*TDS / TCS Excess demands due to non linking of PAN Aadhaar*
*CBDT Circular No. 9/2025 dated 21-07-2025: Relief on Higher TDS/TCS for Inoperative PANs*
- The CBDT has provided major relief regarding higher TDS/TCS rates under sections 206AA/206CC for cases where PAN was inoperative due to non-linking with Aadhaar.
- No demand for short-deduction/collection: If PAN is made operative (via Aadhaar linking) within the timelines prescribed, no demand will be raised on deductors/collectors for short deduction/collection at regular (and not higher) rates, even if PAN was inoperative at the time of transaction.
- *Key Timelines:*
- For payments/credits from 01.04.2024 to 31.07.2025: PAN must become operative by 30.09.2025.
- For payments/credits on or after 01.08.2025: PAN must become operative within 2 months from the end of the month in which payment/credit occurred1.
- This relief is a partial modification of Circular No. 3/2023 and continues the relief provided by Circular No. 6/2024.
- Impact: Redressal of grievances for deductors/collectors receiving demands for higher TDS/TCS due to inoperative PANs, provided corrective action (Aadhaar linking) is done within the stipulated period1.
- All other TDS/TCS provisions of the Income-tax Act continue to apply.
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