The Income Tax Department has issued a stern reminder for taxpayers to link their PAN (Permanent Account Number) with Aadhaar by May 31, 2024, to avoid higher TDS (Tax Deducted at Source) charges. The extension of this deadline is a crucial measure to ensure compliance and avoid financial penalties.
If taxpayers fail to link their PAN with Aadhaar by the deadline, their PAN will become inoperative. An inoperative PAN due to non-linkage can affect various financial transactions, including receiving higher TDS deductions on payments like house rent allowance. This step is part of a broader effort to ensure transparency and accuracy in financial dealings.
The Central Board of Direct Taxes (CBDT) has addressed concerns from taxpayers regarding short-deduction notices for TDS and TCS (Tax Collected at Source). The CBDT stated that transactions made up to March 31, 2024, where the PAN becomes operative by May 31, 2024, will not incur higher TDS/TCS deductions.
Suppose a payment of INR 50,000 with a standard TDS rate of 10%. If the PAN is not linked with Aadhaar, the TDS deducted would be INR 10,000 instead of INR 5,000, causing a significant financial impact.
The extension to May 31, 2024, offers a critical opportunity for taxpayers to comply with the linking of PAN and Aadhaar, thereby avoiding higher TDS rates and ensuring smooth financial transactions. The Income Tax Department urges all taxpayers to take immediate action to prevent any disruptions.
