PAN Inoperative-higher TDS

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This discussion addresses the TDS deduction rate when a PAN becomes inoperative after a bill is booked but before the TDS return is filed. The consensus is that if the PAN was inoperative at the time of deduction (December 2024), TDS should be deducted at the higher rate of 20%. If TDS is based on payment, the 20% rate applies. However, if TDS is based on credit entry, the date can be adjusted to reflect the PAN's operative status, allowing for a 2% deduction with applicable interest.

Murali

Murali (Querist)

23 January 2025 Dear Sir,

we have deducted TDS @ 2% under 94 C, but his PAN is inoperative in the month of Dec 2024 bill booked.

now he linked with aadhar, becomes operative,

we are liable to deduct 20% or 2% in Dec 2024 because of we are filing TDS return

please confirm

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

23 January 2025 For the month of December TDS deduction will be at 20%.

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CA Roomi Gupta

CA Roomi Gupta (Expert)

24 January 2025 Pan Operative or not need to be checked at the time of deductions . As it was inactive at that time TDS @20% should be deducted.

Message likes : 1 times

CA ANILKUMAR B.COM FCA DISA

CA ANILKUMAR B.COM FCA DISA (Expert)

25 January 2025 clarify whether TDS is deducted on the basis of payment or credit entry. If TDS is on the basis of payment, you are liable to pay @20%. If TDS is based on credit entry, change the date of TDS entry after operation of PAN and pay the TDS of 2% with interest.

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