Section 260AA of income tax provides that in case of TDS deduction, if
Permanent account number(PAN) not provided, TDS will be deducted at higher end,
20%. This rule is applied to every assessee having or not having salary income.
But what’s in the case when the deductee has the income below the
exemption limit under income tax. If the dedcutee has not PAN number and has
the income below exemption limit of income tax, will the tax be deducted at
higher level?
-
If the assessee furnished form 15G or
15H for the declaration that his income is below the exemption level, He needs
to attach a photocopy of PAN.
-
Does having a PAN number is must in
india that without that card one can’t have a fixed deposit in banks.
-
What income tax rules say about PAN
number? Is it necessary for every individual either having any income or not.
Income tax section 139A provides that it is not necessary to have PAN
card for the people whose income is below the exemption level.
In this regard Karnataka High court gives the
decision that TDS can’t be deducted at higher level on the person who have not
PAN number and having income below the exemption level. Honourable High court
adds some points which are as under.
•
Section 206AA makes it conditional for every person who wishes to have a
transaction in bank/FIs including small investors/depositors (i.e., investors/depositors
with income below taxable limit) to invariably have a PAN. This runs counter to
section 139A according to which such persons need not have a PAN.
•
Section 206AA hinders and discourages such small investors from coming forward
to invest their money for secured reasons and their secured future. This is
also not desirable for country's economy.
•
Further section 206AA is unreasonable as it invalidates Form 15G which does not
mention PAN.
•
Section 206AA which overrides section 139A is discriminatory against small
investors . Section 139A has withstood scrutiny of Article 14 of the
Constitution for reasonableness.
• In the result, section 206AA read down and made inapplicable
to those with incomes below taxable limits. Banks and FIs not to insist on PAN
for opening accounts of below taxable limit income-earners. - [2012] 22
taxmann.com 157 (Karnataka)
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