CBDT Eases Tax Burden: No Higher TDS for Demise Cases Before PAN-Aadhaar Linking Deadline
News Mania Desk/Agnibeena Ghosh/7th August 2024
In a recent update from the Central Board of Direct Taxes (CBDT), taxpayers who have not yet linked their PAN with Aadhaar have received a significant relief regarding higher tax deductions. Previously, those who failed to complete the PAN-Aadhaar linkage by the deadline faced higher Tax Deducted at Source (TDS) rates of up to 20 percent. However, the CBDT has now issued a circular providing relief for cases where the deductee or collectee passed away before the linkage could be completed.
According to Circular No. 8/2024, dated August 5, 2024, the CBDT has acknowledged several grievances from taxpayers regarding instances where the deductee or collectee had passed away before May 31, 2024, the extended deadline for linking PAN with Aadhaar. In these situations, taxpayers were faced with higher tax demands due to the inoperative status of the deceased person’s PAN, leading to complications in tax collection.
The CBDT’s new directive stipulates that for transactions carried out up to March 31, 2024, if the person had passed away on or before May 31, 2024, and PAN-Aadhaar linkage had not been completed, the deductor or collector will not be liable to apply the higher TDS rates under sections 206AA or 206CC of the Income-tax Act. Instead, the standard tax rates applicable under other relevant provisions will be enforced.
Previously, taxpayers had until June 30, 2023, to link their PAN with Aadhaar, after which non-compliance rendered PANs inoperative. This inaction resulted in higher TDS rates on transactions, a situation that has been particularly challenging for those dealing with the estates of deceased individuals.
To address these issues, Circular No. 6 of 2024, issued on April 23, 2024, had already allowed a window until May 31, 2024, for taxpayers to link their PAN with Aadhaar to avoid higher TDS rates on transactions up to March 31, 2024. The recent CBDT circular further extends this relief by clarifying that higher TDS rates will not apply if the linkage could not be completed due to the demise of the individual.
Before this update, CBDT Circular No. 3 of 2023, issued on March 28, 2023, had established a 20 percent TDS rate for transactions involving an inoperative PAN. The new circular aims to mitigate the tax burden on taxpayers and their families in cases where the deceased’s PAN status impacted the tax deductions.
This recent decision by the CBDT highlights the board’s responsiveness to taxpayer concerns and its commitment to addressing the complexities arising from the PAN-Aadhaar linkage requirements. By alleviating the financial strain on families dealing with the loss of loved ones, the CBDT’s latest directive provides much-needed relief and clarifies the tax obligations in such sensitive situations.
