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Big updates on PAN Aadhaar linking and no penalty on TDS TCS

Central Board of Direct Taxes (CBDT) Provides Relief to Taxpayers on Short Deduction of TDS/TCS Due to In-operative PAN since PAN Aadhaar still not linked.The Central Board of Direct Taxes (CBDT) has released a circular to address taxpayer complaints about income tax notices for short deduction or collection of Tax Collected at Source (TCS) or Tax Deducted at Source (TDS) i.e. The Big updates on PAN Aadhaar linking and no penalty on TDS/TCS short deduction. The reason for sending these notices was because the deductees’ or collectees’ Permanent Account Numbers (PANs) were no longer active. The circular offers relief to taxpayers who were penalized for failing to deduct TDS/TCS at the higher rate that applied to PANs that were not in use since PAN Aadhaar linking still pending.




On April 23, 2024, the CBDT circular was released in response to multiple complaints from taxpayers who had received income tax notices. These notifications were sent out as a result of TDS/TCS deductors’ and collectors’ failure to deduct or collect tax at the higher punitive rate that applies to inactive PANs. This problem emerged because PANs were not linked to Aadhaar, which made them inactive for taxation reasons.


Relief Measures:

In line with the circular, the CBDT stated that neither the deductor nor the collector will be required to deduct or collect tax at double the rate allowed by sections 206AA/206CC of the Income Tax Act for transactions completed up to March 31, 2024, provided the PAN is operational by May 31, 2024. Rather, the standard rate of deduction or collection, as required by other Act provisions, shall be used. The purpose of this relief is to help deductors and collectors who were not aware of the deductees’ or collectors’ in-operative PAN status overcome their difficulties. It makes sure that taxpayers who fail to collect or deduct TDS/TCS at the higher rate because of a non-functioning PAN are not penalized. This is big updates on PAN Aadhaar linking and no penalty on TDS/TCS short deduction.


The relief offered by CBDT is noteworthy because it gives taxpayers who unintentionally paid fines because of the non-operational PAN issue some much-needed rest. The necessity to deduct or collect TDS/TCS at a higher rate for transactions involving inoperative PANs was not well-known to many taxpayers. In order to lessen the impact of fines on taxpayers, CBDT is offering relief for transactions up until March 31, 2024, and extending the period for the PAN to go into effect until May 31, 2024.
By making sure the PAN goes live within the allotted period, it gives them a chance to make up for the non-compliance. By doing this, penalties are avoided and TDS/TCS compliance is encouraged, which facilitates a more efficient tax administration procedure.


Expert Opinion:

Experts, such as tax consultants and chartered accountants, have praised CBDT for its aid. They stress that in order to prevent future compliance problems, taxpayers must take proactive measures to integrate their PAN with Aadhaar.It is not only required to save penalty and double deduction of TDS/TCS, also helpful for online ITR filing at Income tax portal. Utilizing the relief options provided in the circular, taxpayers can guarantee adherence to tax laws and reduce the possibility of fines.




Here big updates on PAN Aadhaar linking and no penalty on TDS/TCS short deduction, asa major step in resolving taxpayer complaints is the CBDT’s circular, which offers relief to taxpayers on short deduction or collection of TDS/TCS owing to inoperative PANs. The goal of CBDT is to facilitate improved tax administration and lessen the cost of compliance on taxpayers by offering relief measures and clarity. It emphasizes how crucial it is to comply with tax laws on timeand how important it is for taxpayers to be more aware of their responsibilities. If you need any help for PAN Aadhaar linking or activate your PAN immediately at Income tax portal “www.incometaxindia.gov.in”, Kcorp Tax consultant is here to comply with tax rules.


Read alsoAadhar update last date in 2024.