Govt may Deduct 20% Tax from Salary if Employees Fail to share PAN, Aadhaar
GUWAHATI: The Income Tax Department is 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.
Earlier, the Central Board of Direct Taxes (CBDT) formulated this rule and came into effect on January 16 which allows deduction of 20 per cent salary from those who earn more than Rs. 2.5 lakh per annum and have not furnished PAN and Aadhaar details.
In its 86-page page circular, it 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. However, if the income is less than ₹2.5 lakh per annum, no tax will be deducted.