In a significant update, the Income Tax Department has extended the deadline for penalising non-deduction of double TDS, offering a lifeline to taxpayers grappling with unlinked PAN and Aadhaar. The Central Board of Direct Taxes (CBDT) clarified in its circular on April 24, 2024, that no punitive action will be taken against TDS deductees if they link their PAN with Aadhaar by May 31.
Why Does It Matter?
Under income tax regulations, failure to link PAN with Aadhaar triggers double TDS deduction. Since June 30, 2023, inactive PANs faced this penalty, compelling those conducting TDS-related transactions to deduct double the applicable rate. Consequently, many received notices for short deduction of TDS/TCS due to inactive PANs.
The CBDT acknowledged taxpayer grievances stemming from such notices and provided relief to deductors facing penalties due to inoperative PANs.
Sandeep Sehgal, Partner-Tax at AKM Global, praised the circular, emphasising the importance of prompt action by deductors to ensure PAN-Aadhaar linkage before May 31, thus avoiding penalties. He highlighted the absence of a utility to verify PAN status, urging authorities to address this gap.
How to Link PAN-Aadhaar?
Deductees can visit the Income Tax Department’s portal to link PAN with Aadhaar before the deadline. For individuals encountering demographic mismatches, dedicated PAN Service Provider centres offer biometric authentication solutions for a nominal fee. Notably, individuals aged 80 years or older and NRIs are exempt from this mandate.
Consequences of Non-Linkage
Failure to link PAN with Aadhaar renders accounts non-KYC compliant, prohibiting securities trading until linkage is completed. Moreover, inoperative PANs hinder income tax return filings, delay return processing, and result in double TDS deduction.
As the deadline approaches, taxpayers are urged to expedite the PAN-Aadhaar linking process to avoid penalties and ensure seamless compliance with income tax regulations.
