Quote right PAN or pay more Tax

Failure to mention the Permanent Account Number (PAN) while submitting tax returns will henceforth entail payment of higher tax on non-salary income like interest or house rent.

The Centre’s decision will come into effect from April 1, 2010. “The deductee (person from whose income tax is deducted), shall mandatorily furnish PAN to the deductor failing which tax shall be deducted at the rate in force or at the rate of 20 per cent, whichever is higher,” the Finance Bill for 2009-10 proposes. The proposal will apply to incomes, other than salary, like interest, rent, and royalty. The non-residents will also be charged penal rate if they do not quote the correct PAN. The deductor (like banks) will deduct tax above the rates than the prevailing rates or 20 per cent, whichever is higher, in case the TDS assessee did not furnish PAN. Even those who misquote their PAN intentionally or by mistake will have tax deducted at the penal rates. Currently, at the TDS stage, tax on interest or casual income is deducted at 10 per cent. Currently, tax payers who have interest income or other income which is not taxable, submit Form 15 G. In case of senior citizens or pensioners the prescribed form is 15H. The Income Tax Department said: “It is being noticed that in a number of cases, the non-quoting of PANs by deductees is creating problems in the processing of returns of income and in granting credit for tax deducted at source, leading to delays in issue of refunds.” But the prime reason behind the government’s move is it will help the IT Department to detect any potential tax evasion, tax experts said. According to the latest amendments to the IT Act, all existing assessees or taxpayers or persons required to furnish a return of income, even on behalf of others, should have a PAN. Besides, the government has made it mandatory that anyone who intends to enter into financial transactions like sale or purchase of property, making fixed deposit over Rs 50,000 or buying mutual funds over Rs 50,000 would have to quote the PAN number. Source: Deccan Herald