New Delhi, Jan 24 (SocialNews.XYZ) Trouble and hardship is looming for those earning Rs 2.5 lakh per annum but have not provided PAN and Aadhaar details to the employer.
This is consequent to the Income Tax Department asking employers to deduct 20 per cent salary as Tax Deducted at Source (TDS) from all employees who fail to furnish PAN and Aadhaar details.
This rule was formulated by the Central Board of Direct Taxes (CBDT) and came into effect on January 16. The rule will be applicable to those who earn more than Rs 2.5 lakh per annum.
This rule is aimed at keeping a close eye on TDS payments and revenue earned by this segment. In the financial year 2018-19, revenue from this segment amounted to around 37 per cent of the total direct tax collection.
In its 86-page page circular, the CBDT has said employees have to quote PAN and Aadhaar details compulsorily as per the Section 206-AA of the Income Tax Act.
The circular reads: "Section 206AA in the Act makes furnishing of PAN or Aadhaar number, as the case may be, by the employee compulsory in case of receipt of any sum or income of amount, on which tax is deductible."
The circular states that if an employee fails to provide these details, the employer is responsible to make deductions either at the tax rate on the employee's salary or 20 per cent or above.
In case, the income is less than Rs 2.5 lakh per annum, no tax will be deducted.
After several deductions, if your salary attracts approximately 20 per cent tax, the TDS rate of 20 per cent will apply.
In case your salary attracts a 30 per cent tax rate, your employer will compute the average tax rate, i.e, employee's total tax liability divided by total annual income. If the average tax rate turns out to be 20 per cent, the TDS would be 20 per cent.
However, employees will be exempted from paying education and health cess at 4 per cent rate in case the deduction made is at a higher rate.
The CBDT says the lack of PAN or Aadhaar details is creating problems in giving credit.
Source: IANS
About Gopi
Gopi Adusumilli is a Programmer. He is the editor of SocialNews.XYZ and President of AGK Fire Inc.
He enjoys designing websites, developing mobile applications and publishing news articles on current events from various authenticated news sources.
When it comes to writing he likes to write about current world politics and Indian Movies. His future plans include developing SocialNews.XYZ into a News website that has no bias or judgment towards any.
He can be reached at gopi@socialnews.xyz