The recent initiative by the Income Tax Department is a commendable step forward. It entails that no demands will be made in instances where the Tax Deducted at Source (TDS) was under-deducted by the deductor due to the non-linkage of PAN (Permanent Account Number) and Aadhar by the deductee. Moreover, if the transaction is recorded by March 31, 2024, and the PAN of the payee becomes active by May 31, 2024, then there will be no obligation to deduct TDS at a higher rate.
Nevertheless, the communication lacks clarity regarding the resolution of previously raised demands that have already been settled by the deductors, and how relief will be extended in such cases.
It's crucial to note that if the PAN is not active by May 31, 2024, the relief will not be applicable. Therefore, both conditions must be met: the transaction must be before March 31, 2024, and the PAN must be active by May 31, 2024, to avoid the obligation of deducting TDS at a higher rate.
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