HIGHER TDS DEDUCTION ON SALARIED EMPLOYEE IN CASE OF INOPERATIVE PAN

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BHAVESH (Querist)
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20 November 2025 IF AN EMPLOYEE WHO HAVE AN INOPERATIVE PAN THAN HIGHER RATE TDS DEDUCTION? HOW TO COMPUTE TAXABLE SALARY? (IE. AFTER CONSIDERING STANDARD DEDUCTION + 87 REBATE ) CAN I GIVE SLAB RATE BENEFIT TO THAT EMPLOYEE?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 November 2025 - As per Section 206AA of the Income Tax Act, if an employee’s PAN is inoperative or not furnished, TDS must be deducted at the higher rate.

Even if PAN is inoperative, the taxable income of the employee is still computed normally:
- Gross Salary (Basic + Allowances + Perquisites)
- Less: Standard Deduction (₹50,000 u/s 16(ia))
- Less: Other deductions (like u/s 80C, 80D, etc., if declared and supported)
- Taxable Income = Net figure after deductions.

- you cannot give effect to rebate if PAN is inoperative, because Section 206AA forces deduction at higher rate.

- No, slab rate benefit cannot be applied at the time of TDS deduction if PAN is inoperative.
Employer must deduct TDS at 20% (or higher, as per section).
- Employee can later file ITR, claim slab benefit, deductions, and rebate u/s 87A, and get refund of excess TDS.

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