Tds - deduction rules

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Respected Sirs, As we know whenever we make payment to others,we have to deduct the TDS if the same applicable for TDS @ the rates specified in the act.And suppose if the PAN is not specified in the invoice we need to deduct @ 20%...but one of my client is having big turnover and having so many fixed customers..as a reason they are fixed PAN is not providing in invoices.but my client having their PAN in his records..Now what is case..? whether we need to deduct TDS @ 20% as there is no Pan in invoice or at normal applicable rates...kindly suggest me do we need PAN in each and every invoice or what...?? Regards, Goutham.M
Replies (15)

In my opinion..TDS should be deducted at the rate prescribed because they have their PAN.

The reason that "PAN is not provided in the invoice" do not restrict the deductor to deduct TDS @ 20%.

when he is having a valid existing pan then you need to ask him to qoute it and you do not deduct @ 20% in case when there is a pan.

Khusbhu Jaiswal is correct.yes

Tds should be deduted at prescribe rates, as the concern party has PAN.
PAN must be qouted if available since non qouting debares deductee from claiming 20 % tds deducted...

PAN will have to be mentioned in your TDS return. If you have the PAN of clients, then deduct as per rates given in TDS schedule and not at 20%.

Sir.total payment given to contractor including service tax so tds to be deducted on which amount after deducting s.t.amount or full amount

When the client having PAN , insists them to quote in their invoices.

TDS to dedcuted at the rate prescribed in Act.

TDS has to be deducted on the amount excluding service tax

TDS shall be deducted at normal rate.

If you make payment to any person which is subject to TDS deduction (specified U/s 192 to 196D) of Income Tax Act 1961 .Then you should deduct TDS as per prescribe rate while making the payment and quote his PAN so that he can claim Tax credit.
But If someone don't have a valid Pan then TDS should be deducted @ 20% (as per section 206AA).
In section 206AA specifies that The deductee shall furnish his Permanent Account Number to the deductor and both shall indicate the same in all the correspondence, bills, vouchers and other documents which are sent to each other.

In your case If your client make payment to any person which is subject to TDS deduction then PAN should be quoted in the bill, the deductor(your client)  should also quote the Pan while preparing TDS Return Statement otherwise Demand Notice may be issued U/s 200A of IT Act .

But In Practical Scenario no one bother that Pan is mentioned in Bill or not, but it is mandatory to quote PAN in TDS Return Statement(i.e.,Form 26Q, Form 24Q or Form 27Q). 

You must first check whether the PAN you have is of the same person or not. You can verify it from www.tin-nsdl.com. If the PAN is of the same person or assesse than you can deduct tds at normal rates or else at 20%.
Dear all, Thank you so much for your valuable replies..and Mr.Willam sir,we need to deduct TDS on full amount including ST portion right..? Except in case of rent payable...
Dear all, Thank you so much for your valuable replies..and Mr.Willam sir,we need to deduct TDS on full amount including ST portion right..? Except in case of rent payable...
Dear Wakeel.as i mentioned my client is having pan of client and quoting the same in returns..dats fine..my doubt is if IT dept comes for scrutiny n finds that there is no pan on invoces..is there any penalty for the same...?


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