Answer

1. F

   Facts

   Where a deductee's PAN is inoperative for not linking Aadhaar, TDS has to be deducted at the higher rate under Sec 206AA (now Sec 397(2)). If you deducted at the normal rate, CPC shows a short deduction.

2. P

   Provisions and law

   • Sec 206AA, Income-tax Act 1961 (now Sec 397(2), Income-tax Act 2025)Higher TDS, generally 20%, where the deductee has no valid or operative PAN
   • Sec 139AA, Income-tax Act 1961 (now Sec 262, Income-tax Act 2025)PAN holders must intimate Aadhaar; an unlinked PAN becomes inoperative
   • CBDT Circular No. 03 of 2023From 1 July 2023 an inoperative PAN gets no refund, no interest on refund, and higher TDS and TCS
3. A

   Analysis

   Check the PAN status on the e-Filing portal before paying. Example: rent of ₹60,000 a month to a landlord with an inoperative PAN needs TDS at the higher rate instead of the normal rate, and the shortfall becomes your default. CBDT has given one-time relief in the past where PANs became operative by a set date, so check any current circular before paying the difference. Ask the deductee to link Aadhaar quickly.

4. C

   Conclusion

   1. 1Verify PAN status on the e-Filing portal
   2. 2Ask the deductee to link Aadhaar and pay the fee
   3. 3Check any CBDT relief circular for the period
   4. 4If no relief applies, pay the difference with interest and correct the statement

Check PAN status before every big payment; the default falls on the deductor.

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.