CA Umesh Sharma
Quick Summary
Arjuna (Fictional Character): Krishna, a lot of TDS Deductors who have filed their TDS returns for the 2nd quarter of FY 2023-24 have received intimations for Defaults in their TDS Return for Quarter 2nd. Why are the TAN holders getting these default notices from Income Tax Department? Krishna (
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FAQ :
TAN holders are receiving default notices because many deductees have inoperative PANs, which are PANs not linked with Aadhaar by the deadline.
If a PAN is not linked with Aadhaar, it becomes inoperative from 1st July 2023, leading to TDS being deducted at a higher rate.
The higher TDS rate for inoperative PANs can be up to 20% as per Section 206AA read with Rule 114AAA(3)(iii).
No, even if the deductee links their PAN with Aadhaar after the TDS return is filed, the TDS should have been deducted at the higher rate based on the PAN status at the time of deduction.
A TDS deductor can verify the PAN status of a deductee by logging into the TRACES website and using the PAN Verification window found under the dashboard tab in quick links.
TAN holders who have received intimations of default are advised to revise their TDS returns at the earliest to avoid further complications and should verify the PAN status of all deductees in the future.
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