CBDT has earlier vide Circular no. 03 of 2023 Dt. 28.03.2023 provided consequences for assessee who fail to link their PAN and Aadhar. Relevant extract of that circular is as under:
“(i) refund of any amount of tax or part thereof, due under the provisions of the Act shall not be made to him;
(ii) interest shall not be payable to him on such refund for the period, beginning with the date specified under sub-rule (4) of rule 114AAA and ending with the date on which it becomes operative;
(iii) where tax is deductible under Chapter XVJJ-B in case of such person, such tax shall be deducted at higher rate, in accordance with the provisions of section 206AA;
(iv) where tax is collectible at source under Chapter XVJJ-BB in case of such person, such tax shall be collected at higher rate, in accordance with the provisions of section 206CC.”
One of the consequence mentioned above is in relation to deduction of tax at higher rate u/s 206AA and accordingly many assessee when filed their 2nd quarter onwards TDS return for FY 2023-24, started receiving notice from Income tax department for short deduction of TDS.
We had discussed about the same in our article. To read CLICK ME.
Further, based on the above circular CBDT has mentioned 01.07.2023 as the date from when the above circular shall be effective.
Hence, CBDT has raised demand on deductor who had deductor TDS at higher rate for such inoperative PAN and they had raised grievance with CBDT that they were not aware and were not able to check as to whether the PAN is operative or not and hence now they cannot deduct or deposit such higher rate of TDS.
Thus, considering the above grievance, CBDT has modified the above circular to provide relaxation and state that in case where transaction is entered into till 31.03.2024 and PAN and aadhar is linked till 31.05.2024 then no such higher TDS/ TCS shall be applicable on deductor or collector.
The above relaxation has been passed by Circular no. 6 of 2024 Dt. 23.04.2024
To read full circular CLICK ME.
Although the relaxation has been provided which is a welcoming step but what would be the consequence where deductor have collected and already deposited 20% TDS with interest to government. There is no mechanism prescribed for them to claim a refund of same. It would have been better if Income tax department would have considered the same rather than punishing the honest taxpayers as always.
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