CBDT Grants Relief from Higher TDS/TCS for Inoperative PANs
The CBDT has given major relief to taxpayers by allowing reversal of higher TDS/TCS deducted due to an inoperative PAN, if they link their Aadhaar on time. This update, notified via CBDT Circular No. 6/2024 dated 23.04.2024, is crucial for lakhs of taxpayers facing higher tax deductions despite valid compliance.
Let’s break down the relief and what action taxpayers must take to benefit.
What is an Inoperative PAN?
As per Section 139AA of the Income Tax Act, your PAN becomes inoperative if it is not linked with Aadhaar by the notified deadline. Consequences include:
- Higher TDS under Section 206AA
- Higher TCS under Section 206CC
- Inability to file ITR
- Trouble in bank and financial transactions
Focus Keyphrase: Relief from Higher TDS/TCS
What the New CBDT Circular Says
CBDT Circular No. 6/2024 provides relief by allowing deductors and collectors to adjust or refund excess TDS/TCS deducted due to inoperative PANs, if the PAN becomes operative after linkage with Aadhaar within the same financial year.
Key Points:
- Applies only if PAN was made operative within the same financial year
- Deductors/collectors can re-compute TDS/TCS at normal rates
- Adjustments can be made in subsequent statements filed in the year
- No need for the taxpayer to bear the burden if Aadhaar linkage is done in time
Example for Clarity
| Particulars | Without Relief | With Relief (as per Circular) |
|---|---|---|
| PAN status in April 2024 | Inoperative | Inoperative → Operative in July |
| TDS deducted in May 2024 | 20% under Section 206AA | 10% (revised) after PAN is updated |
| Adjustment in June 2024 | Not possible earlier | Allowed as per new Circular |
How to Link PAN with Aadhaar
Steps to link your PAN with Aadhaar:
- Visit https://incometax.gov.in
- Click on “Link Aadhaar” option
- Enter PAN, Aadhaar and mobile number
- Pay late fee (₹1,000 if applicable)
- Submit OTP and complete the process
⚠️ Linkage takes around 30 days to reflect on e-filing portal.
Expert View: Practical Tip
If you’re deducting TDS/TCS on behalf of others, recheck the PAN status periodically. If your deductee links Aadhaar mid-year, revise your TDS return and avoid penalising them with excess deduction.
Legal Basis and Notifications
- Section 139AA: PAN–Aadhaar linkage rule
- Sections 206AA/206CC: Higher TDS/TCS for invalid PANs
- CBDT Circular No. 6/2024: Available here
FAQs
Q1. Will I get a refund if excess TDS was already deducted?
Ans: Yes, the deductor can adjust or refund excess TDS if the PAN becomes operative in the same FY.
Q2. What if I link Aadhaar after the FY ends?
Ans: Then this relief won’t apply. Higher TDS/TCS remains valid.
Q3. Do I need to inform the deductor after linking Aadhaar?
Ans: Yes. Share updated PAN status with your deductor to help them revise returns.
Conclusion
The relief from higher TDS/TCS for inoperative PANs is a much-needed step for taxpayers who were compliant but faced system delays. If you’ve linked Aadhaar, don’t forget to notify your deductor or collector and request TDS/TCS adjustment.
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Summary:
CBDT has allowed relief from higher TDS/TCS on inoperative PANs if Aadhaar is linked during the same FY. File revised TDS returns after PAN becomes operative.