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Tds deduction without pan

Harkesh Kumar (Finance Manager) (97 Points)

13 April 2012

Dear All,

I received two bills of advertisment for Rs. 59400/- each respectively say X . should i deduct tds if he has no pan no, he is

saying that PAN is applied for will be received in 1-2 months.

Regards,

Harkesh Kumar

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8 Replies

kavitha (studying final) (830 Points)
Replied 13 April 2012

breif account please

kavitha (studying final) (830 Points)
Replied 13 April 2012

dont have pan no then deduct 20% tds effective from apr'2010

1 Like

valji (Accounts manager-MBA) (2150 Points)
Replied 13 April 2012

agreee with above dedut 20% as a higher deduction for not having pan

yasin143 (sr acc) (26 Points)
Replied 23 April 2012

WHILE WE HAVE TAKE INVOICE THAT TIME THE PARTY HAVE NOT PAN NUMBER WE NEED TO DEDUCT TDS 20% ON INVOICE AMOUNT

kavitha (studying final) (830 Points)
Replied 23 April 2012

hi yasin, give me brief account of transaction

kavitha (studying final) (830 Points)
Replied 23 April 2012

i think you should deduct 20% tds

yasin143 (sr acc) (26 Points)
Replied 23 April 2012

HA KAVITH, HERE PARTY HAS NOT PAN NUMBER WHILE SUBMITTING THE BILLS, SO THATS WHY I DEDUCTED 20% TOTAL INVOICE AMOUNT KAVITHA

CA Rama koti Reddy (DGM ( F & A)) (50 Points)
Replied 23 April 2012

A new section 206AA has been introduced in this financial year 2010-11. According to this new section 206AA tax will be deducted at the rate higher of prescribed rate or 20% in the case of non-submission of the PAN.

All the points regarding to this new section 206AA are as follows.

1- For all the transactions regarding income tax department such as submission of any form and paying the tax, one need to furnish Permanent Account Number (PAN).

2- From this financial year 2010-11, Tax deduction at source(TDS) will be deduct higher than prescribed rate or 20% if PAN is not furnished on all the transaction.

3- All the non residents as well as residents who liable to pay tax need to have PAN by 31st of march 2010. PAN number need to mention to those who are liable to deduct the tax and before the date of deducting the tax. Like if an employer deduct TDS to the employees from the salary, the employees need to mention their PAN number before the date of deducting TDS from salary unless the TDS will be deducted at higher levels.

4- Income tax department also stated that all the financial transaction without PAN will attract tax from 1st of April 2010. Income tax department also made mandatory to mention PAN to both the deduct or and deductee of TDS.

5- According to this new provision of income tax act, any declaration like section 197A will not be treated valid unless PAN is furnished to the declaration. If PAN is not furnished declaration of Section 197 and 197A will be VOID.

6- So according to this act any person who is eligible for deduction but not quote PAN, he/she need to pay TDS @ 20% instead of 2 percent on rental payments for plant and machineries and 10% on land and building.

7- It is advised to save you from any disputes and mention PAN to all the bills, voucher and all the correspondence.

For non residents and foreign companies

1- The current tax rate for royalties and technical fees is 10% of the gross amount. In the case of interest the lower tax rate is 10-15%.

2- Many foreign companies and nonresident don’t apply for the PAN as they think they are earning passive income from India and what’s the need for that.

3- So for these people income tax department has stated that no lower rate of tax will be allowed to ant nonresident as well as foreign companies if PAN Number not furnished with the return as well as on other documents. And the rate of TDS will be not lower and will be @ 20%.

4- However if any foreign company has not PAN number at the time of return, it must apply PAN and afterwards after quoting PAN number, the company can claim for the refund of tax.

So above all, income tax department wants to maximize the number of peoples in tax regime. 20% TDS is a part of it. With more and more people having PAN number it will be easy for the departments to watch on their bank account as well as all the financial activities on which quoting PAN number is necessary.