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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.
ITR
Higher TDS default when the deductee PAN is inoperative
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Provisions
Sec 206AA, Income-tax Act 1961 (now Sec 397(2), Income-tax Act 2025); Sec 139AA, Income-tax Act 1961 (now Sec 262, Income-tax Act 2025); CBDT Circular No. 03 of 2023
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.
Close
- Verify PAN status on the e-Filing portal
- Ask the deductee to link Aadhaar and pay the fee
- Check any CBDT relief circular for the period
- If 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.
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