??Understanding the CBDT Circular on Non-Applicability of Higher TDS/TCS Rates in Case of Deceased Deductees/Collectees...

Introduction

The Central Board of Direct Taxes (CBDT) issued Circular No. 081/2024 on August 5, 2024, addressing an important concern regarding the linkage of PAN and Aadhaar for deceased individuals. This circular provides clarity on the non-applicability of higher rates of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) as per sections 206AA and 206CC of the Income-tax Act, 1961, in the event of the death of the deductee/collectee before the linkage could be completed.

Background

Previously, allowed taxpayers a window up to May 31, 2024, to link their PAN with Aadhaar to avoid higher rates of TDS/TCS for transactions entered into up to March 31, 2024. However, numerous grievances were received from taxpayers who cited instances where the deductee/collectee had passed away before this deadline, resulting in unresolved tax demands against the deductor/collector due to the non-linkage of PAN and Aadhaar.

Key Points of the Circular

• ?????????????????? ??????????????????: The CBDT acknowledges the grievances related to the demise of deductees/collectees before the PAN-Aadhaar linkage could be completed within the given timeframe.
• ?????????????????? ???????? ???????????? ??????/?????? ??????????: For transactions entered into up to March 31, 2024, if the deductee/collectee passed away on or before May 31, 2024, the higher rates of TDS/TCS under sections 206AA and 206CC will not apply.
• ???????????????????? ????????????????????/??????????????????????: In such cases, the standard provisions for tax deduction/collection under Chapter XVII-B or Chapter XVII-BB of the Income-tax Act will apply instead of the higher rates mandated by sections 206AA and 206CC.
• Implications for Taxpayers
• ??????????????????/????????????????????: Deductors and collectors will not be held liable for higher TDS/TCS rates if they can demonstrate that the death of the deductee/collectee occurred before the PAN-Aadhaar linkage could be completed.
• ???????????? ???? ?????? ????????????????: The estate of the deceased will not face undue tax burdens due to the failure to link PAN and Aadhaar, provided the death occurred within the stipulated timeframe.