Understanding TDS Deduction Without PAN: Key Insights

Learn about TDS deductions when PAN is not provided and avoid higher tax rates with this essential guide.

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Yes, TDS is deducted at a higher rate of 20% if PAN (Permanent Account Number) is not available. This is in accordance with section 206AA of the Income Tax Act. To avoid this higher deduction, ensure you provide your PAN to the deductor.

FAQs & Answers

  1. What is TDS? TDS stands for Tax Deducted at Source. It is a means of collecting income tax in India, where a certain percentage is deducted from payments made to individuals and businesses.
  2. What is the significance of PAN in TDS deduction? The Permanent Account Number (PAN) is essential for TDS deduction as it helps in tracking the tax payments and avoiding higher deduction rates. Without a PAN, the TDS is deducted at a higher rate of 20%.
  3. How can I avoid higher TDS deductions? To avoid higher TDS deductions, ensure that you provide your PAN to the deductor before any payments are made.
  4. What happens if I do not have a PAN? If you do not have a PAN, TDS will be deducted at a higher rate of 20% as per section 206AA of the Income Tax Act. It is advisable to apply for a PAN to mitigate these deductions.

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