CBDT Circular No. 6/2024: Relief Measure for Inoperative PAN

CBDT Circular No. 6/2024: Relief Measure for Inoperative PAN

In Circular No. 6/2024, CBDT provides relief to deductors/collectors grappling with the consequences of Inoperative PANs. If a deductee/collectee’s Inoperative PAN becomes operative (via Aadhar linkage) by 31st May 2024, there shall be no liability on the deductor/ collector to deduct/ collect the tax u/s 206AA/ 206CC, as the case may be, for the transaction entered into up to 31-03-2024.

Compliance check for Inoperative PAN and Specified Person is available on the Income Tax Reporting Portal and the same can be accessed from: https://report.insight.gov.in/reporting-webapp/portal/homePage

Now let’s delve deeper into the key aspects of Circular No. 6/2024:

The recent release by CBDT, Circular No. 6/2024. is a partial modification of Circular No. 3 of 2023 dated 28.03.2023, regarding the consequences of PAN becoming Inoperative as per Rule 114 of the Income Tax Rules, 1962.

In a previous article, I explained the consequences of an Inoperative PAN and also the applicable TDS/TCS, which you can access here: https://taxguru.in/income-tax/applicable-tds-rates-case-person-and-person-inoperative-pan.html

As stipulated by Sub Rule 4 of Rule 114AAA of Income Tax Rules, 1962, the consequences of Inoperative PAN are applicable from 1^st of July 2023. These consequences of Inoperative PAN from 1^st of July 2023 till the date it becomes Operative are as follows:

• Withholding refunds of any amount of tax or part thereof, due under the provisions of the Act;
• Non-payment of interest on such refunds, beginning from 1^st of July 2023 and ending with the date on which it becomes operative;
• Deduction of TDS at a higher rate as per Section 206AA;
• Collection of TCS at a higher rate as per Section 206CC.

Deductors of TDS/ Collectors of TCS who failed to fulfill their mandatory obligation to deduct TDS/ collect TCS and if they had not deducted TDS/ collected TCS, following the provisions of section 206AA and 206CC of the Income Tax Act, 1961 from 1^st of July 2023 are receiving notices indicating their default in short deduction/collection of TDS/TCS subsequent to filing the TDS/TCS return of Q2 FY 2023-24. Details regarding the default amount along with the Justification Report are available on the TRACES portal.

The department has received many grievances from the taxpayers regarding these notices. With a view to redressing the grievances faced by such deductors/ collectors CBDT specifies in circular 6/2024 that if the deductee/ collectee having Inoperative PAN and their PAN becomes operative (as a result of linkage with Aadhar) on or before 31-05-2024, there shall be no liability on the deductor/ collector to deduct/ collect the tax u/s 206AA/ 206CC, as the case may be for the transaction entered into upto 31-03-2024.

This aims to alleviate the burden on taxpayers and streamline compliance processes in the realm of TDS/TCS regulations.