The Central Board of Direct Taxes (CBDT) has issued a contemporary round modifying earlier pointers on the implications of Everlasting Account Quantity (PAN) changing into inoperative underneath Rule 114AAA of the Earnings-tax Guidelines, 1962. The transfer offers aid to tax deductors and collectors going through notices for brief deduction or assortment of TDS/TCS.
Background
As per Round No. 3 of 2023, PANs that weren’t linked with Aadhaar turned inoperative from July 1, 2023, attracting increased TDS/TCS charges underneath Sections 206AA and 206CC of the Earnings-tax Act, 1961. Reduction was later offered by way of Round No. 6 of 2024 for transactions until March 31, 2024, the place PANs have been made operative on or earlier than Could 31, 2024.
Nonetheless, taxpayers continued to report grievances relating to notices for defaults associated to decrease TDS/TCS deductions the place the PAN of the deductee or collectee was inoperative on the time of transaction.
Key aid measures in 2025 round
To deal with these issues, the CBDT has now specified that deductors/collectors won’t be held accountable for increased TDS/TCS charges underneath Sections 206AA/206CC within the following conditions:
For funds or credit made between April 1, 2024 and July 31, 2025, the place the PAN is made operative (by way of Aadhaar linkage) on or earlier than September 30, 2025.
For funds or credit made on or after August 1, 2025, the place the PAN is made operative inside two months from the top of the month during which the transaction occurred.
In such circumstances, regular TDS/TCS deduction and assortment guidelines as per different provisions of Chapter XVII-B and XVII-BB of the Earnings-tax Act will proceed to use.
The transfer goals to cut back undue hardship to compliant deductors/collectors and streamline TDS/TCS administration amidst ongoing PAN-Aadhaar linkage enforcement.
