Get ready to shell out more tax up front on any income received if you are unable to provide your permanent account number from April 1. The tax deducted at source, or TDS, on payments could be as high as 20% for those not quoting PAN against the regular rate of 2%-10%.
The Budget 2009-10 had made it mandatory for residents and non-residents to quote this number or face a higher rate of withholding tax. It comes into effect from Thursday, April 1.
The idea behind the rule is to encourage more people to obtain PAN, a 10-digit alphanumeric tax payer identification number, and thereby become visible to tax authorities. The tax base of the country is a mere 3.3 crore because of massive underreporting of incomes and large-scale exemptions.
Quoting of PAN will allow income tax authorities to establish an audit trail and catch tax evaders. Some experts feel the measure is excessive. “This would put unnecessary burden on senior citizens who do not have a tax liability,” said Kishan Malhotra, Executive Director, KPMG.
Senior citizens could just file Form 15H in absence of tax liability and become eligible for exemption from TDS. If they do not furnish a PAN they will have to face a TDS rate of 20%.
Other Indian residents not falling within the tax bracket will also have to obtain a PAN and quote it where required. Tax deducted at source can be adjusted against a taxpayer’s actual tax liability. But in the case where there is no tax liability it has to be claimed back by filing returns.
The new rule comes with a severe penalty if not followed. Any failure to deduct taxes at appropriate rates will result in disallowance of expenditure for the one making payment, recovery of tax from him, and levy of interest and penalty. Interestingly, the total number of PAN issued in the country is in excess of 8 crore. Income Tax department issues the permanent account number in partnership with UTITSL and NSDL.
With this provision coming into effect even non-residents, having just one-off transaction with Indian parties will have to obtain PAN, failing which they will suffer a much higher withholding tax on their income.
Typically, payments by residents to non-residents in the nature of royalties or fees for technical services attract withholding tax at rate of 10.56% under the Income Tax Act or at 10% under certain tax treaties in the absence of a permanent establishment or a fixed place of work in India.
Similarly, interest payments to non-residents attract withholding tax at a rate lower than 20% under certain tax treaties. The PAN is required to be quoted in document pertaining relating to sale of property, sale or purchase of a motor vehicle requiring registration other than two-wheelers. Most of the banking transactions require PAN to be quoted.
I dnt understand…y the hell v shud pay taxes…..the wat so ever responsible munciple or health or education ministry authorities never do their job perfectly….so y shud v pay taxes….if all of my money is just gng waste
what can i use in panno field in case of deduction at 20%
We are the exporter and commission is due to our agent who is residing in Pakistan and has no any permanent building of office in india . He works from outside india .We did not deduct the TDS because of the provision of Double Tax Avoidance (DTA) . Now my question is we shall have to deduct the TDs @ 20% , if yes then where is the mean of DTA. pleas give guidance at my email id pvchauhan_ca@yahoo.com
Read more: https://www.taxguru.in/income-tax/no-pan-get-ready-to-tds-deduction-at-the-rate-of-20-percent-from-today-i-e-1st-april-2010.html#comment-47322#ixzz0q4CI2z6R
We are the exporter and commission is due to our agent who is residing in Sri Lanka and has no any permanent building of office in india . He works from outside india .We did not deduct the TDS because of the provision of Double Tax Avoidance (DTA) . Now my question is we shall have to deduct the TDs @ 20% , if yes then where is the mean of DTA. pleas give guidance at my email id pardumansharma@gamail.com
Dear Sri Ahmad
As per the provisions, the banks are not required to deduct TDS on interest payments on Savings and Recurring deposits. And you need to declare your income in your IT return only..
I am Senior Citizen. Please let me know if Form 15H is required to be filed each year, in respect of cumulative deposits or it has to be filed in the year of maturity of depsit? In case of yearly filing fo 15H I suppose the yearly accrual of income has to be taken into account for arriving at the taxable income of that particular year.
Why no one discusses about the existence a provision to Rule 114B of IT Rules where Form 60 and 61 are prescribed to file with the authorities like RTA, Bank, Telephone authorities etc., by the individuals who do not have taxable income? Please educate these authorities on this.