The new provision relating to TDS [No PAN - TDS at higher rate]
Divakar
CBDT has notified that the new provision relating to tax deduction at
source (TDS) under the Income Tax Act 1961 will become applicable with
effect from 1st April 2010.
No.402/92/2006-MC (04 of 2010)
Government of India / Ministry of Finance Department of Revenue
Central Board of Direct Taxes
***
New Delhi dated 20th January
PRESS RELEASE
A new provision relating to tax deduction at source (TDS) under the
Income Tax Act 1961 will become applicable with effect from 1st April
2010. Tax at higher of the prescribed rate or 20% will be deducted on
all transactions liable to TDS, where the Permanent Account Number
(PAN) of the deductee is not available. The law will also apply to all
non-residents in respect of payments / remittances liable to TDS. As
per the new provisions, certificate for deduction at lower rate or no
deduction shall not be given by the assessing officer under section
197, or declaration by deductee under section 197A for non-deduction
of TDS on payments shall not be valid, unless the application bears
PAN of the applicant / deductee.
2. All deductors are liable to deduct tax at the higher rate in all
transactions not having PAN of the deductees on or after 1st April
2010. In order that there is no dispute regarding quoting / non-
quoting of PAN or accuracy thereof, the law requires all deductees and
dedutors to quote PAN of deductees in all correspondences, bills,
vouchers and other documents sent to each other. All deductors are,
therefore, advised to intimate their deductees to obtain and furnish
their PAN so as to avoid TDS at a higher rate. All deductees,
including non-residents having transactions in India liable to TDS,
are advised to obtain PAN by 31st March 2010 and communicate the same
to their deductors before tax is actually deducted on transactions
after that date.
3. The procedure for obtaining PAN is simple, inexpensive and quick.
Application for PAN can be filed in Form 49A to National Securities
Depository Ltd. (NSDL) or Unit Trust of India Investor Services Ltd.
(UTIISL) or their intermediaries. Non-residents can apply through the
local embassy / consulate of India. Applications can also be filed,
paid for or tracked online through the Internet on the following web-
sites:¬
http://incometaxindia.gov.in/
https://incometaxindiaefiling.gov.in/portal/index.jsp
http://www.tin-nsdl.com/
http://www.utitsl.co.in/
4. The Central Board of Direct Taxes (CBDT) has issued Notification No.
94/2009 relating to taxation of perquisites / profits in lieu of
salary and Circular No.1/2010 for the guidance of tax dedutors for
salaries. These documents are available on the department’s web site
at http://incometaxindia.gov.in/
Regards.