PAN no of contractors not available

This query is : Resolved

Mittal (Querist)
Follow

04 December 2007 Sir,

We are buildier and constructing flats through contractors. In last quarter our TDS Return was rejected due to missing PAN numbers.

Now plz guide us what should we do because we have deducted TDS and deposited with bank and now the contractors have left the job. And their PAN no. was not obtainable.
So I request you to plz guide me on this querry.

Thanks & Regards
Suresh Mittal

Shyam Lal Naik

Shyam Lal Naik (Expert)
Follow

04 December 2007 The condition imposing atleast 70% valid PAN is improper. It should be challanged in courts.

Ravi Shankar

Ravi Shankar (Expert)
Follow

05 December 2007 If you want to follow my advice, you should be collecting the PANs of all the contractors and give the necessary info in the e-TDS quarterly statements. There appears to be no alternative for this problem. I face a more difficult problem. Banks have been deducting tax in absence of 15-G/H even from old widows and pensioners who do not even know about the concept Income-Tax/PAN. Suppose a bank has deducted from 10 customers out of which 4 are old widows and pensioners not having PANs. The e-TDS return is not file-able as PANs are missing in more than 30% of the cases.

As regards Mr. Naik's suggestion that this condition is to be challenged in the courts, I am of the following view:

If the deductor fails to mention the deductee's PAN in his e-TDS return, the credit of the tax paid does not actually go to the deductee although he has paid the tax, in the absence of his PAN. So, we should encourage our clients to collect and furnish the PANs for better tax administration (instead of challenging the circular).

Upgrade to CAclubindia Pro. Subscribe Now!

Shyam Lal Naik

Shyam Lal Naik (Expert)
Follow

08 December 2007 I appreciate and agree with the view of Mr. Ravi Shankar.

How ever, there are certain sectors, like the one mentioned by the queriest, where a number of small/petty contractors are engaged, its almost next to impossible to provide 70% PAN. Most of the (sub)/contractors are not income tax payee. They would be happy to forgo the TDS, then to apply for/disclose PAN.

Certainly, things will improve in coming years.

However, at this juncture, non acceptance of TDS return and imposing penalty on the deductor for non filing of TDS return for no fault of the deductor does not seem judicious.

More over, it will go against the interest of other deductees, who have intimated their PAN, as they too will not get tax credit in the absence of TDS return.

This condition appears to be abnormally restrictive.