478

Copy to:-

PS to FM/OSD to FM/PS to MoS (R)/OSD to MoS(R)
PPS to Secretary (Revenue)
The Chairman, CBDT & all Members, CBDT
All Pr.CCsIT, CCsIT/Pr.DGIT/DGsIT
All Joint Secretaries/C[unclear in source]sIT, CBDT
Pr. Commissioner of Income-tax (Media & TP) and official Spokesperson, CBDT, New Delhi
CIT, (CPC-TDS)
ADG (PR,P&P) for necessary action
JCIT, Database Cell, with a request to upload the order on the website www.irsofficersonline.gov.in
Web Manager, [unclear in source] DGIT(Systems) with a request to upload the order on the website of www.incometaxindia.gov.in
The Institute of Chartered Accountants of India, IP Estate, New Delhi
All Chambers of Commerce
The Guard File

[Image omitted. See the official document.] (Sunil Kumar) Under Secretary to the Government of India Tele: 23095478

Consequences of PAN Becoming Inoperative for TDS and TCS Deductors

What changed

Document text

Source details

Search Complied AI

Consequences of PAN Becoming Inoperative for TDS and TCS Deductors

What changed

Document text

Source details

Related