Relief from higher TDS/TCS in case death of deductee before PAN & Aadhaar linkage

CBDT has given relief from high TDS/TCS rates u/s 206AA / 206CC in case of death of deductee/collectee before linkage of PAN and Aadhaar.

Non-applicability of higher rate of TDS/TCS as per provisions of section 206AA / 206CC of the Income-tax Act, 1961, in the event of death of deductee/collectee before linkage of PAN and Aadhaar

Section 206AA / 206CC provides for furnishing of PAN to the deductor/collector. Failing to do so attracts TDS/TCS at higher rates. These sections also provide that where the PAN furnished is invalid, it shall amount to non-furnishing of PAN. 

CBDT had issued Circular No. 06 of 2024 dated 23.04.2024 , which provided a window of opportunity to the taxpayers upto 31.05.2024 for linkage of PAN and Aadhaar for the transactions entered into upto 31.03.2024 so as to avoid higher deduction/collection of tax under section 206AA1206CC of the Income-tax Act, as the case maybe.

However, genuine difficulties were faced by the taxpayer in complying with the provisions of section 206AA / 206CC in cases of demise of the deductee/collectee during the said period (i.e. on or before 31.05.2024) before the option to link PAN and Aadhaar could have been exercised . In such cases, tax demands are standing against the deductor/collector as a result of failure to link PAN and Aadhaar of the deceased person.

In order to redress such grievances of the taxpayers, the CBDT has now issued Circular No. 08/2024 dated 5th August 2024 which provides that in respect of cases where higher rate of TDSITCS was attracted under section 206AA1206CC of the Act pertaining to the transactions entered into upto 31.03.2024 and in case of demise of the deductee/collectee on or before 31.05.2024 i.e. before the linkage of PAN and Aadhaar could have been done, there shall be no liability on the deductor/collector to deduct/collect the tax under section 206AA/206CC, as the case maybe. The deduction/collection as mandated in other provisions of Chapter XVII-B or Chapter XVII-BB of the Act, shall be applicable.

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