Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: ACCOUNTING STANDARD :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: VAT Audit :: TDS :: list of goods taxed at 4% :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: empanelment :: cpt :: form 3cd :: Central Excise rule to resale the machines to a new company :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT RATES
General »
 Banks warn share tax hike threatens Paris' post-Brexit appeal
 PMC may decide on property tax rebate for IT firms this week
 I-T Dept is giving out certificates of appreciation. Have you received yours?
 Government works on ironing out benefits refund mechanism for exportersa
  Tax officials are using an IDS provision to question transactions beyond six-year-limit
 Tax-free bonds rally like midcap funds
 Senior citizens do not have to pay advance tax on salary and interest income
 GST: Audit commissioners to get adjudication powers
 Interest on NRE rupee account can be exempt from tax under FEMA
 Impact of GST on Real Estate Sector
 GST regime: Tax payers allowed to take option of third-party interfaces

PAN will increase your tax outgo
April, 01st 2010

Every person whose total income exceeds the maximum amount which is not chargeable to income tax is required to obtain a Permanent Account Number(PAN). Further, the central government may specify any class of person/s who are required to obtain the PAN, irrespective of their income / tax liability.

Mandatory to quote PAN

It is mandatory for a taxpayer to quote PAN in his/her tax return as well as other correspondence with the tax authorities, including tax payment challans. Further, PAN is also required to be mentioned in respect of specified transactions. These include sale and purchase of immovable property, bank deposits exceeding specified limits, buying mutual funds exceeding specified limits, etc.

Higher TDS w.e.f April 1, 2010

It is pertinent to note that w.e.f April 1, 2010, it has been specified that any person entitled to receive any sum or income or amount on which tax is deductible under the provisions of the Income-Tax Act, 1961, is required to furnish his PAN to the person responsible for deducting such tax.

If PAN is not furnished, then the deductor is under an obligation to withhold tax at the rates specified under the Act, rates in force or at the rate of 20%, whichever is higher. In other words, it effectively means that if the rate of tax deducted at source (TDS) on a particular transaction / payment is say 5% or 10%, however, if the recipient fails to provide his PAN to the deductor, then TDS on such payment would be withheld at a higher rate of 20%.

Quoting PAN must for all correspondence

It has also been specified that the deductee (recipient) shall furnish his PAN to the deductor and both shall indicate the same in all correspondence, bills, vouchers and other documents that are sent to each other.

No certificate for nil / lower TDS

It is important to note that there is a beneficial provision under the Act, wherein if the tax authorities are satisfied that the total income of the recipient justifies that TDS should be deducted at nil or lower rate in comparison with the TDS rates prescribed under the Act, then the tax authorities may issue a certificate specifying that the TDS should be deducted at such nil or lower rate. The tax authorities shall not grant such certificate for nil / lower withholding of tax unless the applicant furnishes his PAN, while applying for lower rate of TDS.

Exercise caution

In many cases wherein the payment is made to foreign parties, the provisions of the respective Double Taxation Avoidance Agreements (DTAA), if more beneficial in comparison with the Act, are applied to.

In the absence of the recipient furnishing the PAN, tax may now have to be deducted at the rate of 20%. This may cause hardship to the recipients based outside India, as they would now have to obtain PAN. Similarly, in domestic payments as well, the recipient should ensure that he has provided the PAN against the transactions where TDS is to be deducted like contractors, rent, professional payments, etc, to avoid hardship in the form of cash flow issues.

Therefore, caution needs to be exercised in this context and wherever the deductee does not have PAN, necessary steps should be taken to apply for the same, else TDS would be deducted at a higher rate.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Mission

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions