Despite not linking PAN-Aadhaar, such deductee will not have to pay more TDS-TCS, CBDT issued circular

PAN-Aadhaar Linking: The Central Board of Direct Taxes (CBDT) has issued a circular giving major relief with regard to the provisions of TDS and TCS in the event of death of deductor and collector before linking of PAN and Aadhaar before May 31, 2024.

The Finance Ministry said that in view of the difficulties being faced by the taxpayers, the Central Board of Direct Taxes has issued a circular dated August 5, 2024 in which the government has relaxed the provisions of TDS and TCS in the Income Tax Act, 1961 in the event of the death of the deductor and collector before linking PAN and Aadhaar. In cases where the deductor and collector have died before May 31, 2024 and before exercising the option of linking PAN with Aadhaar, the deductor and collector will not have any liability to deduct tax under section 206AA/206CC of the Income Tax Act in respect of transactions made up to March 31, 2024, according to the circular for redressal of grievances of taxpayers.

The Finance Ministry said, on April 23, 2024, the Central Board of Direct Taxes had issued a circular to provide relief from higher TDS (TCS) under the Income Tax Act on transactions done up to March 31, 2024 and this is a continuation of the same circular in which the deadline for linking PAN and Aadhaar was extended to May 31, 2024.

CBDT was receiving complaints from taxpayers that the deductee-collectee had died before the last date of linking PAN-Aadhaar, i.e. 31 May 2024, due to which they are unable to link PAN-Aadhaar. In such a situation, the request for tax demand is pending. According to the rules, if the taxpayer fails to link PAN Aadhaar, then 20 per cent TDS is deducted, which is the rule of deducting 5 per cent TCS. To avoid higher TDS TCS, the government had extended the date for linking PAN-Aadhaar to 31 May 2024.