Taxpayer Alert: Income Tax Department Raises TDS/TCS Rates for ‘Inoperative’ PANs

If your PAN status is 'Inoperative,' you may face higher TDS/TCS rates as per Section 206AA/206CC of the Income Tax Act, 1961
Taxpayer Alert - Income Tax Department - TDS - TCS Rates - Inoperative - PANs - taxscan

The Income Tax Department has issued an important notice directed towards Tax Deductors/Collectors, bringing attention to significant changes in the tax deduction and collection processes. Individuals with PAN status marked as ‘Inoperative’ are now subject to higher TDS/TCS rates, in accordance with the provisions outlined in Section 206AA/206CC of the Income Tax Act, 1961.

The income tax portal update stated that as follows:

“Attention Tax Deductors/ Collectors!!

Deductees/Collectees having PAN status as ‘Inoperative’ attract higher TDS/TCS rates applicable as per provisions of Section 206AA/ 206CC of Income Tax Act. Please refer CBDT Notification no 15/2023 and Circular no 3/2023 dated 28th March 2023. The status of PAN can be checked by clicking the link ‘Verify PAN Status’ available under the quick links.”

This alert stems from the Central Board of Direct Taxes (CBDT) Notification No. 15/2023 and Circular No. 3/2023, both dated March 28, 2023. These notifications provide detailed insights into the revised TDS/TCS rates applicable to those with ‘Inoperative’ PAN status. The notification clearly stated the consequences of the inoperative PAN. Apart from these, the department also stated other consequences too.

The consequences as per the notification:

“1. where tax is deductible under Chapter XVII-B in case of such person, such tax shall be deducted at higher rate, in accordance with the provisions of section 206AA;

2. where tax is collectible at source under Chapter XVII-BB in case of such person, such tax shall be collected at higher rate, in accordance with the provisions of section 206CC.”

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