Income Tax Section 206AA is require TDS Deductee receiving as Contract Income or other Income which is liable to Deduct TDS on it, PAN is mandatory/compulsory for the Deductor. In case, the Deductee fails to furnish PAN, the Deductor is liable to deduct tax at a rate which is higher of the following:
- the rate specified in the Act;
- the rate or rates in force or
- at the rate of 20%.
In the case of TDS Deductor deducted tax below Tax rate then TDS Deductee or TDS Deductor or both is liable to pay penalty or interest. Thus the Tax Deductor must deduct TDS at Higher Rates (@ 20%) as the PAN is not furnished by the deductee. TDS Deductor have to either get the PAN from the concerned deductees or have to collect/pay the balance amount of tax to the Government Treasury to avoid all the penal consequences.
Before 01.10.2010, it was mandatory to submit e-TDS/e-TCS return with certain percentage of PAN of Deductees failing which return filing was not possible. After releasing new codes as C & T for higher rate and for non deduction of TDS for transporter, e-TDS/e-TCS return can be validated without 100% PAN numbers of Deductees. To submit return without having 100% PAN, TDS Deductor have to select higher rate as coded "C" in column named "Reason for non-deduction / lower deduction" as appearing in the quarterly return.
Before 01.10.2010, it was mandatory to submit e-TDS/e-TCS return with certain percentage of PAN of Deductees failing which return filing was not possible. After releasing new codes as C & T for higher rate and for non deduction of TDS for transporter, e-TDS/e-TCS return can be validated without 100% PAN numbers of Deductees. To submit return without having 100% PAN, TDS Deductor have to select higher rate as coded "C" in column named "Reason for non-deduction / lower deduction" as appearing in the quarterly return.
