TDS on Salaried Employees-PAN Inactive or PAN Not Linked With Aadhar

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SIDDHARTH MAHESHKUMAR SHAH (Querist)
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25 July 2024 if any of employee's PAN Number is not linked with his Aadhar on Income Tax Portal and this employee falls under the Tax Slab of > 10 Lacs, then What is the liability of Employer for TDS deduction from his Salary?

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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26 July 2024 Taxpayers cannot file ITR or claim refunds with inoperative PAN cards.
The pending returns will not be processed, and pending refunds will not be issued to inoperative PAN cards.
The TCS/TDS will be applicable at a higher rate.
The TCS/TDS credit will not appear in Form 26AS, and TCS/TDS certificates will not be available.

Regards,
Ramesh Kr Verma Advocate

Gokul Sharma

Gokul Sharma (Expert)
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26 July 2024 Sir one of my client's TCS not reflecting after Pan Aadhar linking completion.

what to do ?

can told the deductor to revised TCS Return ?

SIDDHARTH MAHESHKUMAR SHAH

SIDDHARTH MAHESHKUMAR SHAH (Querist)
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26 July 2024 still my query not resolved.
My Query is :
if any of employee's PAN Number is not linked with his Aadhar on Income Tax Portal and this employee falls under the Tax Slab of > 10 Lacs, then What is the liability of Employer for TDS deduction from his Salary?

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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13 August 2025 Good question! Here’s what the employer’s liability is when an employee’s PAN is not linked with Aadhaar, and their income exceeds ₹10 lakhs:
Key Points:
1. PAN-Aadhaar Linking Requirement
The Government mandates that PAN must be linked with Aadhaar by employees.
If PAN is not linked with Aadhaar, then the PAN becomes inoperative for income tax purposes.
2. Impact on TDS Deduction
When PAN is inoperative or invalid, the employer cannot use that PAN for TDS purposes.
As per Section 206AA of the Income Tax Act (TDS provisions), if PAN is not furnished or is invalid, higher TDS rate applies.
3. TDS Rate When PAN is Not Linked with Aadhaar
Employer must deduct TDS at the rate of 20% or the rate specified in the Finance Act, whichever is higher.
This rate is higher than usual slab-based TDS rates.
4. Applicability for Employees with Income > ₹10 Lakh
For employees in the highest tax bracket, the TDS deduction will be at 20% (or higher if applicable) instead of slab rates.
Employer should inform the employee to link PAN with Aadhaar promptly to avoid this.
5. Employer’s Liability
Employer is legally bound to deduct TDS at higher rate if PAN is invalid due to non-linking with Aadhaar.
Failure to do so may attract penalties or disallowance.
Summary Table:
PAN Status TDS Rate on Salary
PAN linked with Aadhaar & Valid As per applicable slab rates
PAN not linked with Aadhaar / Inoperative PAN 20% (Section 206AA applies)
Employer’s Action Steps:
Verify PAN-Aadhaar linking status of all employees.
Deduct TDS at higher rates for employees with unlinked PAN.
Inform employees to link PAN-Aadhaar ASAP.
Maintain proper documentation of communications.

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