But In my opinion and as per the reading of 206AA which states as follows
“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 PAN to the person responsible for deducting such tax (hereafter referred to as deductor), failing which tax shall be deducted at the higher rate.”
Please note the important wordings in the text of section are “on which tax is deductible”, i.e if the employee getting salary less than Rs. 160000 i.e exemption limit, then they are not getting sum on which tax is to dedutible. hence section 206AA is not apply to them, no tds will be deduct on them.
If the person is getting salary more than exemption limit and claiming deduction u/s 80 C for tax saving, then PAN no. should be must.
It he is not providing, then you can apply Section 206AA and TDS 20% will be deduct on it.