Find
With an inoperative PAN, deductors must apply the higher rate under Sec 397(2) of the Income-tax Act 2025 (old Sec 206AA), generally 20%. Linking makes the PAN operative and normal rates apply again.
ITR
Higher TDS because PAN is inoperative
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Provisions
Sec 397(2), Income-tax Act 2025 (old Sec 206AA); Sec 262, Income-tax Act 2025 (old Sec 139AA); CBDT Circular No. 03 of 2023
Analysis
The extra TDS is not lost; it shows in your Form 168 (old Form 26AS) and can be claimed in your return. Example: FD interest of ₹1,00,000 with TDS at 20% instead of 10% means ₹10,000 extra deducted, which comes back as a refund once the PAN is operative. Tell the bank after linking so it updates its records.
Close
- Link PAN and Aadhaar
- Confirm the status shows operative
- Inform your bank, employer or broker
- Claim the extra TDS in your return
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