NEW DELHI: The Central Board of Direct Taxes (CBDT) has notified a new provision relating to tax deduction at source (TDS) under which all transactions where the deductee’s Permanent Account Number (PAN) is not available will be charged at the higher prescribed rate of 20 per cent. The new provision, which applies to non-residents as well, will come into effect from April 1, 2010.
In a statement here on Wednesday, the CBDT said that “Tax at higher of the prescribed rate or 20 per cent 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 Sec. 197, or declaration by deductee under Sec. 197A for non-deduction of TDS on payments shall not be valid, unless the application bears PAN of the applicant/deductee”.
Alongside, the CBDT also advised all deductees, including non-residents, to obtain their PAN by March 31, 2010, and communicate the same to the deductors before tax is actually deducted on transactions after that date.