NEW DELHI: All salaried class have been alerted that your employers will soon deduct 20 per cent of your salary as TDS if you fail to furnish Permanent Account Number (PAN) and Aadhaar details before them.
This new norm was formulated by the Central Board of Direct Taxes (CBDT) came into effect on January 16.
As per an 86-page circular issued by the CBDT, it is mandatory for the employees to quote PAN and Aadhaar details as per the Section 206-AA of the Income Tax Act or else the employer is responsible to make deductions.
“Section 206A in the Act makes furnishing of PAN or Aadhaar number as the case may be, by the employee compulsory in case of receipt of any sum or income or account on which tax is deductible,” the circular reads.
“Taxpayers are also liable to furnish their correct PAN or Aadhaar number as the case may be, to their deductors. Non-furnishing of PAN or Aadhaar number as the case may be, by the deductee (employee) to the deductor (employer) will result in deduction of TDS at higher rates under section 206AA of the Act,” the circular added.
The new rule by IT department will be applicable on those employees earning Rs 2.5 lakh per annum. No tax will be deducted if income is less than Rs 2.5 lakh per annum.
Know about CBDT’s new norm:
In case, if an employee fails to furnish his/her Aadhaar/PAN details, the employer, according to CBDT, can collect Tax Deducted at Source (TDS) as per the highest among the following rates:
- the rate specified in the relevant provision of the Income Tax Act
- rate or rates in force
- at a rate of 20 percent