A new provision relating to tax deduction at source (TDS)
under the Income Tax Act 1961 will become applicable with effect
from 1 April 2010. Tax at higher of the prescribed rate or 20% will
be deducted on all transactions liable to TDS, where the Permanent
Account Number (PAN) of the deductee is not available. The law
will also apply to all non-residents in respect of payments /
remittances liable to TDS. As per the new provisions, certificate for
deduction at lower rate or no deduction shall not be given by the
assessing officer under section 197, or declaration by deductee
under section 197A for non-deduction of TDS on payments shall not
be valid, unless the application bears PAN of the applicant /
deductee.
All deductors are liable to deduct tax at the higher rate in all
transactions not having PAN of the deductees on or after 1st April
2010. In order that there is no dispute regarding quoting / non-
quoting of PAN or accuracy thereof, the law requires all
deductees and dedutors to quote PAN of deductees in all
correspondences, bills, vouchers and other documents sent to
each other. All deductors are, therefore, advised to intimate
their deductees to obtain and furnish their PAN so as to avoid
TDS at a higher rate. All deductees, including non-residents
having transactions in India liable to TDS, are advised to
obtain PAN by 31st March 2010 and communicate the same to
their deductors before tax is actually deducted on transactions
after that date.
The procedure for obtaining PAN is simple, inexpensive
and quick. Application for PAN can be filed in Form 49A to National
Securities Depository Ltd. (NSDL) or Unit Trust of India Investor
Services Ltd. (UTIISL) or their intermediaries. Non-residents can
apply through the local embassy / consulate of India. Applications
can also be filed, paid for or tracked online through the Internet on
the following web-sites:-
http://incometaxindia.gov.in/
https://incometaxindiaefiling.gov.in/portal/index.jsp
http://www.tin-nsdl.com/
http://www.utitsl.co.in/
The Central Board of Direct Taxes (CBDT) has issued
Notification No.94/2009 relating to taxation of perquisites / profits in
lieu of salary and Circular No.1/2010 for the guidance of tax
dedutors for salaries. These documents are available on the
department’s web site at http://incometaxindia.gov.in/