12 August 2010
WHETHER THE PROVISION OF 20% TDS, FOR NON SUBMISSION OF PAN, IS APPLICABLE TO SALARIED EMPLOYEES.MY ORGANIZATION HAS 1500 EMPLOYEES. I WOULD LIKE TO CLARIFY IN THE CASE OF AN EMPLOYEE WHO DOES NOT HAVE PAN, WHETHER TDS @ 20 % HAS TO BE MADE WHEN GROSS TOTAL INCOME, BEFORE CLAIMING DEDUCTION U.S. 80, EXCEEDS THE EXEMPTION SLAB BUT NET TOTAL INCOME, AFTER CLAIMING DEDUCTION U.S. 80 DOES NOT EXCEED THE EXEMPTION SLAB.
12 August 2010
yes also applicable to slaried employees.
As per the recent amendments W.e.f 01/04/2010, on non-submission of PAN, Tax is to be deducted @ higher of prescribed rate or 20%.
ü The Finance (No.2) Bill, 2009 had introduced a new section 206AA in the Income-tax Act, 1961 (ITA), which provides that every recipient of income is required to furnish its Permanent Account Number (PAN) i.e. tax registration number to the payer.
ü From the new financial year, Assessees will have to pay a higher income tax at source if they do not have a Permanent Account Number (PAN). Tax at higher of the prescribed rate or 20 percent will be deducted on all transactions liable to tax deduction at source (TDS), if the person liable to the tax does not possess a PAN.
ü All those liable to pay the tax, including non-residents, need to obtain a PAN by March 31, 2010. This number has to be communicated to those liable to deduct tax before the tax is actually deducted on transactions after that date.
ü As such, all financial transactions without PAN will attract tax from April 1, 2010. The Income Tax Department has already made it mandatory for employers to quote PAN of their employees and parties from whom tax is deducted while filing TDS returns.
ü According to the new provisions, declaration by a taxpayer under Section 197A for non-deduction of TDS on payments will not be valid if it is given without quoting PAN. The certificate for deduction at a lower rate or no deduction will not be given by the assessing officer under Section 197 in the absence of PAN.
ü Henceforth any person eligible for deduction fails to do so, he will have to pay 20 percent TDS instead of two percent on rental payments for plant and machinery and 10 percent on land and building.
ü To avoid disputes regarding quoting, no quoting of PAN or accuracy, all eligible for the deduction and those liable to deduct will be required to quote PAN in all correspondence, bills, vouchers and other documents sent to each other.
12 August 2010
IF EMPLOYEE'S SALARY EXCEEDS THE BASIC EXEMPTION LIMIT AND HE DOES NOT HOLD PAN, THEN Tax is to be deducted @ higher of prescribed rate or 20%.
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