JOIN USQuote PAN or be ready to shell out a hefty TDS
Under new Income tax rule all financial transactions not having reference of PAN will attract higher rate of Income Tax at the point of Tax Deduction at Source (TDS).
A new provision relating to TDS will come into effect from April 1 this year, whereby all transactions where the deductee’s PAN is not available will be charged at a higher of the prescribed rate or 20 per, cent, Central Board of Direct Taxes (CBDT) spokesperson said here. “From next financial year (2010-11) onwards a new provision relating to TDS under the Income Tax Act 1961 will become applicable. Tax at higher of the prescribed rate or 20 per cent will be deducted on all transactions liable to TDS, where the Permanent Account Number (PAN) of the deductee is not available,” he said.
The new provision applies to non-residents as well. “In order that there is no dispute regarding quoting and non-quoting of PAN or accuracy thereof, the law requires all deductees and deductors to quote PAN of deductees in all correspondences, bills, vouchers and other documents sent to each other,” the CBDT said in a notification.
“All deductors are, therefore, advised to intimate their deductees to obtain and furnish their PAN so as to avoid TDS at a higher rate,” the CBDT spokesperson said.
TDS rates traditionally vary depending on the transactions and the latest notification is intended to encourage compliance with regard to TDS, he said.