Skip to main content

PAN Card - for all transactions

 


The start of this new financial year requires additional effort from tax payers, as they need to be vigilant about their tax deduction at source (TDS). For some years now, there have been efforts made to ensure a particular procedure is followed for TDS and this includes disclosing the permanent account number (PAN).

Starting April 1, the punishment has been changed to a higher tax deduction for those who do not disclose PAN.

Tax at varied rates is deducted for various incomes and then the net payment is made to the beneficiary. The nature of income or earning, the person or entity receiving the income, determine the rate at which the tax is deducted. For instance, when a bank pays interest in excess of Rs 10,000 to an individual at a single branch, the tax is deducted at source from the interest earned. The individual will take a tax cut at the rate of 10 per cent plus an education cess.

As per the new guidelines applicable from financial year 2011, if a deposit holder does not provide the PAN, there is an obligation on the bank to deduct 20 per cent from the interest he earned, that is, double the rate applicable under normal circumstance. Here are some cases where the tax burden can suddenly jump higher for an individual. For better, easier understanding, the education cess is not taken into account.

INSTANCES

Many times, an individual has the PAN but does not disclose it. Like in case of aprofessional who has worked for, say, Rs 35,000. This could be a one-off service to a new client and in such a case, the PAN might not have been provided at the time of payment.

In this case, the entity making the payment would ensure that instead of 10 per cent, the tax is deducted at 20 per cent for not getting the person's PAN. As a result, the individual's net pay for his service is reduced to Rs 28,000.

Such a situation is likely with a large oneoff transaction or even when the person does not normally come under the taxable limit. But, due to some extra payment, the tax is deducted at a higher rate.

THE VULNERABLE

Senior citizens are likely to get trapped in the higher TDS situation because they often have deposits with a bank or have invested in Government of India bonds, where the interest earned is more than Rs 10,000. Since the elderly have a basic exemption limit of Rs 2.4 lakh, their earnings may not come under the taxable limit. In that case, they can submit Form15H with the bank and avoid the TDS. However, if they fill the form but fail to mention the PAN, then they could be slapped with a tax deducted of 20 per cent instead of zero tax.

Usually, families have some deposits or bonds in the name of some members, even if they are unemployed like housewives. They have some deposits or government bonds in their name. Since, they are not working and do not fall under any tax bracket, they can submit Form 15G to the bank and avoid TDS. But, if they fail to provide the PAN in the form, they will be liable for a 20 per cent tax deduction at source.

PROCEDURES

There are often procedures adopted for various business dealings. One of it being quoting a PAN.

Often, when the mistake is realised, efforts are made to stop usage of the old number and replacing it with the correct one. In such a situation, could lead to authorities considering there was no PAN provided. Hence, the beneficiary could face a higher tax deduction.

For example, if there is a rent of Rs 20,000 paid per month to an individual, then the TDS on the amount would be 10 per cent. However, due to a wrong PAN disclosure, there could be some delay in conveying the correct number and in the interim, the tax could be deducted at the higher end.

DEDUCTORS MISTAKE

The worst situation is when an individual has provided his PAN to the concerned authorities. But, the there is a mistake committed by the authority. This could lead to either considering the number is misplaced or it is not given. Therefore, the deduction made is at a higher rate.

Example: The rate of tax deduction when acontractor is an individual is one per cent. If the authorities commit mistake with the person's PAN, he will be slapped ahigher tax outgo of 20 per cent. The difference will be huge, having a serious impact on the beneficiary.

WHAT TO DO

In sum, actual work begins even before the payment is made, because the PAN has to be conveyed to the payer. One condition in the new guidelines says the PAN has to be quoted in all correspondence, bills and vouchers exchanged between the deductor and the deductee, which will ensure the number is available with the concerned authorities.

Suppose a higher tax is deducted at source. The total tax to be paid would not increase, instead the individual will have to look for adjusting the deducted tax amount. For some people, this will take place only at the time of filing tax return, especially for a salaried people who might not have any additional tax burden to adjust the deducted amount. In such asituation, the tax return will show that arefund is due but this will take place only at the end of the financial year.

There can be quicker action if the individual has to pay some advance tax and this would be the case for professionals, salaried individuals with additional or other income. In this case, the adjustment will come earlier because they will pay the reduced amount of advance tax on the income after adjusting for the higher TDS made and hence need not wait till the year-end.


Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...

ICICI Prudential Value Fund Series I

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   Performance of the scheme will be benchmarked to the S&P BSE 500 index ICICI Prudential Value Fund is a closeended equity scheme. The scheme will have tenure of three years (1095 days) from the date of allotment of units. Units of the scheme will be fully redeemed at the end of the maturity period, unless rolled over. NFO PERIOD:   The NFO is open from October 18 to 28. The minimum subscription during the NFO period is Rs 5,000. SCHEME OBJECTIVE:   The scheme aims to provide long-term capital growth by investing in a well-diversified portfolio of equity and equity-related securities. INVESTMENT STRATEGY:     The fund proposes to invest in stocks that are trading at a huge discount in the BSE 500 index and plans to book profit and distribute dividen...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now