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What does this mean?

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Sambit Patel

Director

143 Points Posted on 04 April 2010

Just saw this on HDFC website,

As per section 206AA introduced by Finance (No. 2) Act, 2009 effective April 01, 2010, every person who receives income on which TDS is deductible shall furnish his PAN, failing which TDS shall be deducted at the rate of 20% in case of Domestic deposits and 30.90% in case of NRO deposits
Additionally, in the absence of PAN, Form 15G/H and other exemption certificates will be invalid even if submitted & penal TDS will be applicable.

What does that mean ?

Replies (1)

Guest

Posted on 04 April 2010

In order to strengthen the PAN mechanism, amendments in the Income tax Act have been made by inserting 206AA... It says that any person whose reciepts are subject to TDS shall mandatory furnish his/her PAN to the deductor and if he/she fails then deductor shall deduct tax at higher of the following rates:-

1- the rate prescribed by the act in relation to the reciept

2- at the rate of 20%

TDS would be also applicable at the above rates in case where assessee files a declaration in form 15G or 15H but does not provide his/her PAN. Also no certificate will be granted by assessing officer unless the application contains the PAN of the applicant

Further these provisions will also apply to non-residents where TDS is deductible. These provisions have come into force from 1st April,2010.