Urgent plz suggest

Employees are under control of an organisation, if they do not provide the PAN details, the apporpriate action may be taken. Employees are internal to the organisation, therefore there is no case of non providing of PAN. Even in case of clerical jobs employer seeks every details of employee. So this question is just a theoritical question doesnot having a practical aspect.

Hii... Sunny

I need to add to your query that there is one Circular No.08/2010 dated 13-12-2010 which deals with your Situation which is as under

4.8-1 Finance Act (No. 2) 2009, w.e.f. 1-4-2010 has inserted section 206AA in the Income-tax Act which makes furnishing of PAN by the employee compulsory in case of payments liable to TDS. If employee (deductee) fails to furnish his/her PAN to the deductor, the deductor shall make TDS at a higher of the following rates :

   (i)  at the rate specified in the relevant provision of this Act; or

  (ii)  at the rate or rates in force; or

(iii)  at the rate of twenty per cent.

4.8-2 The deductor has to determine the tax amount in all the three conditions and apply the higher rate of TDS. This section applies to any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVII-B of Income-tax Act. As Chapter XVII-B covers all payments including salaries, salaries are also covered by section 206AA. In case of salaries there can be following situations :

  (a)  Where the income of the employee computed for TDS under section 192 is below taxable limit.

  (b)  Where the income of the employee computed for TDS under section 192 is above taxable limit.

In first situation, as the tax is not liable to be deducted no tax will be deducted. In the second case, if PAN is not furnished by the employee, the deductor will calculate the average rate of income-tax based on rates in force as provided in section 192. If the tax so calculated is below 20 per cent, deduction of tax will be made at the rate of 20 per cent and in case the average rate exceeds 20 per cent, tax is to be deducted at the average rate. Education cess  @ 2 per cent and Secondary and Higher Education Cess  @ 1 per cent is not to be deducted, in case the TDS is deducted at 20 per cent under section 206AA of the Income-tax Act.

Sorry Mr. JHA but this is not a theoriticle question

this situation is completly practicle and I have posted here because I am facing this currently

THANKS MR. GAURAV SHARMA

I HAVE UNDERSTAND THE SECTION

BUT PLEASE CLEAR THE SITUATION WITH AN EXAMPLE

IE. IF SALARY IS 500000 THEN WHAT WILL BE THE TAX IF PAN NOT PROVIDED

AND IF SALARY IS 900000 THEN WHAT WILL BE THE TAX IF PAN NOT PROVIDED.

THANKX AGAIN

Again this is theoritical only, buddy your company is paying somebody a salary of 5,00,000.00 p.a and not having details of that employee, so ridiculous. Even if he is not having a PAN ,it may be applied and can be obtained in 10 days.

That's the reason i have told you this is very theoritical quetion.

Even Mr  Sharma has provided you with detail provision applicable in this case, still you are asking him to explain like ABCD. Mr CA student be practical you are going to be professional soon....

All the best

Mr. JHA , I think You have just bookish knowledge and you have not done your articleship regularly.

No other arguments with you

Thankx for your suggestion

Hi Sunny as clarified by Guarav

The deductor has to determine the tax amount in all the three conditions and apply the higher rate of TDS. This section applies to any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVII-B of Income-tax Act. As Chapter XVII-B covers all payments including salaries, salaries are also covered by section 206AA. In case of salaries there can be following situations :

  (a)  Where the income of the employee computed for TDS under section 192 is below taxable limit.

  (b)  Where the income of the employee computed for TDS under section 192 is above taxable limit.

In first situation, as the tax is not liable to be deducted no tax will be deducted. In the second case, if PAN is not furnished by the employee, the deductor will calculate the average rate of income-tax based on rates in force as provided in section 192. If the tax so calculated is below 20 per cent, deduction of tax will be made at the rate of 20 per cent and in case the average rate exceeds 20 per cent, tax is to be deducted at the average rate. Education cess  @ 2 per cent and Secondary and Higher Education Cess  @ 1 per cent is not to be deducted, in case the TDS is deducted at 20 per cent under section 206AA of the Income-tax Act.

in the above case employer no need bother about the slab rate applicable to employee and tax is on Taxable Salary on that 20%+cess @ 3%.

It is simple.. act itself says that deduct tax at the rate of 20 percent if you don't have pan number. don't mix it up with slab rate. deduct tax at the rate of 20 percent whatever the payment you had made. 

AGREE WITH KRUNAL

Most Welcome Sunny

Ya sure Sunny I will try to explain you with an Example 

Suppose our salary is Rs.500000 the Basic Tax would be Rs.34000 which is 6.8% of Rs.500000 In this case our tax is less than 20% of Rs.500000 which is Rs.100000 so we have to deduct Rs.100000 without adding any Education cess.

Now think of other situation 

our salary is Rs.2000000 then Basic Tax would be Rs.454000 which is 22.7% of Rs.2000000, In this case 454000 is higher than 20% of Rs.2000000 so here we simply need to deduct  tax of Rs.454000 + Education Cess.

Sir,

    Can You Tell Me Where I Can Get The Detail That Vat Is 5% In Uttar Pradesh On Mink Blanket 

Regards

Ankur

Sir,
   From Where I Can Get Imformation That There Is 5% VAt On Blanket In Uttar Pradesh

Hehe..

I dont know why you guyz are fighting like hell on this querry..

Dear.. The solution is simple..

Deduct T.D.S on the rate Higher of the following..

i) Average annual tax rate on salary, or

ii) 20 %

Therefore, If the amount of receiopt of income from salary is Rs. 500000/- then tax should be deducted @ 20% and if it is Rs.9000000/- then @ 30%. 

:-)

Hehe..

I dont know why you guyz are fighting like hell on this querry..

Dear.. The solution is simple..

Deduct T.D.S on the rate Higher of the following..

i) Average annual tax rate on salary, or

ii) 20 %

Therefore, If the amount of receiopt of income from salary is Rs. 500000/- then tax should be deducted @ 20% and if it is Rs.9000000/- then @ 30%. 

:-)