Friday, April 26, 2024

New CBDT Guidelines: Simplifying TDS/TCS Compliance for Inoperative PANs

The Central Board of Direct Taxes (CBDT) has recently revised its guidelines regarding inoperative PANs affecting TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) compliance. This revision is detailed in Circular No. 6/2024 dated 23.04.2024, addressing the challenges faced by taxpayers due to inoperative PANs.

Key Modifications in the New Circular

  1. Transactions Deadline and PAN Reactivation: For transactions conducted up to March 31, 2024, and where a PAN becomes operative (by linking to Aadhaar) on or before May 31, 2024, the higher tax rates under sections 206AA/206CC will not be applied. This adjustment provides relief from higher TDS/TCS rates for inoperative PANs during this period.

  2. Standard TDS/TCS Rates: For affected transactions, the standard TDS/TCS rates under Chapter XVII-B or XVII-BB of the Income Tax Act will apply, rather than the elevated rates previously triggered by inoperative PANs.

Compliance Guidance

Taxpayers and professionals handling TDS/TCS should update their practices according to these new guidelines to ensure compliance. Detailed information can be accessed through the full circular available here: Circular No. 6/2024.

This modification is expected to streamline the compliance process for TDS/TCS, reducing complications associated with inoperative PANs and ensuring more straightforward tax administration.