The yawning budget deficit has been compelling the government to take certain unusual measures to meet the deficit and the recent notification issued by Central Board of Direct Taxes is a case in point. It provides for mandatory quotation of Permanent Account Number (PAN) in all transactions made between two entities. And the default in this regard would attract a levy of 20% which is of a punitive kind as the TDS rates for various transaction are less than 20%. Thus it is very important to understand the full implications of the latest move on the part of the Revenue Depart which is being touted as a step to secure better compliance of the relevant provisions of the Income Tax At.

 

The word “entities” means individuals or firm. It is well known that different classes and nature of transactions attract rates which are applicable to these. It is extremely important for all concerned to furnish correct and accurate information in respect of the Permanent Account Number (PAN) failing which the provisions of the new notification which is due to come into effect from the next fiscal year. Inaccurate disclosure would lead to higher incidence of tax , a scenario which can best avoided by being diligent and careful in this regard. Under the existing provisions all deductees, that is all the persons form whom Income Tax is deducted and the deductors , who are entrusted with the duty of making deduction from payments ,are under a duty to quote Permanent Account Number (PAN) in all corespondences, bill, vouchers and other documents exchanged between each other.

 

In terms of this new notification, the assessing officers have been directed not to issue certificates for deduction at a lower rate or no deduction unless the application seeking such a certificate carries a valid Permanent Account Number. The statement issued by the department advises all the deductors to intimate their deductees and furnish their PAN to avoid being at higher rate.


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