Tds at higher rate

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2013 Section 260AA of income tax provides that in case of TDS deduction, if PAN not provided, TDS will be deducted at higher end, 20%.
This rule is applied to every assessee having or not having salary income.

But what’s in the case when the deductee has the income below the exemption limit under income tax.
If the dedcutee has not PAN number and has the income below exemption limit of income tax, will the tax be deducted at higher level?

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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18 February 2013 If PAN is not furnished tax will be deducted at source @ 20%.

However the 20% rate would be applicable only if tax is deductible at source. Where no tax is deductible at source the 20% rae is not appl;icable

CA Prashant Gupta

CA Prashant Gupta (Expert)
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18 February 2013 TDS and tax on income is different thing.
if PAN is not provided then TDS will be 20%, if TDS is applicable
but if income is less then exemption limit then the person can get refund of that TDS

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CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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18 February 2013 206AA. (1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereafter referred to as deductor), failing which tax shall be deducted at the higher of the following rates, namely:—
(i) at the rate specified in the relevant provision of this Act; or
(ii) at the rate or rates in force; or
(iii) at the rate of twenty per cent.

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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18 February 2013 The relevant section is reproduced above.

It covers only those payments on which tax is deductible as per chapter XVIIB.

If a person is deriving salary income which is below the exemption limit, the question of TDS does not arise and hence section 206AA does not apply.

CA Suraj Lakhotia

CA Suraj Lakhotia (Expert)
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Querist : Anonymous

Querist : Anonymous (Querist)

20 February 2013 thanks all...