Quote your PAN to save excess deduction of tax from your income

The CBDTCentral Board of Direct Taxes (CBDT) in its notification stated that those who do not provide their Permanent Account Number (PAN) to the deductor, the tax to be deducted (Tax deducted at source - TDS) from their income (salary, fee, etc.,) would be at 20%. There are various rates ( 1% to 10%) for the TDS depending on the nature of transaction. This new notification will be effective 1-Apr-2010.


What are the impacts of this notification:
  1. Quote your PAN in all your communications, bills etc.,
  2. The deductee to inform the deductor and also the deductor to inform the deductee.
  3. Those without PAN will have to get their PAN, to save themselves from excess TDS
  4. More people / business will get their PAN soon.
  5. When you open a Fixed Deposit with bank and the interest paid/payable is more than Rs.10000 pa, tax will be deducted at 10%. If you fail to quote your PAN, tax would be deducted at 20%.
Let us look at a situation. A new business started in Jan 2010 and do not have a PAN. The business may start billing for the services and the customer will have to deduct the tax, as per the nature of transactions (say 5%). Since the new business failed to provide the PAN, the customer will deduct 20% from the bill. Now, the business cannot get back the excess 15% (20% - 5%) back from the customer. It has to file the return with the Income Tax department and adjust the excess TDS or claim refund (as the case may be).

It is a longer process to get the excess TDS adjusted or to get a refund. Why cut down your operating cash flow (net payment from customers)?.

Get your PAN and quote in all your transactions.

Cheers,
Gopal

0 comments:

Post a Comment

 

Cross currency rates

Indiblogger Rank

My thoughts Copyright © 2009 WoodMag is Designed by Ipietoon for Free Blogger Template