PENALTY DEADLINE EXTENDED FOR THOSE WHO HAVEN'T LINKED PAN & AADHAAR

NEW DELHI: In a relief for those dealing with taxpayers who have not linked their PAN and Aadhaar, the income tax department has relaxed the deadline for imposing penalties.

PANs of those who had not linked the two ID proofs by the June 30, 2023 deadline had become inoperative and anyone deducting tax at source (TDS) or transactions requiring collection of tax at source had to withhold a higher amount. For instance, in case of individuals whose PAN became inoperative, the TDS on house rent allowance doubled to 20%.

Since many of the deductors or collectors did not know the PAN was inoperative, they continued to deduct or collect tax at the lower level, and faced a penalty from the tax department. A large number of them had petitioned govt, which has now relaxed the rule, exempting deductors or collectors of any liability for transactions that took place up to last March, provided the PAN becomes inoperative before the end of May.

"This is a big relief to several of those who were required to withhold or collect tax at a higher rate... It is in the interest of the taxpayers to promptly link their PAN with Aadhaar (if not done so far), as they will not get any refund due to them and also continue to lose interest on their tax refunds until such linkage happens," said Kuldip Kumar, partner at Mainstay Tax Advisors.