Inoperative pan in 24Q return

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This discussion addresses concerns regarding inoperative PANs of landlords when employees claim HRA exemption in their 24Q TDS returns. Initially, there was no clear guidance on the impact of inoperative landlord PANs on HRA claims or TDS deductions. However, a later query highlights a specific case where the department raised a demand due to an employee's inoperative PAN, applying a 20% tax rate under Section 206AA. Recent CBDT Circular No. 6/2024 offers relief, stating that if a deductee's PAN becomes operative by 31st May 2024, the deductor is not liable for TDS under Section 206AA for transactions up to 31st March 2024. If the employee's PAN remains inoperative past this date, the short deduction will likely need to be paid.

K BHEEMA REDDY

K BHEEMA REDDY (Querist)

28 May 2024 Dear Sir,
We are preparing TDS Return 24Q. while preparing 24Q some of employees claimed HRA exemption more than 100000 and submitted the owner pan number. Here issue is some of employees owner pan numbers is inoperative. Is there any issue while filing the 24Q return or is there any Disallowance of HRA exemption during the processing of 24Q Return.

Thanks & Regards,
Bheema Reddy.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

28 May 2024 As on date there is no clarification over the inoperative PANs of landlords, as there is no TDS to be deducted over it. Disallowance of HRA exemption to employees has not been announced till date.

K BHEEMA REDDY

K BHEEMA REDDY (Querist)

10 June 2024 Thank you sir for previous reply. and i have one more doubt.

We are filed 24Q TDS return in our organisation. In that return some of employees pan number is inoperative. in Q1 , Q2, Q3 Returns also there is no error showing even though pan is inoperative and it is processed, But in Q4 Return department is raised a demand for Rs.47220.
Details as follows.
New Tax Regime is opted by employee.
Gross salary 431468
Less: Stud deduction: 50000
Total taxable income : 381468.
In justification report department is showing Inoperative pan Tax rate is 20% U/s 206AA and short deduction is Rs.47220. on what basis they are calculated 47220. is there any possibility
to rectify the demand other than payment. Please clarify my doubt as early as possible.

Thanks in advance,
Thanks & Regards,
Bheema Reddy.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

10 June 2024 In Circular No. 6/2024, CBDT provides relief to deductors/collectors grappling with the consequences of Inoperative PANs. If a deductee/collectee’s Inoperative PAN becomes operative (via Aadhar linkage) by 31st May 2024, there shall be no liability on the deductor/ collector to deduct/ collect the tax u/s 206AA/ 206CC, as the case may be, for the transaction entered into up to 31-03-2024.
Check if the PAN became operative on or before 31.05.2024.
The short deduction seems to be mistake of department, ask for clarification.

K BHEEMA REDDY

K BHEEMA REDDY (Querist)

10 June 2024 Thank you sir for your valuable reply.

The employee pan is still inoperative sir. They are not linked with aadhar before 31.05.2024,
What can i do sir.

Thanks & Regards,
Bheema Reddy.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

10 June 2024 Need to pay the short deduction, when PAN is still inoperative.

K BHEEMA REDDY

K BHEEMA REDDY (Querist)

10 June 2024 ok sir. Thank you very much sir.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

10 June 2024 You are welcome.

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