Non-Applicability of Higher Rate of TDS/TCS in the Event of Deductee’s/Collectee’s Death Before PAN and Aadhaar Linkage
The CBDT issued Circular No. 08/2024 dated August 05, 2024, regarding the non-applicability of higher rates of TDS/TCS as per provisions of section 206AA/206CC of the Income-tax Act, 1961, in the event of the death of the deductee/collectee before the linkage of PAN and Aadhaar.
As per Circular No. 06/2024 dated April 23, 2024, the Board had provided a window of opportunity to taxpayers until May 31, 2024, for linking PAN and Aadhaar for transactions entered into up to March 31, 2024, to avoid higher deductions/collections of tax under section 206AA/206CC of the Income-tax Act.
Several grievances have been received from taxpayers citing instances where the deductee/collectee passed away during this period (i.e., on or before May 31, 2024) before the PAN and Aadhaar linkage could be completed. In such cases, tax demands are standing against the deductor/collector due to the failure to link the PAN and Aadhaar of the deceased person.
To address these grievances, the Board specifies that for cases where a higher rate of TDS/TCS was attracted under section 206AA/206CC of the Act pertaining to transactions entered into up to March 31, 2024, and in the event of the deductee’s/collectee’s death on or before May 31, 2024 (i.e., before the linkage of PAN and Aadhaar could be done), there shall be no liability on the deductor/collector to deduct/collect the tax under section 206AA/206CC. The deduction/collection as mandated in other provisions of Chapter XVII-B or Chapter XVII-BB of the Act shall be applicable.
The Circular can be accessed at: CBDT Circular 08/2024
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