PAN-Aadhaar not linked: Higher TDS rates waived off for deceased taxpayers

Deductors, collectors won't face higher tax rates under sections 206AA and 206CC for transactions up to March 31, if the deductee or collectee died on or before May 31, 2024

The Central Board of Direct Taxes (CBDT) has released a circular saying the higher rate of tax deducted at source (TDS)/ tax collected at source (TCS) will not apply if the PAN and Aadhaar of the deductee or collectee is not linked due to their death.

This circular clarifies that deductors and collectors are not liable for higher tax rates under sections 206AA and 206CC for transactions conducted up to March 31, 2024, if the deductee or collectee passed away on or before May 31, 2024.

“In order to redress the grievances of the taxpayers wherein instances have been cited, of demise of the deductee/collectee on or before 31.05.2024 and before the option to link PAN and Aadhaar could have been exercised, the Circular provides that there shall be no liability on the deductor/collector to deduct/collect the tax under section 206AA/206CC of the Act, as the case maybe pertaining to the transactions entered into up to 31.03.2024,” said the CBDT.

Prior to this, Circular No. 6 of 2024, issued on April 23, 2024, extended the deadline for linking PAN with Aadhaar to May 31, 2024.

According to the regulations, TDS will be deducted at a rate of 20 per cent if individuals fail to link their PAN with Aadhaar. Similarly, TCS will be collected at an increased rate of 5 per cent in compliance with Section 206CC's provisions.

The latest update, however, takes a further step by addressing the issue of deceased individuals, ensuring that the tax burden does not unfairly increase due to their inability to link PAN and Aadhaar before passing away.

How to link PAN with Aadhaar online through the e-filing website

You can only link your Aadhaar and PAN after paying a Rs. 1,000 fine. Follow the steps to link PAN with Aadhaar.

Go to the official e-filing website of the Income Tax Department.

If you are not logged in: Click on the ‘Link Aadhaar’ option available on the homepage under the 'Quick Links' section.

If you are logged in: Navigate to ‘My Profile’ and select ‘Link Aadhaar’ under the personal details section.

Enter your PAN and Aadhaar number.

Enter your name as it appears on your Aadhaar card.

Provide your mobile number.

Click on the ‘Validate’ button to ensure the details match.

An OTP will be sent to your registered mobile number.

Enter this OTP in the designated field and click on ‘Link Aadhaar’.

Once the request is processed, you will receive a confirmation message indicating that your Aadhaar number has been successfully linked to your PAN.