New Delhi: Taxpayers who have not furnished Pan or Aadhaar numbers while filing tax returns will not get the benefit of lower rates of Tax Collection at Source (TCS) and Tax Deduction at Source (TDS), the government has clarified.
As part of Rs 20 lakh crore economic package, Finance minister Nirmala Sitharaman on Wednesday reduced TDS/TCS for the non-salaried specified payments made to residents by 25 per cent for balance period of FY21. This was done to provide more money into the hands of the taxpayers to deal with the economic situation amid COVID-19 pandemic.
However, it has now been clarified that reduced rates would not be applicable to tax payers who have been denied lower rates (of TCS/TDS) due to non-furnishing of PAN/Aadhaar. The tax is required to be deducted at a rate of 20 per cent or higher for this category of taxpayers as per the provisions of section 206 AA of the Income-tax Act.
As per the government announcement, the reduced rate of TDS will be applicable to payment for contract, professional fees, interest, rent, dividend, commission, brokerage.
This reduction will be applicable for the remaining part of the FY 2020-21 i.e. from Thursday (May 14) to March 31, 2021.
