Need help TDS on Salaries

IT is 20% if the employee does not have PAN

Hi Friends,

          In this case it is 10%, but as per Income Tax Act 1961, It is 20% or Normal rate which ever is High which is applicable only for other section expect 192. So the TDS Rate will not change for the section 192 even Employee doesnot gives PAN.

Thanks,

R Shriram.

As per Circular No 8/2010 dated 31.12.2010

 

If the deductee (employee) fails to furnish PAN number then TDS need to be deducted at the rate of 20% 

 

Please refer to para 4.8 of the Attachment

 

Thanks  & Regards

Ram.

Upto basic exmeption limit not required but in case it is above that limit then tax shall be deducted at the higher of the following rates, namely:—

           (i)  at the rate specified in the relevant provision of this Act i.e as per calculation; or

          (ii)  at the rate or rates in force i.e calculated rate; or

         (iii)  at the rate of twenty per cent.

No need to deduct Income Tax at source without PAN till the exemption limit of Rs.160000/- (Taxable Salary after reducing deductions of chapter VIA) in the case of salary for the F.Y. 2010-11 according to Para No. 4.8 of Circular No. 08/2010 dt. 13.12.10. We can be followed principal of above circular for the F.Y. 2011-12 also. Also no need to deduct Income Tax at source without PAN till the threshold exemption limit of other Sections (like 194C, 194H, 194J,etc.) Mohan Jain

Originally posted by : Shriram Ramachandran
	Hi Friends,           In this case it is 10%, but as per Income Tax Act 1961, It is 20% or Normal rate which ever is High which is applicable only for other section expect 192. So the TDS Rate will not change for the section 192 even Employee doesnot gives PAN. Thanks, R Shriram.

No where in the Income Tax Act'1961 has this written that this rule doesn't considers Sec.192, it is the rate of TDS as per the respective section or 20% whichever is higher, in the above case the higher rate is 20%, therefore TDS will be deducted @ 20% only.

However in the case if the net taxable income arrived under (a) above is Nil then there is no requirement of PAN. Otherwise tds would have to be calculated as per (d) above
 

Suppose Net taxable income of the employee is 20 lakhs and he does not provide his pan to the employer then at what rate TDS should be deducted since if we deduct @ 20% his tax liability shall be 4 lakhs and if we apply normal TDS provisions u/s 192 his tax liability shall be Rs. 360000 + Rs. 92000 i.e. Rs. 452000/=.

 

My question is what should be the applicable TDS provision in such case?

If we apply normal TDS provision u/s 192, it will affect employer's TDS return so what is the use of penal provision of 20% u/s 206AA?

@ Rohit Gupta

 

20% provision is made by the department for the persons who try not to show the income in their taxable entity, and for small amount of 1% to 10% TDS they dont like to add these incomes in their taxable income, they dont provide pan and enjoy 

now department's step to make deduction of 20% in place of 1 to 10% will force them to submit their pan.

 

now your query 

 

if the 20 lacs salary holder does not furnish pan, then his TDS would be 20% - apart from it he will not be eligible for credit of tax when filing his return , means double axe of incometax..................

Originally posted by : U S Sharma
	@ Rohit Gupta   20% provision is made by the department for the persons who try not to show the income in their taxable entity, and for small amount of 1% to 10% TDS they dont like to add these incomes in their taxable income, they dont provide pan and enjoy  now department's step to make deduction of 20% in place of 1 to 10% will force them to submit their pan.   now your query    if the 20 lacs salary holder does not furnish pan, then his TDS would be 20% - apart from it he will not be eligible for credit of tax when filing his return , means double axe of incometax..................

I completely disagree with the final answer, sir as per Income Tax Act'1961, it is clearly written that for the person who doesn't provides PAN, TDS would be charged at the respective section rate or 20% whichever is higher. Since the rate as per Sec.192 is higher in this case..TDS would be deducted at that rate only not 20%. Penal provisions in no way will give relaxation from tax.

Mr. Rohit the TDS deduction for 20lakhs salary cannot happen @ flat rate of 20% because the deduction u/s 206AA is the higher of the following three:-

1. 20%

2. Rate in force

3. Rate prescribed

Therefore even the amount which you deduct would be as per rate in force for sec.192, the deduction will fall u/s 206AA (in cases where the PAN is not available). Hence there is no question deduction @ 20% when it is lower than the rate specified u/s 192. 

Also note that one will not be able to file his return without a PAN therefore there is no question of having a double axe of income tax. However one has to note that he might attact for penalty for non-filing of return of income if he does not file the returns. Therefore it become imminent on part of the employer to advice such employees to obtain PAN in advance to avoid such complications.

 

20% if no PAN available.

There is no need to Provide PAN in your Case for the F.Y. 2010-11 Salary, But in Next i.e. F.Y. 2011-12 you will Provide the PAN. As may be your salary Hike in Good %.

And 20% in Case of Not Provide the PAN.