The Income Division, this April, mentioned that PANs will turn into inoperative if not linked with Aadhaar by Could 31, necessitating tax deductions to be made at the next price, and refunds being withheld. Picture for illustration.
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Many employers are in a repair over demand notices from the Revenue Tax (I-T) Division for brief deduction of tax on the revenue of staff who had not complied with a Could 31 deadline to hyperlink their PAN and Aadhaar numbers, with some corporations reporting tax calls for even for staff incomes lower than the taxable revenue threshold.
The Income Division, this April, mentioned that PANs will turn into inoperative if not linked with Aadhaar by Could 31, necessitating tax deductions to be made at the next price, and refunds being withheld. This marked an extension from the same directive final yr that these penalties of inoperative non-Aadhaar linked PANs have been to kick in from July 1, 2023.
As of March 31, 2024, the division had issued about 75 crore PANs or Everlasting Account Numbers. By January this yr, somewhat underneath 11.5 crore PANs have been but to be linked to Aadhaar.
“Whereas the language of the round is obvious that such larger price is relevant solely in circumstances the place tax is deductible, the tax authorities whereas processing the withholding tax, returns have been making use of larger charges even the place the wage revenue is beneath the prescribed threshold,” Anita Basrur, associate, at Sudit Okay. Parekh & Co. LLP advised The Hindu.
“That is creating pointless points for the businesses as they’ve been reporting circumstances beneath the brink restrict merely for the needs of issuing wage certificates (Type 16) to such staff,” she famous.
Many corporations are asking staff to hyperlink the PAN after receipt of the demand notices, and have been revising their withholding tax returns, however there isn’t any readability on the taxman’s stance in such circumstances.
“It’s seen that the tax authorities are usually not contemplating such circumstances and the demand nonetheless stays as payable because the linking is after the prolonged deadline. Many grievances have additionally been filed in circumstances the place funds are beneath the prescribed threshold, and thus there isn’t any requirement to withhold tax and the query of upper price doesn’t apply,” she identified.
“Whereas one could state that there isn’t any loss to the businesses since they could get well the quantity from the staff, will probably be troublesome to get well the tax in circumstances the place wage of the staff is beneath threshold or in circumstances the place staff have left the organisation,” Ms. Basrur emphasised.
Queries to the Central Board of Direct Taxes on the difficulty had not elicited a response until the time of going to press.
Akhil Chandna, associate at Grant Thornton Bharat recommended: “For monetary yr 2023-24, they need to deposit the excellent tax quantity if the worker’s PAN and Aadhaar remained unlinked after Could. Thereafter, the staff also needs to declare the TDS quantity by submitting or revising their tax return for 2023-24 topic to PAN-Aadhaar linkage”.
Suresh Surana, a chartered accountant, mentioned that employers could obtain notices for brief deductions if they’ve deducted taxes at a price decrease than 20%, which might even be topic to curiosity and penal penalties.
“Employers should confirm that every one staff have linked their PAN with Aadhaar to make sure correct TDS [tax deduction at source] and keep away from such notices. The place staff had linked their PAN and Aadhaar on or earlier than Could 31, employers wouldn’t be liable for brief deduction,” he mentioned. Nevertheless, linking PAN and Aadhar subsequently could not impression these demand notices, Mr. Surana cautioned.
