Under the new Income Tax rule, get ready to pay 20% of your income as TDS if you don’t provide your PAN and AADHAAR details. TDS stands for Tax deducted at source.
The rule formulated by the Central Board of Direct Taxes (CBDT) says that if you do not provide your PAN and AADHAR details then your salary must be deducted at least 20% . This rule came into effect on January 16,2020. This rule is formally applicable on the people who earns more than Rs. 2.5 lakhs per annum.
The main objective behind this rule is to keep a close eye on TDS payments and revenue earned by this segment. In the year 2018-19,the revenue collected was amounted to around 37% of the total direct tax collection. The CBDT in its 86 page circular said that the details of PAN and AADHAAR are compulsory as per the 206- AA section of the Income Tax Act.
The circular said “Section 206AA in the Act makes furnishing of PAN or Aadhaar number, as the case may be, by the employee compulsory in case of receipt of any sum or income of amount, on which tax is deductible.“
This also states that if an employee is not able to provide the details, he will be himself responsible for the deduction of the TDS amount.
Why CBDT started this rule?
The main reason behind this rule is that the lack of the details of PAN and AADHAAR creates a huge problem in giving credits.
The tax Deductors are advised to quote and collect correct details of the PAN and AADHAAR in the TDS statements which is for salaries in the Form 24Q.
But in case if your salary is less than Rs. 2.5 lakhs then no tax will be deducted.
After deductions, if your salary attracts 20% tax then the TDS rate 20% will apply. So to save your salary form being deducted please provide your proper details of PAN and AADHAR to the respective Income tax department or authorities