Tds - deduction rules

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.

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%.

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).