If you have not linked your permanent account number or PAN to the Aadhaar card, you will have to pay a higher tax deduction at source (TDS) from next month. The deadline for linking your Aadhaar number and PAN has been extended to March 31. Failure to link these two documents within the stated deadline will affect your debit and credit card payments, online transactions and cash withdrawals at ATMs, among others.
According to the section 139AA of the Income Tax Act, every person with PAN on July 1, 2017 and who is eligible for Aadhaar must link these two documents. In the past three years, the Central Board of Direct Taxes (CBDT) has extended the last date of linking the Aadhaar card number to PAN several times. If the PAN is not linked to Aadhaar before the expiration date, the PAN will become ineffective, under Section 114AA(3) of the Income Tax Act. For those applying for new PAN cards, it is mandatory to list Aadhaar numbers, according to Section 139AA of Income Tax Act.
Be ready to pay higher TDS if you miss the deadline
If PAN is put out of action, the income tax department will find that the person has not filed a PAN and therefore can bear the consequences. Section 206AA(6) of the Income Tax Act requires taxpayers who have taxable income to submit their PAN card information. If the PAN provided by the taxpayer is invalid, it will be deemed that the debtor has not provided its PAN to the deductible, in accordance with Section 206AA(6) of the Income Tax Act.
So if you miss the March 31 deadline and your PAN card stops working because it is not linked to the Aadhaar card, you will have to pay TDS at the highest rate of 20 percent, according to section 206AA of the law. The higher TDS rate will apply to interest on fixed deposits, dividends and other income currently subject to TDS.
Abhishek Soni, co-founder of Tax2win, explained the new rule to the investors and said, “If we don’t link the Aadhaar to PAN, a higher TDS rate i.e. 20 percent will be charged on income eligible for For example, the TDS rate on FD interest is 10 percent if the interest amount is more than Rs.40,000 but according to section 206AA, if the Aadhaar is not pegged to the PAN, the TDS will be deducted by 20 percent.”
PAN-Adhaar Link: Rs 10,000 fine every time you PAN . does not deliver
According to Section 272B of the Income Tax Act, a penalty of Rs 10,000 may be levied in the event that PAN is not stated or delivered as required by the Income Tax Act. Under the provisions, any such non-compliance could be subject to a fine. A fine of Rs 10,000 can also be imposed on the defaulter every time the person fails to provide the PAN card details. This fee is in addition to the other consequences such as PAN becoming unusable due to non-reporting of Aadhaar, higher TDS rates and so on,” said Ruchika Bhagat, general manager of Neeraj Bhagat & Co.
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