Inoperative PAN is not inactive PAN, clarifies I-T Dept amid concerns on ITR filing

Inoperative PAN is not inactive PAN, clarifies I-T Dept amid concerns on ITR filing

A permanent account number (PAN) that has become inoperative due to not being linked with the Aadhaar card, is not the same as an inactive PAN, the Income Tax Department clarified on July 18, amidst confusion over income tax return (ITR) filings.

"It is clarified that an inoperative PAN is not an inactive PAN. One may file the Income Tax Return (ITR), irrespective of PAN becoming inoperative," the taxation body said in a statement.
However, there will be consequences of an inoperative PAN, such as the "pending refunds and interest on such refunds will not be issued to inoperative PANs".
Also, the tax deducted at source (TDS) will be deducted at a "higher rate for inoperative PANs", it said. Similarly, the tax collected at source (TCS) will be "collected at a higher rate for inoperative PANs", the I-T Department added.

Consequences of Inoperative PAN

Inoperative PAN is not an inactive PAN. The individuals can file income tax return irrespective of PAN becoming inoperative. However the following are the consequences of inoperative PAN

1. Pending Refunds or interest on such refunds will not be issued.

1. TDS will be required to be deducted at higher rates for inoperative PAN.

1. TCS will be required to collected at higher rates for inoperative PAN.

Hence it is advisable for all NRI’s /OCI’s/ Foreign Citizens to intimate their residential status to jurisdictional assessing officer as soon as possible.
Section 206AB & 206CCA – Tax Deduction or Collection at Source For Not Filing of Income Tax Return

Section 206AB is inserted after section 206AA of the income tax act. The latter provides for the deduction of TDS at higher rates for those who do not provide/furnish their Permanent Account Number (PAN). 

Similarly, section 206CCA for TCS is inserted after section 206CC of the Income Tax Act. Read on for a detailed explanation covering the recent CBDT circular no. 10/2022, the compliance check functionality and more.

Who is a specified person under section 206AB

Specified Person is the one who:

• Has not filed the income tax return (ITR) for the preceding FY, and the income tax return (not belated return) filing due date has expired and

• Total amount of tax deducted or collected (TDS and TCS) in the last FY is Rs.50,000 or more.

Note: It does not apply to a non-resident who does not have a permanent establishment in India. Permanent establishment for this purpose includes a fixed place of business where the enterprise’s business is carried out wholly or partially.

Penalty for non-linking of PAN with Aadhaar card

The taxpayers who have not linked their PAN-Aadhaar within the last date of 30th June 2023, can do so by paying a late penalty of Rs.1,000. They must pay the penalty before filing for the PAN-Aadhaar link on the Income Tax website. However, they need to ensure they have a valid PAN number, Aadhaar number and mobile number to pay the penalty.
by GST Info Tamil

New sections were introduced in the Finance Bill, 2021 to deduct TDS (tax deducted at source)/ collect TCS (tax collected at source) at higher rates when the amount is paid to specified persons who have not filed their income tax returns. 

By GST Info Tamil