Wednesday, January 26, 2011

TDS Rate Doubles if You Fail to Mention Your PAN

TDS Rate Doubles if You Fail to Mention Your PAN

TDS or Tax Deducted at Source refers to the deduction which is made by the employer while granting salary to the employee. If one looks back at the pay slip, he can very well catch a glimpse of TDS which has been deducted by his employer in course of payment of his salary. Normally, the employer is held responsible for the purpose of collection of TDS from his employees and the former is required to deposit the same with the Government within the specified time period. For cases where the question of self employment is related in form of professionals like CA, Doctor, CS, etc. they need to take care of this matter all by themselves and deposit the same with the Government within the specified time limit. The specified time limit in such cases can very well be extended in both the cases, provided sufficient and proper cause is brought into light.

Interest and rent payment in respect of current rate of deduction for tax at source is 10%. For the purpose of salary payment, the employers are eligible to deduct TDS from the salaries of their employees on monthly basis and for computation of income tax liability of the later, benefits with regard to investments, housing loans and others are also taken into consideration.


However, if an employee fails to furnish his PAN card number at the time of making payment than the rate of TDS will directly be doubled from 10% to 20%, which may hurt the assessee. In case the original rate of deduction made on salary is more than 20%, then, then TDS will be applicable at such higher rate.

While the action of TDS is in progress, the deductor, that is, the employer, shall issue a certificate in Form no 16 or 16A to the payer of such TDS, that is, the employee, which acts as a proof for claiming credit for such purpose. The facility of cross checking is available by means of Form 26AS, and if the amount matches with the amount in form no 16 or 16A, it can be said that TDS has been properly submitted to the IT department. And like in all cases, if the amount of TDS charged is higher than the tax liability in actual, then the same is eligible for a refund by way of filing return of income.

Added to it, assesses who expects their income to be below the basic exemption level, they shall furnish declaration for non-deduction of income tax at source in form no. 15G, whereas the senior citizens can also avail the same benefit in Form no. 15H instead of 15G. This procedure is only applicable to the ordinary residents in India and non-residents are not covered here. Other cases, which are not covered here, can make an application to the IT Officer to issue a certificate for such purpose in Form no 13.

Thus, we can very well observe the dramatic changes that can take place when one forgets to put his PAN card number in case of TDS.


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