No Higher TDS/TCS If Deductee/Collectee Dies On or Before 31-05-24 Without Linking PAN-Aadhaar | CBDT

Circular no. 8/2024, dated 05-08-2024

Rule 114AAA lists down consequences that apply if the PAN of a person becomes inoperative due to non-linking with his Aadhaar. One of the consequences listed is tax shall be deducted/collected at a higher rate in accordance with section 206AA/206CC.

The Central Board of Direct Taxes (CBDT) vide Circular no. 06 of 2024 dated 23.04.2024, specified that for transactions up to March 31, 2024, if the PAN becomes active (linked with Aadhaar) by May 31, 2024, there shall be no liability on the deductor/collector to deduct/collect the tax under section 206AA/206CC. Tax shall be deducted/collected as per the relevant provisions of the Act.

The CBDT has received several grievances from taxpayers who cited instances of the demise of the deductee/collectee during the period before the option to link PAN and Aadhaar could have been exercised. Tax demands are standing against the deductor/collector as a result of failure to link the PAN and Aadhaar of the deceased person.

To address such grievances of the taxpayers, the CBDT has specified that in respect of cases where a higher rate of TDS/ITCS was attracted under section 206AA/206CC of the Act pertaining to the transactions entered into up to 31.03.2024 and in case of the demise of the deductee/collectee on or before 31.05.2024, i.e., before the linkage of PAN and Aadhaar could have been done, there shall be no liability on the deductor/collector to deduct/collect the tax under section 206AA/206CC, as the case may be.

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