In a significant relief to taxpayers, the Central Board of Direct Taxes (CBDT) has clarified that no penal consequences will arise under Sections 206AA or 206CC of the Income Tax Act for short deduction or collection of TDS/TCS in cases where the PAN was rendered inoperative due to non-linkage with Aadhaar—provided corrective action is taken within the stipulated timeline.
Issuing a partial modification to its previous circulars, the CBDT has addressed widespread concerns regarding notices issued for short tax deductions. The department has now offered conditional exemptions, allowing taxpayers to avoid penalties if their PANs are made operative by September 30, 2025, effectively granting a 60-day extension.
The clarification outlines two key scenarios:
- For payments or credits made between April 1, 2024, and July 31, 2025, no penalty will apply if the PAN is linked with Aadhaar and made operative on or before September 30, 2025.
- For payments or credits made on or after August 1, 2025, no liability will arise if the PAN is linked and made operative within two months from the end of the month in which the payment is made.
However, the department emphasized that in both cases, tax deduction or collection must still be carried out in accordance with other applicable provisions under Chapter XVII-B or Chapter XVII-BB of the Income Tax Act after the PAN becomes operative.
This move aims to provide clarity and breathing room for taxpayers struggling with Aadhaar-PAN linkage issues, while ensuring compliance in a phased and fair manner.
👉 Click here to read the latest Gujarat news on TheLiveAhmedabad.com